Friday, March 05, 2010

Why we buy at uptrend line

I received some heat for posting about the possible trading buy on Genting SP when it tested its uptrend line at S$0.86-87. For your information, Genting SP has rebounded today to close at S$0.905. With this rebound, Genting SP may continue to rise to the immediate resistance at the psychological level of S$1.00 and thereafter at the strong horizontal resistance of S$1.05.

The reason why buying at an uptrend line can be a good trading idea is clearly illustrated by one of our top performers today- AEM. This stock dropped to its strong horizontal support of RM0.50, which coincided with its uptrend line support yesterday. Today, it gained RM0.235 (or, 46.5%) to close at RM0.74. Of course, not every stock would give you such a strong rebound, but there are enough such sharp rebounds that its is worthwhile to try catching a falling stock at its strong support, be that a horizontal support or an uptrend line support.


Chart: AEM's daily chart as at Mar 5, 2010 (Source: Quickcharts)

This is not a call to buy AEM. Incidentally, AEM should encounter stiff resistance from its downtrend line at RM0.78-80.
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5 comments:

  1. JRSaturday, March 06, 2010 3:28:00 PM

    Hi Alex,

    Astro price is on the uptrend recently. Having won the case recently, possible bullish breakout in the near term?
    Appreciate your feedback.

    BR.

    ReplyDelete
  2. LaymanMonday, March 08, 2010 10:06:00 AM

    Dear Alex,

    Humbly seek your view on which CI shares counters would you prefer if you have RM20K for long term investment?? Appreciate your reply and thanks.

    ReplyDelete
  3. Alex LuMonday, March 08, 2010 12:46:00 PM

    Hi JR,

    See my earlier post on Astro.

    ReplyDelete
  4. Alex LuMonday, March 08, 2010 12:54:00 PM

    Hi Layman,

    I think you can look through my past recommendations & select a few that you may meet your investment requirement. It is better that you do the selection after a bit of study because you have to internalize why you choose a stock. If you ask others to choose for you, then it is no different from buying stocks based on tips.

    ReplyDelete
  5. LaymanMonday, March 08, 2010 2:20:00 PM

    Dear Alex,

    Thanks for the guidance. I dont know what to do and where to turn to before this. I got a clearer picture now. Thanks again.

    ReplyDelete