AAPL with SMA 120

AAPL tested the 120 days moving average(SMA 120) for several time and SMA120 is acting as resistance at this time.

Looking at few days back, we see that AAPL formed a doji bar just right at the SMA 120, which mean uncertainty and it did retreat back.

Moving average is frequently used showing the average value of a stock's price over a period. Moving averages are generally used to measure identify direction of the stock and define the possible support and resistance area.

This is a good example of how SMA works. SMA 120 so far work well in AAPL, once AAPL touch SMA120 ,it tendency to go back up is high (as a support) or retreat back (as resistance).

We could define that AAPL is still in bearish market as long as it is below this SMA.

Generally, investor look at SMA 20, SMA50, SMA 200(Most professional use these). but, investor could choose to adjust the time frame for particular security since every security act differently.

SMA is just an indicator, it should only act as reference when comes to decision making.
At this case, AAPL, we look for uncertainty which reflect from candle stick to conform SMA as a valid support and resistance area.

April 15 revarsal

These stocks are stock that are in their uncertainty stage.
Which means, it might break through its resistance/ support level and advance after getting more fuel.

or the bull/bear might be exhausted and this is a turning point.

yes, i am looking at turning point.

How could you tap in into these stocks?

If its break through yesterday's high, it is tendency to go up further but easily exhausted if not support by volume.

If its break through yesterday's low, it is tendency to go down further.

I am particular look at candidates that go south.(just my preference)

Remember, nothing is guarantee, market is acting randomly. We can only do our best to dive along with the market. exit plan should always in place after an entry.

-Do not let ego drive you nuts--

The Secret?

There is no secret in trading.

A professional trader is who know how to manage risk. That's it.

A business man could be the tycoon in his field, but when comes to investing in stock market. Different outcomes might occur. When he is in his field he would look at every aspect of the investment in and out. but when its comes to sock investment. He might just pick it from news or rumors and result are usually disappointing.

WHY?

It is easy. If this tycoon could have really examine the underlying company as the same manner he would buy it for his business. He might as well benefited from his practice. But it is always easier said than done. People tend to go off when comes to investing in stock market.
They listen at news, tips, rumors... but do not do any research.

What kind of research you need to do?
Fundamental analysis- tell you why this stock acts the way it is now. (why?)
Technical analysis- help you to decide enter and exit point. (when? timing)

If you can tell why you invest in a particular stock and show a plan to enter and exit the market.
You are better off than just listen at tips.

-Treat investment(trading) as a business-

What is this about?

To my dear friends,

Some of you might ask what is this blog is about?

It is about Stock trading, and what is a trader looks like when they are trading(at least this reflect my habit).

I will share with you how and why i choose these stocks to trade over time and if i found interesting case, i would also post it here.

I will also post some long term play if i find something attractive, like GE after bad news hit.

In fact, there is no secret in trading(or invest), it is a system. Stick with it and do it.

First quarter earnings is coming...

This week could be consider the beginning of the first quarter earnings release.
Especially many big banks will release their earnings in this week which is over shadow the broader market.
Should it be more write-off coming up?
How investors decipher it is highly driving the market direction.
I am not sure what will happen in the future.
However, one thing that i am sure is that no matter how, it is just a day.
There is no good day or bad day for professional traders. It is just a day.

GE- Would it be a bargain now?

GE gap down by 4.70(about 12%) after reported First quarter earnings below expectations and issued disappointing outlook for 2008.

Despite all these disappointing outlook, GE is a well known established company. current price fall to 32.00. The next strong support level would be 31.00.

Would it be a good bargain for a long term investor?
Should the price fall below 31.00, we could just put a stop order at 30.80 to protect our capital.
Or just apply a covered call strategy in this case (if the stock price trading between 31-33 for 1 year, it would have generate at least 30% return for a year. Not bad for a passive investment.)

This could be a decent long term play since big player might go in to grab the company share at the bottom.
We might see this stock at the congestion period for a while before it pick up in price and volume.
If institutional players are accumulating GE shares. Should them?

But, i am not rule out that big players might test out the 31.00 support for a while before they really accumulating GE shares. So, should we pay a bit patience in this play?