| trend | sto | sto zone | pps | psar | macd | macd trend | ma20 | ma200 | |
|---|---|---|---|---|---|---|---|---|---|
| CMP $175.34 |
In an analysis posted Tuesday, I wrote: "[A] more patient strategy would be to wait for a pullback before opening the position."
Patience is surely a virtue, but what really are the chances of a pullback to the 20-day moving average on this stock?
The chart shows that CMG has in fact pulled back to the 20-day moving average seven times in the past six months, including one rather nasty correction that took it to 9.2% below the moving average.
The time between pullbacks have ranged from seven trading days to 15 trading days. This suggests that patience will reap a quick reward.
Human traders (as opposed to the cyborgs locked in the back rooms of some hedge funds) have Newton's First Law of Motion built in to their brains: A stock price in motion will tend to remain in motion unless acted upon by an outside force. And traders add to that a corollary, A rising stock will rise forever and we'll all get rich.
Of course, we who look closely at the charts know that world doesn't work that way.
CMG is in the third day of a bounce off of the moving average. I would expect a pullback sometime in the second week of October.
No guarantees. We shall see if past is indeed prologue.
Disclaimer
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
Abbreviations:
- pps - Person's Proprietary Signal.
- psar - Parabolic Stop and Reverse
- ma20 - 20-day moving average
- ma200 - 200-day moving average
- macd - Moving Average Convergence-Divergence
- sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
- trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways.
- sto: green for bull, red for bear.
- sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
- psar, pps, macd: green for bull mode, red for bear.
- macd trend: green for rising, yellow for sideways, red for falling. neutral.
- ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.
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