Let the trend be your friend: How to buy stocks at 52 week high
PLEASE DO NOT BE SCARED about investigating a 52 week high play. Because, guess what - It is moving UP for a reason. And THERE is SUPPORT behind you.
The best thing you can ever know in stocks is "LET THE TREND BE YOUR FRIEND" it has never become more clear to me because it actually is one of the safest ways to make money. Think of it this way, THERE IS NO RESISTANCE!!!!!!!!!!! And, with a few simple Trend lines you can figure out support as well as set stop-losses.
Understand the Market - Stop Trading, and think for a second. I would first like to congratulate you for putting the Overtime into the Market (because these extra hours of DD are necessary to profit in the Wild Wild West which we trade in). Now that you have stopped trading think about WHY a stock hits a 52 week High.......Think about it. Would a Big Financial Advisor buy at a New 52 Week High if he thought it was the top? No, A stock usually hits a 52 Week High with Momentum, Reason, and Smart Investors Pushing it. I will note that some 52 week Highs are hit, and never broken. Also, Note a little trick on how to avoid head-fakes (by searching for news, earnings, and a reason for the run). 1) Ask Yourself - is there and ascending trend line??? Is it within 10% of the stock's current Price? Yes, then move on to the next one.
2) Ask Yourself - did we recently break a tested resistance line? Are we still within 5% of that SHELF? IF yes, continue......
3) Ask Yourself - DID we see BREAKOUT VOLUME?? Is today's volume above average? And, most importantly, Have you seen Large Block buys........and is today's BREAKOUT volume greater then the most recent RED volume.
WE HAVE TO BE SURE THAT BUYING Outweighs the SELLING. OTHERWISE we will be caught in a HEADFAKE, and trying to sell out of a FALLING ROCK.
4) Ask Yourself - IS the MACD above Zero? Is the fast line crossing the slow line today or tomorrow. Or has it in the past 2 days? Good, continue.
5) Finally, the Stochastic. Are we trending in a CONTROLLED manner? Is the move supported with Smooth Motion in the Stochastic lines? And is there still room in the Stochastic for more BREAKOUT?
After looking at all these different options let the trend be your friend and don't worry about playing a 52 week high stock. Remember there is a reason it is that high.
This article was written by Rob Rens of StockHidoeut.com Penny Stocks Penny stock investing site to help members when buying penny stocks. Rob Rens of StockHidoeut.com Penny Stocks Penny stock investing site to help members when buying penny stocks.
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