Beware Of Relying on Stock Technicals Alone

Good morning all,

Today I wanted to write a little about the dangers of relying on the technical aspects of stocks alone. 

While technical analysis is a wonderful tool in determining the strength of a stock, it is not the end all to cure all in finding stocks to invest in. 

Technical evaluations can have many hidden traps that pump and dump promoters place in there in an attempt to "dress" up whichever stock they are going to promote. Looking at price increases or decreases very rarely very accurate. Just because a stock finished the day at plus or minus a certain percentage doesnt mean it actually moved very well at all. To be clearer I have to actually look at the individual trades themselves and see the amounts that were bought or sold. Have you ever seen a big jump in a  penny or sub penny stock and then looked and saw that it was a 50 share buy? That all to often is a promoters attempt to lure you into a stock on price alone. They manipulate the price with little buys thinking you wont notice that it was a crapola buy because they totally think you are stupid. A 100% gain on a stock is not really a gain if it only had 1,000 shares in volume.  I say dig DEEPER. 

Pay attention to the time and sales as promoters will manipulate the stock at 4 common times. The first is at the close the day before a promotion begins. They will often try to manipulate the stock down so as to get what they dress up and call a "bounce" first thing in the morning. The second is first thing in the morning in order to try to get the stock to move so they can proclaim its gaining momentum therefore luring you into their trap while at the same time making themselves look good. Third is once the stock stalls and we should all know by now that stocks stall. They will put in little buys in order to try to attract attention to the stock  through percentage gains again creating another trap. The Fourth and in my book the most pathetic is the end of the day manipulation to save face because the promotion bombed. They will try to get an end of day percentage gain so that they can tout their followers with a look at what our "call" did today, It gained blah blah blah percentage. 

Technicals can totally help you avoid these situations if you dig deeper underneath the dressed up surface, and also check to see if a particular stock has been promoted recently and what the outcome of that promotion was.  

Until tomorrow, 

Ride Hard or Stay Home