The last thing to do when transacting stock market is to buy tracks that follow a downtrend (TB lines). Do not buy while they are getting much less when they go down if they are confined by the downward trend for you will very difficult times.
For example, the energy sector has experienced some gains and demonstrated several upward trends in 2016, but the vast majority of sector stocks have stopped rising in late 2016 to begin a clear downtrend. The titles of Vermilion (TSX VET) and Tourmaline (TSX TOU), for example, gave no valid buy signal until recently. Whenever these titles have gone through important supports (S lines), they then continued their downward trend for a while technically These securities will again become interesting if they stop their downward trend to move horizontally between a support (S) and a resistor (R), which means a neutral trend. But this does not amount to much for a buy signal. For this, the titles must begin an uptrend (TH) through the resistance of the neutral trend.
Identify the passage of a downward trend upward
Although the vast majority of the energy sector shares followed a downward trend in 2017, they have not all been this trend at the same time and do not begin their ascent at the same time. As you can see from the graphs, Trilogy began his new uptrend in early August and began a second bull cycle after mid-September 2017. Meanwhile, Vermilion reversed its trend and neutral began his first bull cycle. Note that during this period, the title of Tourmaline moved within a neutral trend reversing nothing yet.
Evolution of the short action (above) and the volume of transactions made on the action (bottom)
Paramount Resources TEC Ltd (TSE:TET)
Tourmaline Oil Corp (TSE: TOU)
Vermilion Energy Inc (TSE:VET)
Choose leaders
When a sector as a whole is in downtrend, it is expected that the downward trends eventually turn neutral trends. But some titles take the lead: they are the leaders, the first wave of bullish signals. If buyers continue to flow, other titles will start an upward cycle in the coming days and suddenly, the industry will see a new uptrend.
Self-directed investors often react too late to these situations. Typically, when the first titles take off the first or second day, investors are watching the movements without buying. During the third day, as the titles of the first wave rising for three days and that the second wave of titles go up for two days, they will buy the shares of the third wave that start an upward cycle and an uptrend this day -There, believing it will go up as much as others. In reality, they buy the laggards. If the securities of the first wave stop rising or start to go down, the shares of the second and third waves will do the same.That's why you have to buy the securities of the first wave, the leaders.
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