UK Stocks and ETFs - Watchlist and Discussion - Page

#11

RE: UK Stocks - Watchlist and Discussion

(2014-01-07, 08:37 PM)MalcolmSm1th Wrote: Below is First Group (FGP.L).

This is one which I believe is leaving a shortish Stage 1 and could be entering a Stage 2.

There are some caveats here as this thing has has false dawns before, but that are what stop losses are for. I has, I believe been in Stage 1 since about May this year after it landed with yet another thump down a long and horrible Stage 4 run which has three downward gaps on this part of the chart alone.

The thing has been trading in the 100-120 range for about nine months and I do think that this may be an early Stage 2 breakout but, of course, history has shown that breakouts in FirstGroup tend to be rewarded with a thunderbolt from on high blasting the stock to even lower depths.

This is, I believe, a potential place to get in and, if so, keep the stops at around 110 or so.

- Malc

Hi Malc, that's a good initial Stage Analysis of FGP.L. However, there a few points that you need to consider that could affect it's Stage 2A breakout. Here's the checklist for an investor position from the first post:
  1. Price Action - price above a flattening or rising 30 week moving average
  2. Relative Performance - strengthening and above the Mansfield Zero Line (Relative Performance 52 week MA)
  3. Volume - ideally two times the the four week average or greater on the Stage 2A breakout week
  4. Support / Resistance - little or no heavy near term resistance.
So, the best thing imo is to go through these points with each stock and make sure it has at least 3 of the 4, but ideally 4 out 4 of these requirements. As that will stop the vast majority of false breakouts and breakouts that are too early and will need many months or longer to move into their advancing phase. So lets look at FGP.L, firstly price is above rising 30 week moving average, but volume on the breakout was less than average, and relative performance although improving, is still below a declining zero line. Finally, I've overlaid the Ichimoku cloud on the weekly chart to give a visual guide of potential resistance, of which you can see it's below a quite heavy near term cloud, which is the overhang from the 2012 range. And so it only scores one out of four of the requirements for an A+ candidate and hence needs more time to develop imo, which doesn't mean it won't go higher, but just that it has a number of headwinds and so you need to consider the opportunity cost of buying it.

So I'd recommend from my experience with the method that you should always check against the four main requirements, as it will help you avoid the majority of false breakouts and stocks that need more time to base.



Attached Files Thumbnail(s)
   
isatrader

Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
Reply


Messages In This Thread
RE: UK Stocks - Watchlist and Discussion - by isatrader - 2014-01-07, 10:01 PM
FTSE AIM All Share index - AXX - by isatrader - 2014-01-08, 02:46 AM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-28, 10:33 AM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-28, 07:50 PM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-29, 02:53 AM
Sharehunter.com February Article - by isatrader - 2014-02-08, 10:11 AM
UK FTSE 350 Mining Sector - by isatrader - 2014-07-28, 11:13 AM
UK FTSE 350 Sectors - by isatrader - 2014-08-10, 08:44 PM
UK FTSE 350 Sectors - by isatrader - 2015-01-05, 12:07 AM
UK Advance Decline Line chart - by isatrader - 2016-01-31, 11:34 AM
FRES.L - Stage 1B breakout - by isatrader - 2016-02-04, 07:16 PM
UK Advance Decline Line chart - by isatrader - 2016-02-27, 12:57 AM
PFC.L - Stage 1 - by isatrader - 2016-03-03, 02:01 PM
POLY.L - Stage 2A - by isatrader - 2016-03-05, 09:59 AM
UK Advance Decline Line chart - by isatrader - 2016-03-05, 11:25 PM
UK Advance Decline Line chart - by isatrader - 2016-05-08, 09:55 AM
FRES.L - by isatrader - 2016-04-11, 03:55 PM
Copper stocks - by isatrader - 2017-01-08, 01:13 AM
Cyber Security - by isatrader - 2017-01-14, 11:32 AM
UK AIM Stocks - by isatrader - 2020-01-04, 01:35 PM
UK Stocks - by isatrader - 2020-01-07, 12:40 AM
RE: UK Stocks - by isatrader - 2020-01-08, 01:48 AM
RE: UK Stocks - by isatrader - 2020-01-09, 08:51 PM
RE: UK Stocks - by isatrader - 2020-01-14, 01:00 AM
RE: UK Stocks - by isatrader - 2020-01-14, 11:33 PM
Sector Focus: UK Homebuilders - by isatrader - 2019-12-26, 03:02 PM
RE: Sector Focus: UK Homebuilders - by pcabc - 2019-12-28, 08:39 PM
Re: Sector Focus: UK Homebuilders - by isatrader - 2019-12-29, 10:48 PM
FTSE AIM All Share index - AXX - by isatrader - 2014-01-08, 02:46 AM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-28, 10:33 AM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-28, 07:50 PM
RE: UK Stocks - Watchlist and Discussion - by Tom - 2014-01-29, 02:53 AM
Sharehunter.com February Article - by isatrader - 2014-02-08, 10:11 AM
OT: a bit - European cement - by pcabc - 2014-04-06, 08:54 PM

Forum Jump:


Users browsing this thread: 6 Guest(s)