Monday, March 14, 2011

Shorting speculative stocks and 1 month Graph

1. An interesting observation. To understand when the speculative buying end and when the selling starts, the 1 month graph with 30 day moving average is a good indicator. In case of ROYL which moved up from 3 dollars to 8, by speculative buying, the moving average on 1 month graph was always above the 30 day moving average. This can show that it is not the time to short the stock.

2. A plateau or stage 3 is also formed just like any other stocks in rally which form a plateau before moving down to stage 4. In case of speculative stocks the time frame is shorter. Hence the 1 month graph gives an excellent understanding of when the selling starts. When the stock goes down the 30 day moving average on the 1 month graph one can expect the selling to begin. Shorting at time or maybe wait for 1 or 2 days to confirm the
selling, and then shorting is also a good idea.

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