Tuesday, November 13, 2012

Dump Empyrean Energy Shares!

In the past few weeks, you would notice that I have consistently forecasted that some stocks would go north. This time, the forecast is different (as it will sometimes be). Empyrean Energy (LSE:EME) is currently weak and it is expected to continue to do so. In this type of market, buyers would end up being worse-off, especially buy-and-hold bulls.  On the other hands, sellers would inevitably smile to their banks.


Technical Forecast

This market, which was recently bullish, is now bound to go south as explained here. The Exponential Moving Average period 21 and the Williams’ Percentage Range period 20 are used on the chart below. From July 24, 2012 to October 2012, the market was in a bullish mode. Now, the market has changed. The price is below the EMA 21 (having closed below it several days ago). The Williams’ % Range, which was formerly in a perpetual overbought condition, especially from August to September, is presently in an oversold situation. This is a vivid change in the market from a bullish mode to a bearish mode - a ‘sell’ signal. The bull would gain nothing here except negativity. The worm is killing itself; but it thinks it is killing the dog. When this piece was being written, the price was at 7.625. There are demand levels at 7.00 and 6.50 – weak levels, as they would turn out to be. There are supply levels at 8.00 and 8.50 – levels that would check any northward attempts.


Learn A Lesson From The Fig-tree

It is good that some would like to listen to falsehood, even when reality proves them wrong. The reality on the chart that represents Empyrean Energy PLC stock is this: the price is falling. What should you do in a weak market? Shouldn’t we learn a lesson from the fig-tree? Apple Inc. (NASDAQ:AAPL) reached a high of more than 705 on September 12, 2012, in what was essentially a long-term uptrend. On September 26, my technical model indicated a shorting opportunity. You can see what has happened to the price since then. See how much that has been lost in terms of points! It now trades far below the 600 price level. A bear markets is not ominous, provided that speculators respect it and trade accordingly. We thrive in the market only when we constantly follow its flow.


A cheap market may fall lower and lower, and vice versa for a dear market. For failure to respect the market trend, someone that was $100 million rich is now only $4 million rich. For failure to respect the price, someone who had $3 million now has only $0.5 Million. Trading careers have ended abruptly because traders held onto long positions in falling markets. Big institutions have collapsed because of the failure to acknowledge when to hold on and when to let go. I have seen some markets falling irrespective of good fundamentals. I have seen some markets rising in spite of bad fundamentals, and therefore I have learned to respect the price. You need to know when you should hold some stocks and when you should short them. We need to look at the reality on the chart and respect it, or else we are in trouble. Speculation has to do with plus expectation, respect for the price, correct mindset and risk control.



This article is ended with the quote below:


“If you are having issues with trading and ready to pull your hair out with frustration, perhaps you are complicating something that is actually quite simple. Maybe you are trying to turn the reality of how markets really work into a way that they don’t. Maybe you are really just looking at a duck, thinking it’s a baboon. It’s really just a duck…” - Sam Seiden



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Azeez Mustapha


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