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
NB: You would be exposed to
world-class, cutting-edge, and top-notch trading experiences here: www.advfn.com
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Copyright (C) ADVFN PLC
For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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