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Tuesday, April 22, 2014

Plexus Holdings: A Very Difficult Market

Plexus stock (LSE:POS) is a difficult and choppy market as shown in the chart. The price is jumpy with no protracted directional move.

However, what would be the next directional move when momentum returns to the market? The ADX period 14 shows that the market is in an equilibrium mode; but the fact that the DM- is above the DM+ means the bearish determination is strong enough to be noticed.  On the MACD (default parameters), the histogram is below the zero line. The signal lines are also sloping downwards and when they succeed in crossing the zero line to the downside, they can only show one thing. The price may drop further.

We are not really interested in the fundamental noise that is behind the price action, we are interested in the effect it has on our portfolio. Now instead of worrying about the hit rate, we would want to use a sound position sizing technique to achieve our objective – that is to survive the current phase and make gains when there is a breakout. 

Conclusion: Plexus price is very choppy, but the it may drop further when a breakout does occur.  The current volatile and trendless phase in the market is giving the bear enough time to gain an upper hand over the bull. One whose teeth were sharpened by us now bites us with the same teeth.

This forecast is ended with the quote below:

“No one in his right mind would start out any position with 180 per cent of his/her total capital.” – Dirk Vandycke

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Eye-opening trading lessons: Lessons from Expert Traders



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