Sunday, March 11, 2007

Visualization

Visualization is the art of looking at a chart and understanding what is happening and what might happen next. Here is WLT -


Let's walk through it.

a. - The 4 and 8 EMA's are bunching together the stock is flat and we are looking for a breakout. There was a mini-BOB going on just before the breakout. The breakout occurs.
b. - We begin to get steepling and the 4 EMA runs away from the 21 EMA. The final white candle steeple I personally call the "cathedral of dead money".
c. - The slide begins - slowly at first and then getting larger and larger. If you've ever seen the dynamics of an avalanche - this is what it looks like - begins slowly builds to a crescendo and then peters out.
d. - BOB appears - what'd ya know - good old BOB and
e. - the 4 and 8 EMA'S are bunching together the stock is flat and we are looking for a breakout.

What happens next? Stay tuned. I like this stock I don't know why it is behaving like it is and I will buy it again on a breakout from here.

Now, given that, what stage do you think this one is in?



Of course the scenario shown for WLT doesn't have to occur in this stock, in fact it could go on to even greater glory than it already possesses - but which of these two stocks would you have greater confidence in buying today?

Visualization is the key or as my Mom used to say - "Look before you leap."

2 comments:

Bullish Jim said...

Cathedral of Dead money, perhaps? I love that term by the way.

QUALITY STOCKS UNDER 5 DOLLARS said...

Nice charts