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When Not to Chase a Stock by kensey |
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When a stock is in a strong uptrend, it's easy to fall into
the trap of picking it up when it is up a couple of points, before a dip that could provide a better buying opportunity.
Using the 13-day EMA (the green line on the price graph), you can establish a price the stock is likely to gravitate back to, and as a result, determine a more favorable time to buy in. |
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Cisco Sys Inc (CSCO)     |
CSCO has hugged the 13-day EMA tightly during its recent uptrend. Each time it breaks away from that level, the stock seems to navigate its way back. Sellers come in at each staccato burst and take profits in a fairly predictable way. Eyeball the 13-day EMA, and use that to ballpark the price. You can wait for the stock to fade back to this level, and once it does, schedule your buy order to fire off along with everyone else's. As I write this in early June, the stock has broken out and closed right at the high of the day. This is a very bullish development indeed.
The 13-day EMA is at approximately 76 dollars a share. I would buy now. There will probably be some follow through tomorrow, but given CSCO's affinity for coming back and touching the 13-day
EMA, I would seize this opportunity and place my order.
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