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Amiras Gandhi asked 6 years ago
Hi, When I look at such stocks that are extended over moving avgs on daily, weekly, and monthly, I always hesitate to buy. Can you explain me why I should not be hesitant? I’m sure it happened to you as a beginner. Rgds, Amiras
1 Answers
Pat Walker Staff answered 6 years ago

Good question!
I will look at price in relation to moving averages. But more importantly, I also look at charts in the context of the price pattern. MU is extended above the 50 day. But it's also forming a very nice consolidation pattern from which to launch. A good trading rule is to buy LESS on shorter price patterns or patterns that price is a distance away from the 50 day. Why? Shorter patterns and extended patterns over 50 can have  a higher failure rate. But as you can see, they do work very well.
I hope this helps. Please keep asking questions.
Sincerely,
Pat

Amiras Gandhi replied 6 years ago

Thank you.

Amiras Gandhi replied 6 years ago

RACE also has nice consolidation pattern from which to launch right but it has earnings soon. So you would still buy right? May be small.

Amiras Gandhi replied 6 years ago

Also it’s highly likely that stock price is priced in into the future earnings. AEIS is today’s example. Nothing wrong with earnings but sold off. It happened to it last time too. so it can happen to RACE too right? Usually great earning makes a stock spike when it’s under pullback. What are your thoughts on that?