25 May 2019
Source: Focus Malaysia
INVESTORS buy and sell shares based on a variety of factors such as their evaluation of a company' s fundamentals, its future plans, the strength of its competitors, and so on.
Some also look at mathematical indicators to help them make their decisions. These are based on a technical analysis of a share's trading pattern on the stock exchange.
Two indicators traders often look at are the trading trend and the trading momentum of a company's share.
A trend identifies the direction the share price of a stock is moving, ie , whether it is going up or down.
The trading momentum of a share , on the other hand , refers to the rate at which its trend is moving . In other words , how fast over a period of time.
Successful traders often look at the trading trend and trading momentum of a share before deciding to buy or sell . The objective, of course, is to buy at a low price and sell at a higher price, profiting from the difference.
Using trend and momentum data, technical analysts have developed charts that predict a share's price behaviour in the future based on past movements . These charts usually also identify an indicative price, which is a price level that should normally prompt a trader to consider buying.
Chart 1: Momentum stocks with rising bias ahead
Chart 2: Momentum stocks with falling bias ahead
Chart 3: Daily Trend and Momentum outlook for top 20 volume stocks for next week
WHAT the charts tell you
We illustrate above THREE Charts of how trend and momentum can be used to make buy and sell decisions:
Chart 1: This is a listing (in alphabetical order) of the top stocks with a rising price bias based on trading data on May 21,2019.
Chart 2: This is a similar listing of top picks whose trend and momentum data demonstrate a falling bias.
Chart 3: A similar trend and momentum data analysis is applied to the 20 highest volume trading stocks (on May 21,2019), and the indicator calls suggest how these stocks are going to perform in the coming week.
WHAT you can do
Trader's Corner is compiled by Focus Malaysia in collaboration with BB Consulting Sdn Bhd. It illustrates how trend and momentum analysis can be used to make investment decisions. The mathematical model used here identifies trading opportunities that have a high probability of occurring. But none of the information provided here constitutes a recommendation to buy or sell stocks. Make your own judgements when trading in shares.