WDT Chart - another Object Lesson.
There is a lot to be learnt from a chart like this. More than anything else, I hope that the nameless WDT enthusiast quoted here has learnt :-
(1) The folly of buying (or holding) downtrending stocks.
(2) Why Stops are needed to limit your losses when you get it wrong.
(3) What the Market thinks of a stock is more important than what you think.
(4) Ignoring obvious technical Sell signals is risky behaviour.
(5) Adding to a losing position is unwise.
(6) Averaging-down can be a recipe for disaster.
We can but hope that the poor sod didn't keep to his plan. If he did, his funds will have been decimated.
http://i602.photobucket.com/albums/t...PB/WDT1130.gif
Directional Movement Indicator. This is a conservative trend indicator - even more so in this example because of the 100 day period used (the default is 14). This triggered a clear SELL signal on the very day that the unfortunate poster quoted here was pledging his undying support for WDT. Prior to this, sell signals had been triggered by a trendline break and a falling OBV with another trendline break. WDT was already in a confirmed downtrend when our man made his longterm commitment to this stock.
On Balance Volume. Note the obvious "step" down as a large investor quit WDT. Conventional wisdom has it that "Big Money" is also "Smart Money" and their moves often lead the market. I guess this big dude doesn't qualify as smart - his bailout should have been over 2 years earlier. Better late than never, though eh? (WDT is down to 3 cents this morning).
Note the trendline-break "buy" signal that was triggered after a couple of years. See how there was not a hint of any volume support for this signal (flat/falling OBV). To act on any single signal is unwise. The end of a downtrend does not necessarily mean the beginning of a worthwhile Uptrend.