A time for Caution with this blue sky stock
Quote:
Originally Posted by
SparkyTheClown
A nice write up about the retirement sector this morning. Seems all positive for Ryman, Summerset and Metlife.
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Not all positive for Ryman atm....There are technical signs of a possible bull market correction in progress.
From the past ...RYM has suffered very slight corrections (less than 10%) and no advantage to be gained from exiting and re-entering...
However...remember the phrase "no trend last forever"...so attention should focus on that EMA50 around the 4.40 - 4.50 area.. if RYM past behaviour continues the share price should bottom out here...if not then your caution warning bells should start ringing.
The Caution bell starts ringing when ???
Exponential price rises are usually viewed as unsustainable and are only OK if the company can match it with exponential growth...when price outstrips growth within a bull market phase look out for extended breathers when the share price stalls and waits for the fundamentals to catch up.
This behaviour is common with Blue Sky Stocks. I briefly covered this topic on post 827 2nd October 2012 when I wrote about darling stocks reaching the point of being irrational. I used Mainfreight as an example with its share price stalling for 16 months after it broke above its trend channel
Usually a bull market correction is a good time to accumulate (average up strategy)...but its wise to wait for buy signals to confirm it was a correction.....so to avoid buying in at the top / market cycle change, or waiting a long time during its breather (could be many many months) and occur a portfolio opportunity loss..
The second chart is an up date to my previous chart ...showing the longer term share price history....its break above the trend channel and its look of exponential unsustainable? rise
http://i458.photobucket.com/albums/q...pscbf0c32e.png
http://i458.photobucket.com/albums/q...psa2ffb983.png