Catch The Breakout in Stage 2 for in Investments

Catch the breakout in Stage 2 for investments.

Stage one : is neglect phase or the consolidation stage. Smart investors do investment in this stage. Avoid the investment in stage one no matter how tempting. One should think of not buying the stock at lowest or cheapest price but at the right price just as the stock is ready to move significantly higher trying to pick up bottom is unnecessary and waste of time Stage two is the advanced stage were investor can think of investment.

Stage two : is dominated by significant volume most of the stocks in this stage are above long term moving averages. From a fundamental prospective, the company has an advantage both; the external environment and the management is competent. Mark the volume and the long term moving averages in the stage. The consolidation in this stage is for a shorter duration and the breakouts after this consolidation.

Stage three : is the topping or distribution phase this is the phase where you should get rid of your Investments. In this phase the fundamentals of the company are impaired. There will be profits but not rising as in stage two, because of the external factors or the management has lost the grip. The inventories of the finished goods may be rising or their maybe a decline in the demand for the product and increase in volatility it is time to book profit in this stage

Stage four : is the declining phase where the momentum is lost and the stock is in a negative territory from an investment prospective. The stock may even go below its long term moving averages.

The author can be reached at https://dhandasikho.online/

CA Rohit Tendulkar