Watch out for the volume change!

I get caught in a few occasions that my predictation using technical indicators went haywire when there were sudden drop trading volume. On Aug 6, everything looked good on this chart. The stock price breakout from consolidation and broke the resistance of $0.13 with 63.5M shares traded. The stock price was above 20D, 50D and 200D MA, at the upper Bollinger Band, on top of the Parabolic SAR, MACD confirmed bullish convergence, RSI & Stochastic were bullish. All Standard Six indicators showed bullish convergence and looked really good to enter the position. The next day the volume dropped to 14.2M shares and end up with a bearish marubozu candle. For the subsequent days, the volume getting lower and lower and out of the sudden the stock was losing momentum. Now I have to hold on this stock as a longer term investment.

Courage Marine – is it getting bullish?

This week this counter has a very long marubozu candle and close the week at $0.235 with a volume spike of 13.9M shares traded in one day (on Aug 14). Standard Six Technical Indicators are signaling short term bullish convergence.

Week TA Summary
* Stock price above 20D, 50D and 200D MA and all three MAs are in uptrend. 20D MA crossed 50D MA.
* Stock price on the upper boundary of Bollinger Band.
* MACD crossover (blue over red) on upper half showing bullish convergence.
* Stock price on top of Parabolic SAR.
* RSI at 55%.
* Stochastic blue-red crossover in the up trend.

The chart is also having a very nice Fibonacci retracement back to $0.197 (61.8%) and should form a very strong support line. If the stock price can break the resistance of $0.25 and stay on top of $0.25 with healthy volume, it may go all the way up to $0.337 (161.8%) by Jan 2010 base on Fibonacci fan.

Stock Background
3 Years Historical High = $0.51
Current Price = $0.235

WOW! I have my own investing 10 commandments now! :)

  1. I am 100% responsible for my own decision. I have to digest those information or data for whatever tips, information, recommendation given by anyone, do my own analysis and make my own conclusion.
  2. I need to filter noises in the market. Need to differentiate facts and rumors.
  3. Be disciplined in my investment plan and investing strategy. Don’t get influenced easily by others.
  4. Learn from others and never stop learning.
  5. Don’t be hero in the market. I can never beat the market.
  6. Be firm when it is time to get out of the position and cut loses. (this is quite tough to me for the time being but I have made some good progress)
  7. Endure, endure, and endure! Wait for the right time to buy. (Now I start to understand what the trainer taught me: the toughest thing to do is to wait!)
  8. Invest what I can afford to lose.
  9. Don’t put all eggs into my basket. Diversify my portfolio but don’t over diversify.
  10. Don’t be greedy!