July 27th, 2008
The following chart referring to Lehman Brothers Holding. In my previous article, I did mention that LEH is at “Overbought” territory and the %K is going to move across %D. True enough that the next day %K move across %D and the price dropped. Surprising the day after the price went up by $1.88 and %D went across %K and this happens unexpectedly. This means that although the share is at the “Overbought” territory and the %K is going to move across %D, but it is still too early to tell that the share price is going to fall the next day. In the market mix signals always happen. Therefore filtering and identifying these signals is important.
14 Jul 2008 - $12.40
23 Jul 2008 - $21.10
A total gain of 70.16%, from $12.40 to $21.10.
70.16% is just the best case scenario when people is able to buy at the lowest and sell at the highest. For your information, best case scenario rarely happens. This is just a short term rebound. To make the 70% is not easy as you needs to enter and exit the market fairly quickly. The first and most important things is to identify the company that you are interested in and have a background check on the company. This is define as “Fundamental Analysis“. Dividend Yield, PE Ratio and Book Value are the few things that you would needs to find out. If you are thinking of holding these share for long term, what is the ideal price that you are looking at. Find out what are the difference from the ideal price that you have in mind compare with the current market value. I would like to emphasis that there is always a major risk in entering the market for short term. As a precaution, although you are playing for short term, but buy something that you wouldnt mind holding for long term in case if you are not able to exit the market on time. With the similar example, will you make love with a woman whom you do not want to marry without a condom ? If you dont mind marrying the woman, of course you can afford to take the risk to make love without condom then. This applies to buying shares as well. If you wouldnt mind holding the stock that you have in mind for long term, of course you can afford to take the risk of buying it in the event if you are not able to sell it on time. Next you will need to identify the support level for the overall market. Usually the major point level like 11000, 10500, 10000 are the support level. Usually it takes a while to break the support level. So usually when it touches the support level, there will be a rebound that happens after that before a drop that breaks the support level. The rebound will be a golden opportunity for people to make some cash out of it.
PS : My interest is in the market. But I do not play nor invest in it. =)
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Tags: Fundamental Analysis, LEH
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