Friday, March 21, 2014
IKN's question for shartists: would you buy this shart?
IKN wants to know if you would buy this shart:
UPDATE: A real TA would say "double top" and "lower low" as reasons to not own the chart. I don't care about either of those things, I just see something that goes down 90% of the time.
This looks like an exploreco in the bullshit 2010 market.
It spikes on something similar to "news", then spends the next several weeks dwindling til more news comes out to pop it up again. That means the people buying on news are paying way too much, and its liquidity flows slowly enough that it takes weeks to dwindle back down to a fair price.
And it's not at a fair price right now because it's still going down.
In fact, it looks like 90% of the time this chart is trending down; so there's no reason to buy it unless you have inside info that it's about to pop again. Because if you buy a shart like this thinking "oh it'll pop on the next news", and you don't know when the next news is, you'll see your investment continue to dwindle as the slow flow of sellers continues to drive this down.
And there is a constant slow flow of sellers, not buyers, because the chart is constantly trending down, and that means whatever this thing is supposed to be right now it's still considered overpriced by the majority of the market.
Maybe the next news convinces the market that it's undervalued and it pops. But if you don't know that the next news will prove that it's undervalued, and you don't know when the pop is coming (and the market definitely doesn't think there's one coming soon because the downtrend of the last 30 days is intact), then there's no point in buying this.
Here's an article that illustrates what you're doing if you buy this:
BI - gamblers betting on horse races waste too much money on the longshot.