VICOM (V01.SI) ABC Pattern Analysis on VICOM - Alert! This is an example of an extraordinary stock performance. From 2009 to 2014 (about 5 years) it achieved almost more than 300%. Or it is 700% if one bought at $1 (between 2004 - 2006). However, is it a good time to buy this stock now? Think twice, even three times. I just got to see the chart when a friend shared with me about this company. He painted a reason something like: Resilient cash-flow, recession proof over a crisis (e.g. Global Financial Crisis) and economic moat (no competitor for auto inspection business) I dont deny these facts. However, I recalled in late 2007 when a number of Unit Trust showing-off their performance for the past 5 years mentioning about their growth year-after year. Yes, its good performance, however, they are selling at the high end of a market cycle, whoever bought at the time (including myself) suffered a BIG lost afterward. My point is that (as their own disclaimers) past performance does not necessarily reflect the future. So, when I was offered this company to buy, I do my homework first seeing where it is, in terms of the share price. I use ABC Pattern Analysis. To my surprise... See the yellow C Wave, it has surpassed the C.max formula. I put C.max2 formula with 3 multiplier. The price even surpassed this level. Watch out for the price now to move sideways. My best guess now is that more and more people will take profit at this level. Its simple logic. Say I have bought at 6000 shares at $1, my capital is $6k (to simpilfy calculation I ignore the commission charges). I sold 5000 shares at $6 per share, I got $30k cash at hand (capital $6k+ $24k profit). I retain the remaining 1000 shares which is free for me. Of course the number of shares sold depend on individuals... However, for investor who like to turn their money around, they can look into another opportunity to grow the $30k anywhere else. So, without knowing the big picture of a stock price level, one may unknowingly just follow whatever people or even friend says... And one can be trap for a long-term investment (with a paper loss) Notes: Of course you may argue something like this: I cannot trust this formula or analysis or I dont believe with this formula or analysis. You see, it still surpassed you C.max and even C.max2 I leave it to you whether you want to believe or not, to trust or not. ABC Pattern Analysis is just my tools to gauge a stock price performance, and what is the upside, compared to the downside. There are a lot more opportunity out there. Lastly, DYODD.
Posted on: Mon, 12 Jan 2015 01:10:25 +0000
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