Asian stock markets were mixed and muted Wednesday, opening higher as oil issues drove higher on strong crude prices, and as property stocks built on profit expectations. But markets turned cautious in afternoon trading in front of the pending US Federal Reserve Board rate announcement. Hong Kong and Shanghai finished in the red, Tokyo was closed on holiday, and other regional exchanges were uneven.
The Hong Kong Hang Seng Index fell 135.41, or 0.43%, to 31,414.52, as losing issues outnumbered gainers 25 to 23.
Leading the upside were China Resources Land (1109:HK), up 5.3%, followed by China Overseas Land (688:HK), up 4.3%, and then PetroChina (857:HK), up 2.4%.
Watching the signals for AB&T Financial Corp (ABTO), we have noted that the Chaikin Oscillator is below zero. Traders may be watching for possible bearish momentum on the stock.
Investors often have to decide how aggressive they are going to be in the stock market. Having the mindset of getting rich quick may result in the rapid loss of capital. Of course, there are those who have possibly had luck on their side, but jumping in head first without a plan can be a recipe for disaster. It may be tempting to take a leap with a risky stock. However, high returns in the equity market may come with extensive risk and volatility. Managing that risk in turbulent markets may help keep the average investor above water when things swing the wrong way. Investors may want to assess if they are trading too much or trading the wrong types of stocks. Doing all the research may involve keeping a close tab on technicals, fundamentals, relevant economic data, and earnings reports. Investors may have to find a way to keep the rational side from being consumed by irrational behavior when analyzing the markets.
The Average Directional Index or ADX is technical analysis indicator used to discern if a market is trending or not trending. The ADX alone measures trend strength but not direction. Using the ADX with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) may help determine the direction of the trend as well as the overall momentum. Many traders will use the ADX alongside other indicators in order to help spot proper trading entry/exit points. Currently, the 14-day ADX for AB&T Financial Corp (ABTO) is 13.93. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would signal a very strong trend, and a value of 75-100 would indicate an extremely strong trend.
When applying indicators for technical analysis, traders and investors might want to look at the ATR or Average True Range. The current 14-day ATR for AB&T Financial Corp (ABTO) is currently sitting at 0.0415. The ATR basically measures the volatility of a stock on a day-to-day basis. The average true range is typically based on 14 periods and may be calculated daily, weekly, monthly, or intraday. The ATR is not considered a directional indicator, but it may reflect the strength of a particular move.
When performing stock analysis, investors and traders may opt to view technical levels. AB&T Financial Corp (ABTO) presently has a 14-day Commodity Channel Index (CCI) of -161.01. Investors and traders may use this indicator to help spot price reversals, price extremes, and the strength of a trend. Many investors will use the CCI in conjunction with other indicators when evaluating a trade. The CCI may be used to spot if a stock is entering overbought (+100) and oversold (-100) territory.
Shares of AB&T Financial Corp (ABTO) have a 200-day moving average of 0.6032. The 50-day is 0.4442, and the 7-day is sitting at 0.3686. Using a bigger time frame to assess the moving average such as the 200-day, may help block out the noise and chaos that is often caused by daily price fluctuations. In some cases, MA’s may be used as strong reference points for spotting support and resistance levels.
Checking in on some other technical levels, the 14-day RSI is currently at 38.27, the 7-day stands at 32.08, and the 3-day is sitting at 17.39. Many investors look to the Relative Strength Index (RSI) reading of a particular stock to help identify overbought/oversold conditions. The RSI was developed by J. Welles Wilder in the late 1970’s. Wilder laid out the foundation for future technical analysts to further investigate the RSI and its relationship to underlying price movements. Since its inception, RSI has remained very popular with traders and investors. Other technical analysts have built upon the work of Wilder. The 14-day RSI is still a widely popular choice among technical stock analysts.
Trying to project the day to day short-term movements of the stock market may be all but impossible. Stocks have the tendency to make sudden moves on even the slightest bit of news or for apparently no reason at all. The daily trader may be looking to capitalize on swings or momentum, but the long-term investor may be searching for stability and consistency over a sustained period of time. During trading sessions, stock movements can seem like a popularity contest from time to time. Even after careful study, there may be no logical reason for a particular stock move. Riding out the waves of uncertainty may not be easy, but having a full-proof plan for when markets erode may just be the savior. Having the patience to wait out abnormal moves may help evade the mistake of letting go too soon out of panic.