So many people look to the price of a given stock, but that's where it all ends. What's the price today. Did it go up or down. But that view is so vastly one-dimentional, if not dangerous. It can lead to a host of poor decisions.
To look beyond just price action, people should seek to understand who is participating in the market. Longs, shorts, traders, retail, institutional. All are participants that collectively lead to the price on any given day. I think it's always a good idea to see who, at any given time, and in multiple timeframes, is participating to make the given price what it is. Newbies of course often paint this as some battle between good-guys (longs) and bad guys (shorts). It is not the case at all. First lesson: We are here to make money: PERIOD. While I earn my living as a trader, I'll happily adjust my thinking on a dime, go long or short, and in rare cases such as Nano, take a long position with a long timeframe. For me, "investing" is that rare, and there has to be a pretty special set of circumstances (such as in the case of Nano) for that to ever actually take place.
When you seek understanding of who is participating at any given time, you put colour to the price. You learn who your friends are and who your enemies are. And from there you can see any number of games that get played on a daily basis, and see them for what they are. For example, Nano right now is under accumulation. Part of the game of this accumulation is boxing the price where possible. So you'll see large offers put up, just out of reach of the bid/ask. Just to test the theory, I spooked the ask the other day, putting up a large buy order. Within two seconds, the large sell suddenly evaporated. Of course, they don't want to sell shares. They want to box the price and get your shares. This and a 100 other games that all work well. Of course, the games can be annoying, but then again, I do admire watching the game if it's a real pro working their craft. Dirty pool you say? Nasty shorts, or all the other complaints of unfairness levied on retail? Ummm, welcome to the market, the dirtiest pigpen on the planet. Learn the games, see them for what they are, and at least have context and colour to make good decisions if necessary in the timeframe you're working in.
On July 2nd, I mentioned that anticipation buying was going to be coming in to Nano stock. (
CLICK HERE to read this post) At the time, the price of Nano was $2.98. Now, 7 trading days later, the price is $3.41. Not a bad call I would say. Is the anticipation buying over now?
Not even close. Within any rise (or fall) there is a healthy and natural pattern. In the case of Nano, a rise, think of the analogy of climbing up a mountain. Do you take pauses along the way? Of course you do. Well so do stocks. Points of consolodation are completely normal, and I would say very healthy to the overall upward move. And even within consolidation there are patterns. Sometimes the stock will retest previous resistance points to see if they hold and are in fact now support. Or other times, the stock stays high and tight to the current resistance. Volume can taper as there seems to be at least temporary balance between buyers and sellers. But then the stock truly dries at the current level, breaks resistance, and begins the next leg of the uptrend. Volume returns (often traders hooking on for a ride), and more shares are accumulated in this anticipation buying phase. Volume ramps up, and the stock moves up accordingly, then moving upward to the next resistance point to again pause and/or retest.
In the case of Nano, the current consolidation looks perfect, and is quite high and tight. To my eyes at the moment, I don't see this consolidation point lasting long at all. (Back to the analogy, just a short rest on the mountain climb before resumption of the ascent.)
Another significant component in the midst of this accumulation, is all the technical traders who will buy off the charts. Personally, I would be the next climb will be to the $3.90 area, which should show some pause as the level appears to be significant. But I think too that this pause will also be brief, as it will be the breakthrough of a key area, THIS time (finally) supported by upcoming real news via Candiac. This technical buying, on top of valid anticipation buying should collectively support a substantial move up. I'm very confident we'll be seeing Nano substantially up in to new trading areas that previously just couldn't be sustained. This time will be different.
This is a bit of a long-winded post here, but to summarize:
1) I am very confident Nano will be moving
substantially higher in the short term.
2) Current short term restiance points will prove to be brief.
3) People need to educate themselves far FAR beyond price action of a given stock. If not, you're playing an extremely dangerous game ON yourself, esentially going to a gunfight with a butter knife.
I am a technical trader. 35 years in now, and I still seek to learn. For me, technical analysis saved my bacon years ago, and ultimately gave me the tools to not only survive in the market, but thrive.
Best wishes to all in your own education. Sorry for the long post, but these things are important I think.