Quite often we heard people said “I have bought this stock based on recommendation by news or friends”. It is normal for beginner to follow the trade ideas from someone who claimed to be expert in this industry.
However, from today case study, we would like to demonstrate to you why you shouldn’t buy based on good news. Here we are using a 12-months weekly chart for Techfast Holdings by using Volume Spread Analysis to buy and sell. As you notice, there is a buy signal on January 2017 followed by the 2nd buy signal on March 2017.
On the background, there is an evidence of accumulation with Sign of Strengths (SoS) which indicated Smart Money are removing the supply. As the price goes up, we notice there are a lots SoS until Bloomberg released good news regarding TechFast. You can refer the news below:
Since the good news was released by Bloomberg, the stock price has dropped consequently for 6 weeks and we have a sell signal appeared in iVSAChart recently. Do you still want to consider to buy now?
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Disclaimer: This post is meant for information sharing. It does not served as trading ideas for buy or sell. Please do your research and practice prudent risk management as you are responsible for your own decisions