Tuesday, January 19, 2010

Palladium update

Firstly, I apologize to the regular readers - I wonder if anyone of you can be called regular though as the blog is just over a week old as of today :) - for posting about Palladium again!! As you know, I have posted about these two stocks regularly and I hope at least some of you benefited from one of these picks!!

The fact of the matter is PAL is up over 18% and SWC over 9% since I first recommended them last week. Ever got into a stock and it just felt right? Forget about the charts and indicators. It just feels good and you know you have a winner on your hands. It is a great feeling, and sadly I dont experience it very often :), but thats the way I have felt with these stocks in the last couple of weeks.

I wont go into all the reasons why I like Palladium and these two stocks in particular. For more on that, please refer to the earlier posts here, here, here and here.

Firstly, lets have a look at the palladium prices. The chart still remains a thing of beauty! As of right now, it stands at 465+.

As for PAL, its been almost a parabolic rise from less than 3 to around 4.80! This rise has been accompanied by a significant increase in volume as marked on the chart.

SWC had a huge run up today - a +13% day on significant increase in volume. After the big move to 12, it consolidated for a while on relatively lower volume and then finally came the big move up today.

Now, for the million dollar question - do these stocks still look good even after the huge move up?? And the answer would be a definite yes!! Like I have stated before, overbought and oversold indicators like RSI, stochastics work only in ranging markets and should be ignored for trending markets.

One of the mistakes I used to make earlier, and still sometimes do, is think that the stock is too "expensive" after a big move up. This comes from the fact that at the back of my mind, I think that since I knew of this stock from a lower price, I regret not getting in earlier and thus as a defense mechanism, my mind thinks the stock is too "expensive". But the market doesn't care at what price you could have got the stock!! All the market cares about is NOW! And how do we know what the market is thinking - by looking at the volume. Look at the bullish volume patterns in both these stocks. Such volume cant go waste!

Can there be a period of consolidation or a pull back? Certainly, especially after such huge moves up. In fact, I would welcome a pullback on lower volume or consolidation right here for the stock to form a base at these levels. In the end, how you want to play it is your call. If you are a momentum trader, jump right in or if you are a position trader, wait for a pull back.

I guess that will be it from me today. All the stocks in the watchlist yesterday closed in the green. I would love to say that that's because I am the best stock picker there is, but we all know that that's simply because the markets had a very nice move up today.

Overall, I would advise the readers to tread carefully out there. This is still a market which could swing wildly on news. Nobody got broke taking profits and remember to keep those losses, and there will certainly be losses, small.

Good Luck and Take care!

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