My friend Dewi who has been patiently studying how to trade shares and been thoroughly reading and re-reading my book wanting to understand everything, last week sent me a message and said “STO is now at 10.58 – it’s so very cheap now it can’t stay this low for long – must get in and buy”. I don’t know if it is the magic of Facebook but I can feel her excitement from 30 km where she lives!
I replied to her that – yes that price level is very exciting, near its 52-week lows and certainly things couldn’t be worse with the Greek and EU dramas appearing to have chilled for now. However, we need to keep monitoring as anything can happen – the US company reports were starting that week and it would likely influence the market.
Anyway, 5 bladder busting days after, STO is down to 10.33 drifting down 3 points a day or so. I thought actually today there would be a sharp rise but still it didn’t run up like the other good kids on the sharemarket which all did the fun thing and opened up sharply, however the sugar rush wore off most of them finishing half down, but still they all rose. Anyway, STO is down 4c, and Dewi is back with a question, how come I knew that it’s not yet time to buy.
Well my friends, I really don’t know. In my early days, what I would do is give a prediction of the price moves. Now certainly 10 years and 10 kilos later, I learned not to “try” and outsmart the market, but I can tell you this:
1. Observe volume of buyers and sellers – I observed that there is a low volume of buyers today, less than 200 even with lower price. One can be “contrarian” and sneak in while STO is unpopular but that is a risk one should be willing to take. At 10.58 highest close last week, the price was attractive, but anybody who went in at that point just lost about 20c.
2. Looking ahead – I’ve mentioned US companies start reporting last week – this is generally 2nd week of the 1st quarter. There were a lot of profit warnings plus most of that quarter was about the suspense-thriller of the Greece and EU situation, so, I didn’t expect much good news. However, it was said China economic reports will roll in and they could very well be basis for stimulus, so, things could go either way. I decided to wait some more, if price move up I can try and catch up with it.
But Friday – I scheduled some playtime for my kids who were on school holiday, so I decided no entry that day. The stock barely budged, everybody cautious or on school holiday it seems! Good save eh!
3. What am I waiting for — I want the STO price to either get so cheap ($9.50) that is such a good bargain to resist (like those summer clothes I can buy at winter and bring out when the sun shines) or strong up move confirming the down move is over and reversal of the price cycle is on the way. We still didnt’ get this.
The bladder busting wait continues….