Wednesday, September 20th, 2006
Why you shouldn’t have been Yahoo!-ed
There was no reason to be caught in Yahoo!’s crash if you followed two simple rules.
The first is never buy a stock with a falling 200-day moving average. The second is never buy a stock with a falling 50-day moving average. These two moving averages are a good proxy for the short and long-term trend. If the trend is down you’re trying to swim against the tide.
As you can see in the charts below, both moving averages for Yahoo! were falling so it shouldn’t have been touched.
The only exception is if you’re a GARP or recovery growth investor buying beaten down stocks, but even then I think you want to at least see the 50-day moving average starting to rise.
Word Count: 120. This entry was posted on Wednesday, September 20th, 2006 at 7:10 pm and is filed under Technical analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
September 21st, 2006 at 3:50 am
Yep, two simple MA rules woulda done it!
If not them, perhaps the July weekly chart with SHS neckline break.
Or perhaps the broadening triangle pattern and bearish band action in July.
Chart at http://www.technicaltrades.net/2006/09/20/yhoo-2/
One thing’s for sure…… I wasn’t YHOO’ed yesterday!
September 21st, 2006 at 3:05 pm
[...] A recent post on the Global Growth Investor website gives two reasons why you should not have had any money in Yahoo! when the drop occurred. Once again, it has to do with investing only with the trend. The advice they give is to not invest in any stock that has a dropping 200 day moving average or a dropping 50 day moving average. Yahoo! had both. [...]