Here’s Why You Should Wait For A Clear Trend

  • July 28, 2004
  • Tsutae Kamada

Picking the exact top
and bottom is not easy. In stead of jumping into the market, wait for
a clear trend development.   

Let’s look at the daily chart of Best Buy (BBY). Yesterday the stock
formed a bullish engulfing bar and closed strongly. It appeared BBY was ready
for a minor rally. Notice the RSI indicator was signaling a positive divergence.

Because of the weak market conditions, BBY gapped down, but quickly reversed and
gave us the first buying opportunity.

11:29:23

Intraday Setup Alert

Best Buy (BBY) is forming a bear flag just below the declining 8-period
EMA on the 5-minute chart. BBY is trading at 46.47, down 0.93.

The upward momentum disappeared quickly. Look at a negative divergence. After
breaking below the 240-period EMA, the issue formed a bear flag. Don’t rush.
Wait for a clear trend.

T.Kamada