Yesterday I posted a reminder to always know when stocks are posting earnings. Today I want to expand on a great post via Mark from FundMyMutualFund who really hit home on why technical analysis can be effectively used to help gauge a stock's future activity.
After Akami Technologies (AKAM) reported earnings that dissapointed yesterday I watched the stock open to a hefty 15% gap to the downside and trade insanely high volume as numerous institutions bailed on their shares. This disappointment though was forewarned by the lack of momentum taking place over the last several months on the stock chart.
Overall, the "smart money" knew something was up.
Looking at the AKAM chart you can't help but notice how it had been topping out over the last five months+ and was underperforming the overall market (which has been consistently trending skywards). Check out the charts below for some key technical anaylsis.
Overall, by simply observing odd price behavior and sticking to a disciplined set or rules, stocks like AKAM can be sold well before any real breakdown and ignored as potential buy candidates. Technical analysis can serve a purpose and make a difference when trading stocks!
Stay frosty out there . More stock chart examples and lessons below.
- Example 22: How to Spot Bull Flags that Return Huge Profits
- Example 21: Akami (AKAM) <–- Currently Viewing
- Example 20: 6 Lessons / Reminders From My 23% Profit in EZCH
- Example 19: 6 Reasons Why Deckers Shoes Recent Breakout is Huge
- Example 18: A Closer Look at Chipotle’s (CMG) 150%+ Run this Year
- Example 17: Dryships Stock Offers 5 Valuable Lessons For All Investors