Investment “Brinkmanship”

How many novice traders and investors dream of resigning their humdrum and stressful working careers to work at home making an income on the stock-market?

Even if they are knowledgeable, and have had many successful trades, most will not be able to generate sufficient income to meet the rising cost of living for themselves and their family, and to meet any other financial obligations.

Yet this is the prospect retirees face when their working days are ended. They however have one big advantage over would be professional private traders. They have the capital they have saved in their working days, but even then, few can manage without dipping into their capital.

Is it any wonder then that so many retail investors feel that they they must hang onto their investments until the last moment for every dollar of profit possible, before flogging it off for as much as they can get when its value is spent. This system of brinkmanship risks erosion of capital from the inevitable slippage of price when the bears lumber in to the market. It risks being stopped out at lower than expected prices.

It is an old adage but one investors should remember. Always leave something on the table for the next person. This may entail selling when the buying momentum is stalling, and the stock transitioning into a trading range. It may mean selling in response to technical signals which others do not find convincing. It may mean simply taking profit after the upwards re-rating of a stock. It makes sense to harvest at least some profit when it is there for the taking.

This is a long preamble for posting the current chart of the banking icon Commonwealth Bank. Undoubtedly CBA will go onto forge higher prices in the years to come, but with the chart forming what  looks at present like a head and shoulder pattern, some investors  are likely to sell in expectation that the price could dip to support at about $79 first.

A critical technical feature to look for is whether the upturn of the last two days will continue to exceed the last high of the presumed right shoulder at $85.

CBA Mar 2017



Categories: Chart Analyses, Technical Analysis

Tags:

1 reply

Trackbacks

  1. It’s the prerogative of markets to change their mind. – Technically Speaking

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: