Question: Should i buy Stock Valv?
i am thinking of adding shares of this Stock. Anyone have any thoughts on it? It also seems that it fluctuates alot. Also if anyone can direct me on the best way to read a chart for stocks etc.. Not sure what bollinger band means?? on stockcharts.com it appears to have two BB.. i dont know..
Answer:
Valve Corporation operates as an entertainment software and technology company.
It offers games; Steam, a social entertainment platform that enables fans to buy, play, share, modify, and build communities around the company products, as well as titles from other independent game studios; and Source, a game engine.
The company was founded in 1996 and is based in Bellevue, Washington.
This stock is set up to day trade. Earnings sort of destroyed the momentum it recently had. Technicals show $.85 is an entry price for this stock. Careful, this market is way overbought, and a sell off could start as early as tomorrow a.m. or Wed.
It seems I am the resident chartist here so I will try to give you a hand. (Other TA people...please add your comments too)
If there was one overlay that I think is important in reading a chart it is Bollinger Bands (BB's). If you read most books on charting you will find a drive-by reference of at most one page saying something to the effect that the BB's represent volatility of a stock....but in my years of researching stocks Bollinger bands are so much more and I probably will not have enough room in this post to do justice to the subject.
The most recognized use (you can use others) have BB's as the +/- 2 standard deviations marks of the average of the last 20 units of data (eg: 20dayMA)..The secret to +/- 2 standard deviations is that in a normal distribution, 95% of the data used in this calculation lies within this envelope. Now with stocks this is not exactly true because the data (share prices) don't give a true normal distribution ( but as we used to say "good enough for the girls I go out with LOL).
Why is this important? Because if a share price rises above the upper BB or falls below the lower BB it won't stay there long before gravity draws it back to the center...ie the 20dayMA.
Here is your chart: http://stockcharts.com/h-sc/ui?s=VALV&p=…
The BB's are the two green lines and the 20dayMA is the dotted green line in the middle.
See how on Sept 29, the price fell below the lower BB...it was below the lower BB for 4 days before it moved into within the BB envelope and headed for the 20dayMA....You see it again on Nov 12 where 2 days later it was dragged back in and headed for the 20dayMA....finally you see it recently on Feb 6 where it was above the upper BB before being brutally yanked back to the 20dayMA
A SHARE PRICE IS RARELY OVER/UNDER A BB for more than 6 days...usual time is 2-4 days
The narrowed BB's are points where serious movements take place....Sept 18, Nov 9, Jan 1 and Feb 6 are examples in this chart...you don't really know the direction by the BB's themselves, you must look for clues in other aspects of the charts...however if the share price is near the upper BB when at its narrowest (feb 6) then you get a positive breakout...near the lower BB you get a negative breakout....But this is not cast in concrete this general rule can head-fake you...Nov 9...so you must look for other indicators to guide you as to the direction.
Your stock is in what is called consolidation right now....the BB's are wide apart. So it will wander around the 20dayMA until the BB's narrow again (that is about 1-2 weeks away) when they are narrow then you can decide your plan if you don't bailout earlier....Other indicators help make up your mind.
ADDING SHARES AT THIS POINT IS A GAMBLE....you don't know yet where this stock is headed. Holding the shares is more reasonable, hoping for more gain. Selling and collecting a good profit is always an option of course but that is your decision to make.....but adding right now is not recommended....the other 2 options are 50/50 right now.
The bottom Chart is an indicator that shows the distance between the upper and lower BB. See how the chart seems to come to the same spot before a breakout occurs (Nov 9 and Feb 2)...this is how I guess when the next major movement will come.
This chart has special meaning to me....it helps predict the direction of a break-out
BBwidth, Slow Sto, MACD all rising at once (Feb6)...positive breakout
BBwidth rising, slow Sto and MACD falling all at once (Nov9)...negative breakout
BBwidth peaking and falling back...MACD bottoming out and rising...Slow Sto rising (Oct 9) found a bottom
BBwidth peaking and falling back...MACD peaking and falling back...Slow Sto Falling (Feb 9) the end of a current run
Hope this bit helps...I think I have run out of area to make this post....You will not find these observations in any book....they are the result of my research and as such must be taken with a grain of salt....hahaha