More specifically, what technical indicators would you use to identify when a blue chip stock( or any large cap stock) has an overextended price based on a five day period?
2007-06-25 03:51:52 · 3 answers · asked by FeenixTrader 2 in Business & Finance ➔ Investing
Compare the price/earnings ratio to other stocks in the same industry.
2007-06-25 04:02:34 · answer #1 · answered by hottotrot1_usa 7 · 0⤊ 0⤋
Check the MACD reading, it provides a great comparison of current momentum compared to recent history. The Stochastic is good for short-term readings too. Google for a guy called fib-Master, he has some good online videos about this, and his excellent fibonacci formulas.
What you need to do, is compare the recent price rate-of-change, to the historical rate of change. If the recent rate of change is excessive, then the price is likely overextended. MACD is a generic formula for this. MACD can be seen on most price charting software, so you probably have it.
2007-06-25 05:15:49 · answer #2 · answered by UnderwaterTomato 3 · 0⤊ 0⤋
http://stocksalad.com uses many different indicators blended together.
2007-06-28 21:27:14 · answer #3 · answered by ll 1 · 0⤊ 0⤋