Stage 1:
Accumulation, shares are transferred from weak hands to strong
hands. This stage usually occurs after a long decline or even after
the stock has had a pretty good advance. In this stage, stocks will
often trade in a narrow range, the forces of supply and demand are
about equal.
Stage 2:
Starts at "big" money accumulation. Seller will eventually thin out
and disappear. The stock become stronger, as the stock continues
move higher, the public become interested and they begin to buy too.
Combined, all of these activities, pushes the stock higher.
Stage 3:
Profits are usually being taken out of the stock, the stock begins
to trade in a range and move sideways. It will usually bounce off of
new points of support and resistance in the process. Compare to
stage 1, this stage has greater volatility and large price swings.
Stage 4:
Begins after demand for the stock dry up. Sellers become King, the
sell off starts. At the bigining of this stage, average traders
often believe the pull back is just a pemporary correction, and
become bag holders. The longer the price advances in stage 2, the
more popular the stock will be once it enters the begining of the
stage 4 sell off.
To be a successful trader, you must understand that it is financial
suicide to buy a stock that is in a stage 4 sell off, and it is
completely idiotic to buy a stock that it is topping out (stage 3).
This article was written by light of stockhideout.com Hot Penny Stocks and Penny Stock Investing Stock Message Board
light of stockhideout.com Penny Stocks and Stock Picks