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RE: Do You Agree With Motley Fools’ Buys For July???
Personally, I look at the 9day EMA and the 50 DMA. When the 9 DEMA is above the 50 DMA is a bullish cross. I look at well as MACD to see if there is a bullish positive divergence. Finally, I love watching the relative strength index (RSI) to see where it at. I never buy if its close to 70, which if significantly over bought and like to make trades when a stock is ready to move out of oversold (<30).
I also stopped following Motley Fool when I realized they were a bunch of 25 years with no experience. I started buying subscriptions to the top financial newsletters. I have more than 10 and since 2011 have spent well north of $30K. My main newsletters are from Stansberry Research and Palm Beach Research.
Good stuff. Do you have an example of the 9 / 50 e/dma RSI, MACD set up?
Apple has a good example. RSI is at the top of the chart. The bottom of the chart is the MACD. The bands around AAPL's price curve are Bollinger Bands. They represent the statistically expected price rang for AAPL. Rarely does the price overshoot in either direction. In most cases, the bands act like rubber bands and if the price hits the upper or lower, there is usually a snapback inside the bands. Now look at Feb. You three incredible things lining up. First the price went below the lower Bollinger band. Second, the MACD hit a bottom. Third, the RSI was below 30 signally significant oversold conditions. What happened next is instructive. The price snapped back inside the BB, then took another dip to the lower BB before starting a significant uptrend. Look at the RSI. It then move above 30 and the 12 DMA of the MACD (black line) crossed over it's 26 DMA signifying a positive relative strength. This was a most ideal time to buy and a high probability set up.
Also, in the price graph, the pink line is the 9 day exponential moving average and the blue line is the 50 DMA. When the 9EMA crosses the 50 DMA it's called a bullish cross.
You can look for the opposite when a stock is overbought and you can use the set up to sell out of a position.
Look at November 2017 as an example.
Thanks for sharing, I let the methodology as I use RSI in my trading as well.