Yes, two stocks caught my eye as I cycled through the top 400 – it takes a mere ten minutes – and can be done over a leisurely coffee.
The two stocks are ASX and BBN – there are others which I will mention later – but for now let’s look at the charts:
ASX:
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ASX ORD (ASX): Daily Line Chart
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Click to Enlarge
BBN:
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Baby Bunting Group (BBN): Daily Line Chart
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Click to Enlarge
I am not saying they are perfectly ripe for a move but are worth keeping an eye on.
Before I press the "buy" button I do a little more analysis and an essential step in that is checking the oscillator.
So, let’s try again with the oscillator in each case:
ASX:
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ASX ORD (ASX): Oscillator
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Click to Enlarge
BBN:
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Baby Bunting Group (BBN): Oscillator
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Click to Enlarge
In the case of ASX I would still be comfortable to buy for the short term.
You will note the two arrows which indicate a negative divergence.
I know many traders would not buy when you see negative divergence between price and an indicator.
I do not let that worry me as it is only a short-term flutter.
I also believe that many analysts find a reason to "NOT" get into a trade.
That is, they want every signal to point to profit.
I would not say I am trigger happy, but I do press the "send" easily - after analysis.
I know from experience that while negative divergence does expose the trade to some weakness, it is often not very meaningful.
In the case of BBN, I note the stock had a spectacular run in August and my oscillator confirms that.
So, it is not ready for a buy, but we will watch with interest as it pull backs to zero.
Some other stocks you might like to watch – again with the oscillator teaching us something:
NST:
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Northern Star Resources (NST): Daily Line Chart
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Click to Enlarge
The oscillator has gone close to the -10% mark but I still like it as a short-term trade.
NSR:
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National Storage REIT (NSR): Daily Line Chart
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Click to Enlarge
Almost the perfect wave four pullback – but keep an eye on it.
For mine I would take the risk and be happy with it as a short-term trade – and be happy to throw it back in, if it fails.
Enjoy the ride
Tom Scollon
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