Why Royal Exchange Stock is a Buy for Short Term Traders

Buying a stock is as easy as signing up with a registered broker, verify your information, fund your account and then tell your broker the stocks to a buy but buying the right stock for real profit is incredibly hard. This is one of the reasons timing is so powerful in the stock market; it can help you swing into profit immediately your orders are executed or fall into share price fall;

Let’s look at these two scenarios; you bought a fundamentally sound stock like GTB at N38.09 on the 18th Feb 2019 and keyed into another penny stock on the same date like Cornerstone at 20k. We already know that GTB is more stable, stronger and resilient to a sudden economic shock, but when you compare their share prices, Cornerstone stock has delivered 200% gain while GTB is down by 17% – this doesn’t mean the insurance stock is better, the only difference is in “investors sentiment towards both stock in the last 10 months“.

Understanding Sentiments: the force behind stock prices

Investors’ sentiment, otherwise known as Investors emotion, is the most powerful force behind a bullish or bearish market; it is driven by a combination of financial results, market news, policy directions and expectations, without it, you may be missing out on the single tool to spot your next best trade. As a retail investor, your decision might be limited to what you know and have read in the financial statement of your choice stocks but sentiments cover what you might not be privy to; insider information or pending market-moving breaking news.

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Here is how I applied inventors’ sentiments on Cornerstone insurance and shared the call on my Whatsapp group before the stock appreciated by more than 30%:

Interestingly, a lot of beginners have not mastered the act of following sentiments when buying their first short term stocks and as such, get discouraged when their portfolio becomes red. This is the reason, I will be sharing stocks that might go up on sentiment using some proven technical tools; my pick will come from weekly top gainers; stocks that are up by at least 10% which I think might still go up in 4 – 6 weeks.

Royal Exchange:

The insurance stock closed the week at 27k, up by 17.39% (from 23k). While I anticipate a share price reversal on profit-taking (RSI on the daily chart is 91.29), this week, it still has the potential of running by 30% ( 37- 40k region ) in the next 4 – 6 weeks.

The stock is on the verge of recovering its lost value this year as YTD – it started the year at 30k, fell to 20k but then recovered to 27k – The stock is up by 35% and 22% in the last 1 and 3-months respectively, besides, investors sentiment on this stock is very strong on the weekly chart with RSI at 65.

 

Recommendations:

I’d advise you to wait for the price to fall below the current price or you spilt your money; buy at market price and average down, then take profit at 37 – 40k

Disclaimer:

The idea shared here is my personal opinion about this stock and shouldn’t be taken as a buy or sell advice, please do your due diligence.

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