What’s your opinion on the DPRO chart? You and Quill are the ones who look at this with the experience that pays…doc"
Doc,
I wish it were easy to say ‘Yea’ or ‘Nay’ about DPRO and its chart. But I can’t. So let me run though a vetting process and let them who read it take from it what they will.
Today, a down day for the broad market, DPRO is following it. So that’s Step #1. No matter the merits of a stock --as a proxy for the underlying company–, to what extent is its price movements just a reflection of what’s happening in the broad market? That needs to be looked at. Step #2 is to see how its peers are doing. Step #3 is to pull the company’s financials, which are a mixed bag for DPRO. E.g., revenue is forecast to grow 56%/yr, but earnings to decline by (-73%) for the next three years, and the company is extremely over-valued by every ratio: PE, PS etc. Step #4. Pull a long term chart. DPRO IPOed roughly roughly 4 years ago at $20. Now it’s trading at one-tenth that. OUCH!
OTOH, DPRO is a well-established company that makes useful products. So, I don’t know what to think. It’s a company that seems to be worth owning. But “the market” disagrees. Why? That needs to be discovered before chart magic argues for buying it. (IMHO, 'natch)
Arindam
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Thanks, so its more than just the 2 month, 6 month and 12 month technicals. I’m learning…doc
Doc,
Whether one is using price/volume charts (with or without some fancy indicators), or a company’s financial statements, or macro-economic factors, the game is the same. “Have I seen this pattern of factors and events before, and did they offer a favorable result to a buyer often enough that I could manage my risks and maybe even turn a profit?”
DPRO isn’t a company I knew anthing about. That’s why I went scrambling into the past to try to figure out how it got from its IPO price of $12 bucks a share 3 years ago to its present $2 bucks and change.
My guess is that DPRO had a 6 months lock-up on insider sales. Once that expired, they dumped, because they knew the company’s financials were shaky. Then in Dec '20, DPRO must have had some favorable news, and the dumb money rushed into buy, pushing DPRO’s price back up to its IPO price, whereupon the selling began again. The came five earnings reports, each time followed by more selling, because --it has to be assumed-- the company’s numbers were shaky. The most recent Dec '22 report must have been favorable, and buyers bid up DPRO’s price.
Ques: When was the time for AN INVESTOR to have bought?
Ans: When DPO broke above its trendline. (This is classic, old-fashioned, charting and tape reading.)
Ques: When could A TRADER be buying?
Ans: Any time his/her method and rules say to.
The problem with depending on technical indicators to make one’s buy/sell decisions is that it’s easy to be too clever by half. Some sense of how markets work is also needed and some distance from the daily noise. Most “investors” should be working off of weekly bars and using a pencil and straight edge to draw lines. (IMHO, 'natch.) What trading systems like HA Smoohie are good for is for keeping them out of trouble by not letting them buy when they shouldn’t be buying and by kicking them out of their positions when they should be exiting (instead of hanging on and hoping).
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