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âTrend is your friendâ is a popular saying among market participants. Before investing in any security, it is essential to know the prevailing trend. The trend is the current direction of the price established taking into consideration the price behaviour of the security in the recent past. Which gives a broader view of the direction in which the change in price is likely to take place in the future. Letâs have a look at two stock for the trend analysis.
Nearmap Ltd. (ASX: NEA) is an ASX listed company which provides business to government agencies with aerial imagery and deep location-based data insights with premium Geospatial content. The companyâs online photomap is known to cover aerial imagery for 88% of the population in Australia.
The stock has been in a strong uptrend from 2018 and had delivered a return of more than 150% for the year CY 2018. After such a rally, a halt or correction in the trend is expected which is resulted by profit booking at upper levels. But the trend continued through the next year as well, and as of 9th May 2019, the stock has already delivered a return of more than 137% on YTD basis.
As the market was trending throughout the period use of moving averages would have given a good entry point with trailing stop loss. Well to the surprise of most, 200-day moving average and 50-day moving average had a bullish crossover (which is also considered to be golden crossover) in July 2017 at a price of A$0.74, and since then it has never given a bearish crossover. The daily RSI figure is at 62.63 and is not in the overbought zone.
NEA is trading at A$3.635 on ASX (as at AEST: 12:48 PM, 10 May 2019) up by 2.107%, and according to the signals from above mentioned moving averages, the trend is only getting stronger which is evident in the increase in the difference between the two moving averages.
NetComm Wireless Limited (ASX: NTC) is an ASX listed telecommunications company based in Australia. The company has a portfolio of 3G/ 4G M2M devices which can be used across sectors like agriculture, healthcare etc. It also provides an ultra-fast broadband network for residents through FTTdp and CTTdp devices.
On 22nd February 2019, the company presented its 1HFY19 results in which it posted group revenue of $94.3 million, EBITDA of $8.3 million and NPAT $2.3 million along with its 5G investment plans and outlook. The results seemed to have shocked the streetâs expectation, and the price opened up by a massive 49% on the same day.
Apart from the rise, the volume had also hit sky high level with more than 10.9 million shares being traded that day. To put it in perspective the 20 days average volume, one day before the rise was around 119.9k, thatâs a massive jump of more than 5300%.
After the rise, the stock seems to have been stabilised in a very tight trading range of A$1.09 â A$1.065. If the stock is trading in this tight range, the further direction is difficult to gauge, but the longer the stock takes to break above or below this range high higher the intensity of the next move is expected. NTC shares are trading at A$1.090 on ASX (as at AEST: 12:48 PM, 10 May 2019), up by 0.276%.
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