There are times where I review a company that I don’t know well to get a better feel for the business and how it is performing – the Fundamental Analysis (FA) effort.
This morning I was reviewing some horrible guidance information on RCL (Royal Caribbean Cruises) and so I figured a look at the chart was in order to see how investors were “reacting” to the news. I normally use the 5 minute chart when looking to trade a stock and this is what the action has been so far (I am long):
As you can see that the initial reaction does make sense as investors sold off on the news. However, the key things I noticed were:
1) The volume pattern
2) The divergence in Acc/Dist to the drop in price
3) The ability to hover and test the -0.6 level (the peak yesterday) and then the break above (the trigger for me).
One example where TA wins this bout – I had to trade what I saw and not so much what I thought at the time. The stock is currently trading near the high of day (hod) on good volume.