Check the Trend First

A great company can still be a poor buy right now. Learn a quick trend check using moving averages and price structure, with two real household names as examples.

Great company, wrong time

Plenty of excellent businesses have stocks that drift sideways or fall for long stretches. The price may already reflect the good news, investors may be worried about slowing growth, or money may simply be flowing to other parts of the market. Buying into that kind of stock means waiting, sometimes for years, while other stocks move.

That is why the second filter after the business check is the trend. A stock in a clear uptrend has buyers in control. A stock in a downtrend has sellers in control, and trying to guess the bottom is one of the most common beginner mistakes.

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The rest of this lesson, its chart examples and quiz are part of Investing School. Start free with Stock Market Fundamentals and the first lesson in every category.