Samsung Electronics,world's top maker of memory chips and flat screen TVs, reported record quarterly results on Friday, giving its shares a nice boost.
But whether the results were going to be good, bad or indifferent, the stock was always going to continue it's uptrend, based on analysis of its stock chart.
The reason for this is the stock's inherent steady existing trend behavior.
The trend is defined by low volatility and multiple independent support features; good for investors looking for income, but not great for traders hoping looking for volatility for profit opportunities.
This trend can be defined with three independent methods. They are independent in the sense that each measure of the trend uses a different approach and focuses on different parts of trend behavior. Ultimately they all deliver the same message and it is this independent reinforcement which is important.
The first measure of the trend is the Guppy Multiple Moving Average. This indicator tracks the behavior of investors and traders in the market. The indicator is used to assess trend strength and stability created by market behavior. The long term group of moving averages – red – shows wide separation. This indicates strong buying support from investors. When the market pulls back it is investors who step in as buyers offering strong support for the trend.
The second measure is the trend line. This uses the behavior of price activity to define the rising trend. It shows a consistently rising level of support. The trend line captures the broad ranging activity of the raw price movement. The trend line does not adjust any of the price factors.
The third measure is the 2*ATR line. The Average True Range (ATR) indicator measures the short term volatility of price. The traders application of ATR uses this short term volatility behavior to set a trailing stop loss. A close below the normal volatility suggests the existing trend has ended. The 2*ATR shows the trend behavior has remained inside the normal range of volatility and this confirms trend stability.
Using three separate and independent measures for trend analysis help to confirm the strength and stability of the trend.
Samsung holds no true surprises in term of earnings. The market activity shows a high level of comfort and expectation with Samsung performance.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders –www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.
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