Keywords Studio

12th Nov '18 by Carey Blunt

5 comments 2080 reads

I held Keywords Studios (LON:KWS) from shortly after they floated until about 2 weeks ago when I cut it from my portfolio as the current draw-down started to happen. It has felt overpriced for a while and so I didn't need much encouragement to get out.
I still have a lot of regard for the company though and have been tracking its price relentlessly downwards with the idea of looking for a new entry point.

Anyone aware of any analysis on the company or have any personal opinions on what a good entry point might be?
cheers
Carey

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About the Author

Carey Blunt

Premium Member

Just an IT professional trying to make a decent return on whatever money I can get together.

5 comments

underscored

12th Nov '18

I suspect that future share price appreciation in stocks like KWS are more dependant upon future market sentiment than KWS own growth.

mmarkkj777

12th Nov '18

Hi Carey,

I held KWS too until October. I have tried to get back in and got stopped out again.

I’m now going to wait until it has had some consolidated momentum, coupled with a more general market recovery (as underscored mentions).

It’s all tricky at the moment isnt it?

Carey Blunt

13th Nov '18

Very tricky, I have a lot of capital I would ideally like to deploy but nowhere that I feel comfortable deploying it to!

Benson212

13th Nov '18

I appreciate this doesn’t answer your question directly but here is my view on Keywords Studios. For the record, I’m a momentum trader and use charts to aid my entry and exit from stocks. I know investors are more interested in fundamentals here, but some might benefit from how a technical trader might view this stock.

Momentum has been weak since August 2017, consolidating in a rising rectangle formation. On 9^th October, price had broken down on large volume. This isn’t your Aunt Betty selling her shares here… this is institutional selling. This makes an excellent short trade but very painful if you were long and without a stop loss.
The stock then consolidated and formed a bear flag. Amateur traders and bottom fishers will jump in thinking the stock has found a bottom, buying the share before it’s curled up. As the share breaks downward again, another opportunity to go short has arisen. Now, this is important because if traders are going short, then there will likely be a snap-back rally when short traders cover their positions. I don’t know what percentage of shares are being sold short but it’s something worth looking into. The more, the better!
Price is currently at a previous point of support (August/September 2017). Therefore, it’s worth monitoring the stock to see how price behaves. Things to look for include:
- Low volume on down days and high volume on up days during the consolidation period. This suggests a capitulation low has established and short traders are beginning to cover their positions.
- Look for tight price action and reduction in volatility. This suggests institutions are accumulating shares with various limit orders.
- Wait for the curl up on large volume (this is the most important signal to wait for).

Now, I don’t have a crystal ball so I don’t know what will happen next. If you feel compelled to trade this stock, then wait for the setup first. Better still, avoid the share altogether (which is what I’m doing). The share is now in a stage 4 downtrend, trading at its 52 week low and below the “bulls last stand” (200 day SMA). This is now a market laggard and until it forms a stage 2 uptrend (similar to its 2016 performance), I won’t be buying.

5beab2ddd2959Chart-keywords-studios-1310

Trading conditions are hostile at the moment. Let others fight over pennies and just wait for easy money in the next bull market. As Warrent Buffet once quoted "The stock market is a device for transferring money from the impatient to the patient". Stay in cash until your strategy starts working again and develop what Mark Minervini calls "sit out power"

Hope this helps!

mmarkkj777

13th Nov '18

Hi Bh1991

I’m a fundamental investor, but I’ve started to use technical charts to aid in my buy and sell decisions. so thank you for your input.

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About the Author

Carey Blunt

5 comments

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