Share Consolidation.... Good or Bad?
- Thread starter amohonour
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Re: consolidation.........Good or Bad
Hi Amohonour
Personally I think consolidation is dodgy if you are sitting in it because you can never be sure which direction it is going to take when it finally breaks out. Generally the longer the period of consolidation the stronger the breakout will be. If you are an optiontrader you would do well to get out after 3 days of consolidation to avoid risk and loss of time. After all you can always jump back in when the direction is clear.
These are my only thoughts and are not to be taken as financial advice or recommendation.
Cheers
Happytrader
Hi Amohonour
Personally I think consolidation is dodgy if you are sitting in it because you can never be sure which direction it is going to take when it finally breaks out. Generally the longer the period of consolidation the stronger the breakout will be. If you are an optiontrader you would do well to get out after 3 days of consolidation to avoid risk and loss of time. After all you can always jump back in when the direction is clear.
These are my only thoughts and are not to be taken as financial advice or recommendation.
Cheers
Happytrader
Kauri
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Re: Consolidation.... Good or Bad?
I guess if it breaks the way you are trading it then it is good.
what kind of consolidations are you referring to, rectangular, flag, triangle, saucers .....?
amohonour said:
I guess if it breaks the way you are trading it then it is good.
what kind of consolidations are you referring to, rectangular, flag, triangle, saucers .....?
Kauri
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Re: Consolidation.... Good or Bad?
I never see it as a good sign...usually done with low priced stocks that have masses of scrip due to a history of raisings and issues.. artificial way of raising the sp and also enabling them to embark on more raisings. (MUL, if it survives, will probably be going down this path)
I never see it as a good sign...usually done with low priced stocks that have masses of scrip due to a history of raisings and issues.. artificial way of raising the sp and also enabling them to embark on more raisings. (MUL, if it survives, will probably be going down this path)
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I don't like consolidations as the share prices of the stocks I've followed generally drop after the consolidation.
ERG is probably the stand out, was consolidated and now shares have dropped to where they were prior to the last consolidation.
Some companies need a consolidation, BDG did it and have sort of recovered quite well.
I wouldn't mind seeing OXR do one
ERG is probably the stand out, was consolidated and now shares have dropped to where they were prior to the last consolidation.
Some companies need a consolidation, BDG did it and have sort of recovered quite well.
I wouldn't mind seeing OXR do one
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If you want an example, look no further than CBD...
Was always around 1c share. So they went 50-1 and share price became 50c. Soon afterwards, it was 6c. 'Nuff said.
Was always around 1c share. So they went 50-1 and share price became 50c. Soon afterwards, it was 6c. 'Nuff said.
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MXA turned into LVL and then consolidated too. It went downhill rapidly, mind you the legal problems/challenges that LVL faced didn't help either.
Although on the positive side the shares on issue reduces too, so a much greater chance of some real movement taking place. Patience is required while stocks go into deffered settlement etc.
Although on the positive side the shares on issue reduces too, so a much greater chance of some real movement taking place. Patience is required while stocks go into deffered settlement etc.
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Consolidations also are a way of improving the fundamentals like EPS and other ratios.
Same profit over less shares will increase EPS
Same profit over less shares will increase EPS
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Give it a couple of months.
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Give your broker a call, had to do it once with Westpac after a consolidation with one company.
Took a little while to get it fixed in the portfolio.
Share registry should send new holding statements at the end of the calendar month
Took a little while to get it fixed in the portfolio.
Share registry should send new holding statements at the end of the calendar month
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