Market Context

Having established that your stock is backed by strong fundamentals and that it would be wise to get a position in, you need to figure if the price action is showing the correct context to place a bet. Yes, even an investment can theoretically lose you money. So the simplest way to figure if the market context is favourable, one can check the following-

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1. Price is above the 200 day moving average

2. The 20 day moving average is above the 200 day moving average

3. The price has surged atleast 30 percent in the preceeding few months

4. The left hand side is ‘reasonably’ clear                                                                                                

While 1, 2 and 3 can almost certainly be determined objectively, point 4 alludes to there being price voids- clean territories where price hasn't had any recent action. In the best scenarios, your entries should occur near the 52 week highs or all-time highs of the stock. This suggests you’re buying a name which has shown strength and is moving the right direction