I bought HSBA (HSBC) in mid-December at 659p. The buy decision was as follows: on Stockopedia, I ranked companies with a market cap of over £80m by descending M (momentum) score. HSBA was on the first page, and it had an excellent divvie.
Earlier this month HSBA had a disappointing, but not disastrous, reaction to its results. Other banks reported around that time, and were on balance disappointing, too. As you can see from the chart, the shares declined, and breached the 50SMA (blue circle).
That was a decision point: did I expect support to hold, in which case the share price should continue its upward trajectory, or was support properly broken, in which case any momentum would be defunct?
The reaction to the trading statement suggested that it was likely to be a busted trade.
I don’t think you can afford to be too twitchy on these things, though, as you’ll be in and out of trades like a yo-yo. So I chose what I thought would be a support level lower down: 645p.
An alert was triggered earlier today, indicating that the price fell below that, so I sold. I managed to achieve a little over 645p, dealing costs included. So I lost 2.1% on the trade. Disappointing, but of course less disappointing if the shares decline more.
So, to sum up, I had concluded momentum was lost, and I expect further declines in the share price thereafter.
Note that this is by way of an experiment by me, not a recommendation. I will pick this story up in six months time to see how well I read the tealeaves.
Stay safe out there.