XpresSpa Group Inc (XSPA)

[xlt leader]

VRNG in Accumulation phase

I found this site regarding stages of a stock.


WINNING INVESTOR REALITY

TIME: Our main focus is on intermediate-term and long-term market activities. We believe that in the short-term we are dealing with random forces, which reduce our ability to control our investments. Our time frame definitions are:Short-term: a few days to 6 weeksIntermediate-term: 6 weeks to 4 monthsLong-term: 4 to 16 months.

TREND: Our main purpose is to identify a trend in its early stage and stay with that trend as long as it lasts. We believe that big money is made on big moves. The main tools that help us to identify a new trend and monitor the health of that trend are moving averages (MAs), trendlines, relative strengths and trend stage characteristics.

STAGES: A crucial task when working with trends is to identify the stage of a particular index or stock. The primary trend of the stock market always starts and finishes at the extremes. What do we mean by that? The real bottom of each bear market is characterized by extreme valuations: (1) stocks are extremely undervalued relative to their historical averages; (2) economic conditions are highly unfavourable; and (3) the sentiment towards stocks is negative. The opposite is true at the end of the bull market: (1) Valuations are at an all time high (we usually experience bubble conditions), (2) the economic conditions are near perfect and (3) everyone owns stocks. These market characteristics act as a map and help us to observe the end of the trend.

In addition to the market, individual stocks also experience their own stages. There are four phases of a main cycle for each stock. These are:

Stage 1: The Accumulation Phase - After a long decline, the stock starts to stabilize, despite negative news, financial problems and severe downturns in the Industry. While fundamental analyst continue to predict further declines, the stock remains in a narrow trading range, as the professionals take up all the supply.

The 40-week MA loses its downside slope and starts to flatten out; the accumulation action is all taking place close to the MA; the stock is trapped in a trading range where buyers and sellers have equal power. The stock may cross above and below the MA a number of times. Volume usually dries up.Our policy is to wait and closely observe the stock.

Stage 2: The Advancing Phase – this is the time to own the stock. Fundamental news is more favourable; the company introduces a new product or has a new management; earnings start to improve.The stock breaks out from the trading range on high volume and moves above its 40-week MA (which at the same time or shortly after turns to the upside.) The price usually moves away from the MA, but comes back to it from time to time, only to move away again. All swings and corrections take place above the stock's rising 40-week MA. The most important characteristic of this stage: the MA is clearly trending higher.

Stage 3: The Distribution Phase – after a long advance, prices start to stabilize; the company is a Wall Street’s favourite; fundamental news is excellent; earnings are at an all time high; and the stock is widely owned. Despite these positives, the stock remains in a narrow trading range as the professionals supply all demands.The 40-week MA loses upside momentum and starts to level out; relative strength shows signs of weakness; volume is high; the stock stays within a trading range; and price action revolves around the MA. The stock may move above or below the MA several times.This is the time to sell.

Stage 4: The Declining Phase – at the beginning of this phase everyone believes that the decline is only a correction; fundamentals are still favourable.The stock moves below its 40-week MA which itself turns down; relative strength declines; and the stock breaks major supports. Price moves away from its MA but comes back to it from time to time, only to move and stay below again.


Based on this information I say we are in the accumulation phase.

http://stockcharts.com/h-sc/ui

We are below the 40 week moving average and if you look at the chart you can see $3.00 is a long-term support area.

Opinions please. Thanks

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