6/20/2010 7:40:40 AM
Just in case you were thinking of buying BP, you need to understand the risks.
Here's an image from one of my computer screens (I trade with 4 screens). This gives me a snapshot of the yearly, weekly and daily view of a stock. I like to see where a stock is in those time frames before every decision to buy or sell.
The situation in BP is very bad. And while this may be a great opportunity to buy a stock that is beaten down and quite a value, it's also very risky.
I always ask people why they would take such a risk with their money - there are so many stocks in the stock market, that are good companies and present good opportunities. Just because a stock is in the news doesn't mean you have to be a hero and trade it. In fact, I'd rather trade the stock that no one knows about.
That being said, if you're going to step in at some point here, there is some technical fibonacci support here.
However, if it breaks these levels, it's going lower, much lower. The market is a popularity contest and the unpopular stocks can get very unpopular... I could see BP in the single digits if support breaks here.
So be cautious.