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The next thing to consider is how the value of a stock is trending. Every stock has its own trend as to how it goes up or down over time.
An example to notice is how Sears Holdings (NASDAQ: SHLD) has been experiencing a downward trend in its stock over the years. The Sears Holdings experienced a positive rise in its stock value in 2004 as the stock went from $20 to $110 over the course of a year. Soon after, the stock declined to $80 in 2006. The stock was trading around $20 during the late part of 2015. The value had been declining ever since and even fell below the $5 mark two years later.
Price trends can be helpful, but you should make note of how long those trends have been happening and if there have been any significant changes. The case of Sears Holdings is just one of many examples of how price trends can change. Just because a stock is declining in value does not mean it is going to keep moving down. There is a chance that the stock might move back up. It could happen due to positive economic reports or better market sentiment among investors.
