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Falling knives caught today

DNDN (again!)



AMZN (I’ll give 10banger credit for driving it down for nice picking. Thanks!)


All have stops below day low.  So far, no cut yet.

Again, not a recommendation to buy.  Remember, there are always an equal force (if not more powerful) going against your position.

Good Hunting!

and a Happy New Year to ALL!



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Falling knives caught today






Edit: New addition:  GMCR

So far, no cut on my hand “yet”.  Stops are at yesterday low or today low.

These are highly volatile stocks; therefore it is not a recommendation.

Come to think of it, nothing I trade is a recommendation since I’m trading thru my personal “tunnel vision” glasses.  Use your own “tunnel vision” glasses please!

Good Hunting!



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This is a Day Trader Market!

Forget swing trading, current market environment for the last few months is ripe for daytrading.  Profit, once seen, has to be taken.  Any attempt for a longer ride on the “perceived” trend, which is definitely a respectable position to take, have been seriously punished by current market condition.

As a trader, we need to adapt, adapt, and adapt.  Flowing with the market also means reading the multiple sign posts given by the market.  All these multiple small losses you took as part of trade management are your guiding light to the mood of the market.  If you are applying the proper trend-trading strategy in the market but kept getting punished, you know the market mood has changed.

My strategy in monitor marketing mood is by having multiple trading accounts.  One for day-trading, one for swing trade, and one for longer-term trading.  So far, my daytrading account is ahead for the year but my swing trade and long-term trade accounts were not doing well.   However, I was able to reduce my damage to my accounts by decreasing the positions and trading activities to my non-daytrading accounts.

As long as you are disciplined and always stick with a specific strategy for the trading period, day trade or longer-term, your losses are your sign posts you should not ignore.

I took profit on my DNDN this morning.  Also attempt to catch the SINA falling knife but got a minor cut instead thanks to the close stop a few ticks below yesterday close.

Good Hunting!

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Caught a falling knife: DNDN

Caught myself a falling knife without getting cut!  Look at the multiple time frames of DNDN chart.  Good support, good momentum indicator coming up from below.   After aligning my sight to the knife,  I clapped both hands and caught it.

This is not a recommendation to buy DNDN.  DNDN is a highly volatile stock with a strong tendency to overshoot.  It is simply that I like to catch falling knife with a good story.   If there is no follow-thru tomorrow, I may just take my profit and run; but if the run continue, I’m hanging on for the ride…

Good hunting!

Edit: Btw, since I caught the knife near support, my risk level is low.  My protective stop is a few ticks below the previous pivot low.

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The Art of Catching a Falling Knife

One general mistake for most people is that they tend to grasp the falling knife like they will grasp a round stick- surrounding your fingers on the knife.. Ouch!

The proper way is to line up the flat side (not the edge) of the falling knife so it is parallel to your palm; then you slap both of your palms together on to the blade.  Obviously, you may get some minor cut which depended on how well your palms are parallel to the flat side of the blade,  As in any human response to feeling a sting (pain from the knife cut), you should immediately let go of the knife by opening up your palms to avoid a deeper cut.

Market translation:

Instead of just buying blindly because the price of your favorite stocks are down to a level “you think” is attractive (grasping the knife with your fingers), you should look at the chart to see where the likely supports are in multiple time frames (such as monthly, weekly, daily, and hourly for swing trade).  By paying attention to the popular techniques for recognizing support & resistance such as 50ma & 200ma, Bollinger bands, Keltner bands, or previous pivotal lows etc.; you are instinctively lining up your palms to the blade of the knife so to speak.

Knowing when to clap your palms together will require some timing devices; momentum indicators such as Stochastic, RSI, MACD, etc.may come in handy.

Of course, as in all risk taking endeavor, techniques from the study of technical analysis are only to help you increase your “confidence”; it doesn’t guarantee success.  So it is absolutely important that you let go of the knife the moment you feel the sting; in other words, DUMP that loser of the stock if it kept doing down after your purchase WITHOUT hesitation!

Nevertheless, this is not for everyone.  And PLEASE, do not try it at home!  This is only for those who already cultured discipline from years of practice.  If you don’t believe me, just look at all those fingers or hands lying on the floor at the marketplace.  It is quite a bloody sight!

Good Hunting!

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Is Kindle Fire throwing heat at iPad?

I received my Kindle Fire last week and was feeling delightful playing with the gadget.  When iPad came out, I thought about buying one for myself but I just couldn’t justify spending $499 for a gadget I knew I would not use much since I like to do most of the work on my trusty PC.  However, I’m aware of the “mobility” factor for millions of users out there.

Here is why I think the Kindle Fire “may” impact Apple’s iPad sales growth.

1)      Parent with 2+ kids may not want to buy each kid an iPad for X’mas.  For the price of one iPad, parent can buy 2 Kindle Fire (Yeah! one for each kid!)

Each kid can now watch their own movies, play with their favorite apps, etc while traveling with parent (either in car or airplane).

2)      With a much smaller form factor than iPad, taking the Kindle Fire with us wherever we go is a no-brainer.  In other words, Amazon has taken the tablet PC to the next level in mobility!

3)      Amazon has an amazing name brand that associates with reading, video, and music.  Thus, people will more likely buy the Kindle Fire over other non-Apple brand tablets out there.

Will it replace iPad2?  I don’t think so.  iPad2 definitely has its advantage giving its size and features; but the Kindle Fire has the “potential” to take away prospective customers who were thinking of buying an iPad but now prefer the Kindle Fire giving the 3 points I mentioned above.

In summary, by January Apple earning report, we will know if the Kindle Fire impact iPad sales.  And if it does, the price action of Apple won’t be a pretty sight.

Disclosure:   I bought Apple Jan 2012 380 put option since price action last Thursday broke thru AAPL Nov 14th pivotal low. I also have my mental protective stop near the top of Nov 14th pivotal low as well in case I’m wrong.

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AAPL- Shootout at O.K. Corral (Ooop! I meant price-action at Nasdaq)

What’s an interesting Sunday reading.  We’ve two opposing views on AAPL that is typical of any stock exchange..  And I’m not about to regurgitate more of what is already out there except to paste another take below:


10banger post’s title “Apple is under attack” is accurate for AAPL’s price action for the last two trading days although the content of his post support a bearish long-term outlook.  Ben3, on the other hand, continues to support the positive AAPL long term “growth rate”.  In order for AAPL to reach $500, it must have sustainable growth rate in spite of competition.  Don’t forget Kindle Fire which Amazon recently increased its production run by an additional 1 million units.

In my opinion, the best indicator as to future direction of AAPL is not what we believe will happen; but what the price action is telling us.  While the bull and the bear have their own fundamental beliefs in supporting their view points, their beliefs must be attuned to the price action of the stock in question.  Otherwise, by insisting on being right when the price-action is telling you otherwise, I’m afraid you won’t find Mr. Right when you give back all your AAPL profit or ended up in red.

Btw, giving all the AAPL rumors and fierce competition out there, my opinion is that the AAPL next earning announcement will become the pivotal point for future long-term direction.  In other words, I will label that earning date at a gambling bet and will avoid putting any position by then.

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Mr. Right is not at home

More often than not, the reason we overstayed our welcome when the market was being generous was because Mr. Right insisted that there were more.  What do you do when your guest (an acquaintance) refused to leave your home when the party is long over and after you have given plenty of polite hints, I don’t know about you but I can get very annoyed.  I’m sure you will find a more persuasive method that may involve some physical guidance to the front door.  Compare to the market, you are being very polite.

When Mr. Right deluded you to overstay the “profitable” party at the stock exchange, you could get a real KICK-IN-THE-ASS message with some serious injury to your wallet and psyche.  If there is any one true organization out there that can never be accused of practicing discrimination of any kind, it is the stock market (or commodity market if that is your game).  The market doesn’t care who you are, you overstay you will be punished!  No if or but!

“Hey, you can’t overstay when the market open every day!” so you say.  You see, “overstaying” in the market is a term that we human mortal created for ourselves to throw caution to the danger that is lurking in the marketplace. The true is that the market doesn’t care if you overstayed.  In fact, the market LOVES to have you overstayed!  You know why?  ’cause someone has to be the patsy/victim for the piranha that feasts in the marketplace.

How many of you know about piranha?  I remember very clearly even now that in one of the old James Bond movie when the villain threw a good guy into a small pool filled with piranha.  After a minute in the water, only the skeleton of the poor guy floated back up.  Piranha also doesn’t discriminate when it comes to body size.  In fact, the larger you are (like an elephant), the happier they are.  In fact, the larger you are, the more difficult it is for you to escape the deadly grasp of the piranha..

Fortunately, the piranha doesn’t always show up immediately when you enter the marketplace; for they could be busy devouring someone else!  However, they could smell fear!  Yes, FEAR!  What cause you fear in the marketplace?  YES, when you are losing money.  To the piranha, losing money, even if it is a little bit, is like bleeding blood.

Whoa!  How do I keep myself safe from these piranha then!???  Well, that is why we invent the term “overstay”.  When you make money, you are taking food away from the piranha and they want it back!  And when you lose money, the piranha immediately want to take as much of you before you come back to your sense to get out of the water.

I think we all know the “risk” we are taking in the market.  But do we REALLY know the risk?  The problem we all have is that we have a Mr. Right living in our home.  Mr. Right is very good at convincing us that the piranha is only a myth; that if it even exists, you are immune to it.  Mr. Right can also be very convincing about the market direction.  When Mr. Right said the market is going up, the market HAS to go up.  There is no if or but ’cause Mr. Right is very sure about it!  Even when price action is showing contrary direction, Mr. Right can convince us that it is just temporary, nothing to worry about. In fact, Mr. Right even encourages us to buy more since the price is so cheap! Same playbook if the Mr. Right decided the market is going down.

After we become the feast of the piranha and what is left of us remain from the market place, we obviously want some explanation from Mr. Right.  So we look everywhere and after a period of time, we realized that Mr. Right is not at home.


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The plate is hot!

Market opened higher!  No follow-thru from yesterday big down day.  Stocks I sold yesterday were much lower now even with Dow Jones up 100+.  Time to test the water and do some bargain shopping!

Yes, some of these there… yeah, that’s one too.  Wow, that’s one still on sales!  (Btw, I’m only picking those that hit the bottom of the Bollinger band).  While sitting back to enjoy my new purchases, I realized that the plate I used to hold these purchase was getting warmer… before I knew it, it was hot!  Ouch!

What do you do when you touch a hot plate!  You snapped your hand away so fast you could punch yourself in your face if you didn’t get your head out-of-the-way.  I sold all my new purchases without even thinking about it.  Do you think about moving your hand when it is being cooked on the hot plate?  Unfortunately, I didn’t get my head out of the way fast enough so I kind of punch myself in a face a bit.  No worry, no bruise.  More like a slap on the face.

And thus begin another day of trading without thinking much.  Trust me, you don’t want to think much when trading.   Going in=Action; getting out=Action.    It is that simple!

Don’t be like: Going in=worry… OMG!… “Why me!?”… tear forming… keyboard on the wall… endless debate on the wisdom of cutting losses quick… frozen to headlight syndrome… = Inaction.   Meanwhile, you butt is getting really red from sitting on the hot plate!  Ouch!  Why do you want to do that?

Be careful!


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Italy is no Greece

And its financial impact could be worse.  SPY chart pattern looked like it is starting the 3rd wave to the downside. If anyone is familiar with Elliot wave, the 3rd wave usually last longer than the other 4 waves.

But it doesn’t matter what we think or opinionated on today action; in my book, today action screams caution.  I moved 65% of my position to cash.  There was no thinking on my action; I just did what my trading signal told me.

You will be amazed at how much calmer you can be when you are not overly exposed in your portfolio.  Your ability to see clearly on what the price action is trying to tell you without all the noise from your emotion/thought improves dramatically.

Remember, the market will always be here; you just need to have the cash to play it.  When in doubt, stay in cash; that is my motto.

Be careful!




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