Today price action negates the hanging man bearish pattern confirmation bar yesterday by not continuing on the down trend; instead, it is forming a bullish harami instead.
Take a look at the daily $SPY chart below:
The bull seems to be still in complete control so far…
My 2 cents.
Comments »$GLUU has a gift for me today. After I sold to cut losses yesterday for small losses, it gapped down this morning and continued to head to the support line pronto. Seeing that it bounced off the support line (see yellow line on chart below), I started to build my position.
Below is the daily $GLUU chart:
See how the yellow line tracked all the way back to the support in Feb and how prices reacted to the yellow lines since then? It was almost like a magic line. My action on $GLUU is further proof that cutting losses quickly can result in opportunity to buy back the stock cheaper.
However, nothing is guarantee, my stop will be below the yellow line.
My 2 cents.
Comments »Today was a puke out day.
Market opened down and everything else followed thru.
First order of the day, I checked $MELA to see if there were support to drive the price backup from a gap down. After a few minutes, I decided there were not enough buyers to push it up; so I sold my shares for losses. Again, I picked the wrong horse so I had to accept this as part of the loss. This loss was not a small losses like the normal quick losses I took since I was holding it thru the earning play. Nevertheless, it was still an acceptable loss that I could put it behind me easily. It was a good thing I sold 50% of the position before close yesterday.
Next, I sold $GLUU and $CERS since their price action was horrible in the morning.
$BCRX was also not acting well and I was way overloaded from the breakout above $2 yesterday. Thus, I’ve no choice but to reduce my position size to cut losses and minimize exposure. I’m still keeping 1/3 of the original position size on this one.
$SZYM proved me wrong again for jumping back in two days ago. Oh well, I need to accept my own responsibility for being “impatient and greedy”; so I dumped 85% of my position early in the morning to cut losses and minimize exposure. Later on when price stabilized, I bought some back to maintain a mid-size position on this one.
$AAPL was strong at first but it couldn’t handle the overall bearish sentiment; after looking at the chart, I decided to take my profit and run for now.
$RBCN looked very attractive at $6.9x level and price seemed stabilized around there; I decided to take this opportunity to jump back in for a starter position. So far, I’m still in the green.
Current holdings:
AMRN, LRAD, SZYM, TINY, RBCN, BCRX and 42% cash.
The trades I made in the journal were time-stamped in twitter
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It is my duty to inform you that today $SPY price action constitutes a confirmation of yesterday bearish hanging man candlestick pattern.
Take a look at the daily chart below. Yesterday price action tried but could not take out the high of 04/11/2013 and a hanging man candlestick pattern was formed. Today down day confirms the bearish sentimental. Be wary of further downtrend this week.
Below is the primer on Hanging Man candlestick pattern:
Be safe!
My 2 cents.
Comments »Today I took my medicine and it tasted quite bitter. These were liquid medicines so I would have to suffer the taste of it.
Below is a list of my medicines (from mild taste to yucky, err..):
$DNDN
$GLUU
$CERS
$DNN
$MELA
$BCRX
$SZYM
I cut losses from the above medicines. Believe it or not, after the medicine, I feel a whole lot better!
Have you taken your medicine yet? What? None of my business. Oh, ok… hey, take it easy, no need to give me the evil eyes…
Raised my cash level to 42%
My 2 cents.
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Today was a big hug and a slap on the face.
Market was down in the morning but I seemed to pay less attention to what $SPY was doing these days.
My focus was on $GLUU and $BCRX.
$GLUU opened a little bit higher and I felt the urge to buy back my shares. I noticed that even though yesterday was a down day, it still has a higher low compared to the day before. With this kind of thinking, I decided to buy back $GLUU with a stop below yesterday low which was a low risk trade for me. By end of day, I was not stopped out.
$BCRX was acting strong and I added twice during the day. Somehow, the momentum went out of gas but price still closed above $2.00. I’ll decide what to do with this one tomorrow.
After browsing around the watchlist, I decided to buy starter position on $DNDN and $DNN. $DNDN because the chart looked bouncy and $DNN because $CCJ was up at the time and the Russian supply of military grade uranium for conversion to commercial use would cease to be available sometimes in the 2nd half of the year. I later added a bit more to $DNN.
$AMRN was going strong all morning and when it took out the high made in April 23rd, I added a bit more to my swing trade position.
$AAPL was doing great so I left it alone.
$SZYM was on a defensive all day and I wasn’t thrilled about the price action at all. I sold out my position two days ago to lock in some nice gain but then I felt the urge to buy them back. Now I have to deal with this correction all over again. Why did I have to buy them back? Why? Why? Ok, enough of my whining. Sometimes, I’ve to let my ego complains a bit so that it can settle back into the background. (grin)
$MELA. Mela, Mela… what’ve I done to you that you’ve to slap me on the face? Before closing, price dropped quite a bit when I wasn’t looking. However, after I was made aware of it, I dumped 50% of my position to cut my losses. With the earnings numbers out, after hours price tanked quite a bit. Somehow, I thought their business model was starting to kick in gear. Depend on price action tomorrow morning, I may just buy back some share for intermediate term hold. Let’s see how it goes tomorrow morning.
Current holdings:
AMRN, LRAD, SZYM, TINY, AAPL, BCRX, GLUU, DNN, MELA, CERS, DNDN and 21% cash.
The trades I made in the journal were time-stamped in twitter
Comments »Most of you all know that I’m long $AMRN from last year and have to sit through the drawdown all because FDA could not decide on the NCE (new chemical entity) status on the almost pure EPA chemical ingredient in $AMRN’s new drug Vascepa. Month after month of no approval and with $AMRN taking the path to self-distribution of Vascepa instead of going thru the Big Pharmaceutical company, price continued to head south. It was because I did not average down during the drawdown period that I could tolerate the temporary setback on my long-term position trade.
As in any price movement based on human emotion, there will come a point where a bottom or a top can be called on for a speculative play. What most people don’t realize is that while picking bottom or top can be akin to playing with fire, it is actually a low risk trade if you’ve done your homework correctly. Please refer to my past post on the art of catching a falling knife.
Remember this stock market wisdom- Buy low and sell high?
How do you propose to buy low when you are not trying to pick a bottom?
As I mentioned before, the only way I will add to underwater long-term position is when I play the added shares as a swing trade. Meaning that I will have stops in place to protect myself if price head the wrong way. These stops are non-negotiable; otherwise, I’ll just be kidding myself into averaging down to my core position.
Last Tuesday when $AMRN announced the FDA has accepted its Supplemental New Drug Application (sNDA) seeking approval for the marketing and sale of Vascepa(R) (icosapent ethyl) capsules for use as an adjunct to diet in the treatment of adult patients with high triglycerides (TG >=200 mg/dL, price gapped up but turned around and headed south for a few more days. I knew then that the bottom was about to set in. While we won’t hear from FDA regarding the approval of this sNDA until Dec of this year, it is considered a game-changer catalyst that can propel $AMRN to be a very attractive take-over target.
There are support level from Dec 2011 low of $5.99 and price last week has dropped down to low of $6.34 before heading back up. While I didn’t buy the swing trade position at the low, I bought them around $6.4x. The way I see it, the risk/reward for the swing trade is excellent. My stop was below $5.99 and I’m only risking about $0.45 cent per share for a return that has the potential to be multiple times of the risk.
Below is the weekly $AMRN chart. Notice that last week bar is a doji. A doji at the bottom near a support has a high probability of forming a bottom.
Below is the daily $AMRN chart. Notice that today price action has penetrated the downtrend bar.
Needless to say, I’m close to double-up my position on $AMRN with my swing trade position. If price never look back, these swing trade position will become part of my core position. Perhaps, this drawdown is really a gift in disguise for me…
My 2 cents.
Comments »Today was a problem-solving day.
Not because I had a problem with the market but because I had to solve a non-market problem that took all my concentration during market hours. By the time I solved the problem, Holy Moly! there were only 20 minutes left before market close.
$AAPL opened higher and I knew I had to buy some. The weekly chart show a Bullish Harami and any open higher than Friday close was a buy. Take a look at the $AAPL weekly chart below.
The circle area is the Bullish Harami candlestick pattern. Today price action took out the high of last week bar so the probability of $AAPL bottoming is high. I bought a starter position and left it alone. Later, when my attention came back to the market near the close, I added more $AAPL.
I also wanted to buy back my $SZYM I sold Friday. I started to accumulate shares in the morning and then later in the day. I bought back the size I wanted and is satisfied for the day. Nevertheless, the spinning top candlestick chart formed today was not exactly an endearing pattern I wanted to see. Let’s see if there is a confirmation for a top tomorrow. Spinning top needs to be confirmed with down days afterward to considered a top.
$GLUU gapped up but price began to fall during the morning time. At price got close to the half-way point of Friday bar, I sold to lock in profit. Later, I went back in for a bounce but it was for naught since I was stopped out for small losses from re-entry point.
$RBCN was heading back up in the morning so I added. Seeing that price was doing well in the morning, I placed a stop at breakeven not expecting it to be hit. No! Price had a bad hiccup and went straight down pretty fast and took out my stop and I didn’t even know I was stopped out until half-hour later since I wasn’t paying attention to it. Oh well. Seeing such volatility, I opted to stay away from $RBCN for now.
$BCRX was acting like it wanted to go up so I bought more. I added more later to bring it to the position size I wanted. Prices action went up later so I’m fine for now.
$MELA was having some correction today but I decided to keep my shares since price action hasn’t broken thru the $1.27 support line. $MELA is reporting tomorrow; therefore, I’m basically holding this one thru earnings.
$CERS was showing strength in the morning so I decided to buy a small starter position so I don’t forget it.
Not much going on today since I didn’t have much time to stay with the market.
Current holdings:
AMRN, LRAD, SZYM, TINY, AAPL, MELA, BCRX, CERS and 32% cash.
My 2 cents.
The trades I made in the journal were time-stamped in twitter
Comments »My past posts support Osho’s contention that continuous thought creates the mind. And when you have two conflicting continuous thoughts going on in your head, then you have two minds vying for your attention. The battle for control of the two minds is what make an ego.
Ego = continuous thought #1 (mind #1) vs continuous thought #2 (mind #2)
As in any battle, the mind that has the most training will always win. Since we are all by-product of our society, in the absence of new training, our preprogrammed mind will always win. It is the “I’m right” mind. I call it the natural mind because it comes out automatically without any effort on our part.
Preprogrammed mind = Natural mind = Automatic mind = I’m right (or I need to be right)
If our natural mind is in charge while we are trading, then we are “blind” to what the price action is telling us. In other words, what our eyes see and process when looking at the chart or tape is being shouted down by our natural mind.
Your brain processes the price action from the vision of your eyes and give you the following thought, “Whoa! Price is going down like a waterfall!”
“Ignore it! It is only a temporary. Price will go back up because my fundamental analysis says so!” your natural mind shouts at you.
“But I wanna cut my losses!”
“Don’t you dare! I want you to buy more! Average down here ’cause I’m right!”
And so it goes…
And here is the rub.
Most of us are not even aware of this natural mind being our obstacle in the pursue of investment success; instead most of us are looking at the wrong direction. We think that if we have a Holy Grail trading system, our natural mind will listen and obey its signal and we will be on our merry way to being rich.
You see, what you have forgotten is that our natural mind will have no part of it. It will denounce the so-called Holy Grail trading system the moment it spits out some losing trades.
Just by being aware of this natural mind isn’t going to make you a better trader but it is a necessary first step. From here, we need to train another part of our mind to become a winning trader. A mind that is trained in the art of trading to displace our natural mind during trading hours.
Let me give you a parallel example to get my point across.
Before I learned the simple four movement in martial art as I explained before, I didn’t know how to defend myself correctly. Hence, when a punch was going for my face, my natural mind would have me reacted in fear and my body helplessly unorganized to defend such a sudden attack.
In the same token, our natural mind is not prepared to deal with a situation when our belief of the stock is being challenged by price action going the wrong way after our buy order is filled.
After getting proficient of my four martial art movements from weekly practices, my trained mind and body automatically countered an attack before the natural mind even had a chance to get involved.
In the same token, when the stock goes the wrong way after I’ve bought, my trained mind (from the many hours of researching the statistical significance of supports & resistances, candlestick chart formations, moving averages, momentum indicators) automatically executes an order to close the trade to cut losses or lock in profit before the natural mind has a chance to say no. Trust me, your natural mind is very adept in talking you out of taking the proper action to cut losses.
“Are you sure you want to cut losses here? You do know that price will go back up after you cut losses, right?”
The truth of the matter is that the ego is not completely wrong here. Statistically speaking, (even if it is only 10% of the time) we WILL from time to time cut our losses quickly right at the bottom of a correction. And it is from this statistical event that our ego persists in haunting us in order to freeze us into inaction.
By training your mind in the art of cutting losses quickly, which will require a firm commitment on your end, you will transform yourself to cut losses automatically without thinking. Remember, our ego is simply a dominant continuous thought process; thus any thinking on our part will automatically bring forth our ego. Hence, if you can cut losses automatically without thinking, you are way ahead of most traders whose natural mind is their dominant decision maker.
Nevertheless, our natural mind is a very powerful ego and can get really feisty if you ignore it too often. Say you cut your losses quickly in one of those statistical event of getting out at the bottom before market takes off without you, your ego can do seriously harm on your psyche by blasting you with all kind of insult and emotional guilt and pain. After a bout of this guilt-ridden episode from your ego, you may not be so sure about cutting your losses quickly next time.
And this is why it is important that we train ourselves in calming our ego with other form of exercises such as meditation, Tai Chi, yoga, chanting, etc.
Being aware of our ego messing up our trading is not enough, you must know how to cut your losses quickly in spite of the interference from our natural mind. To do that, you must embark on a training like an ambitious Karate martial artist who wants to earn his 10th Dan black belt or someone who want to achieve the highest level of internal martial art like the Tai Chi master in the video below:
Remember, these are just friendly demonstration of the internal martial art. To achieve the highest level of internal martial art, it is not the exercise and practice of the physical movement like Karate but a long and patient practice of cultivating chi. Believe it or not, if you embark on a path to cultivate chi, you are also embarking on the path to minimize the impact of your ego as well since ego can prevent your chi from developing. Thus, practicing Tai Chi is one of the routine I like to keep up on a regular basis.
My 2 cents.
Comments »Today was a hit and miss session.
Market opened in a yoyo fashion around the neutral point but that was not my focus in the morning.
I was watching $MELA because I came upon this stock and the chart looked ripe for a breakout thesis. Price opened higher but I still wanted it so I bought at the open and continued to buy at price climbed. I finished buying the position size I wanted and left it alone. As of now, I’m a little bit under water due to its closing. Nevertheless, I’m willing to give this a bit more time before deciding that the breakout is a fake. It is still too early to tell since $MELA was up 6.45% for the day even though I had to pay premium to buy it.
$AAPL was looking strong at open so I decided to buy some for a daytrade. I did not post my entry and exit at twitter since I don’t want to cluster my twitter account with daytrading activities. Nevertheless, I got stopped out for a profit and missed the rest of the rally later in the day. That was fine since I made it a point to stop the daytrading activities once I filled my quota for the day; otherwise, it it so easy to give your daytrading profit back when you over-trade.
Next, I saw the negative opening range on $PPC and $YGE and decided to sell them for small losses. Dumping $PPC was the correct move but not $YGE since price turned around and ended up positive for the day. But then, it is always so easy to judge yourself with hindsight information. There are still time for me to get back in $YGE if next week provides a supportive market condition.
$RBCN was taking heat on the get go and I sold some shares to lock in profit. Later, when prices tanked further down to the low $7.3x area, I bought back shares for the bounce.
$DNN was having problem coming back to the surface for air so I dumped it to take my losses.
$SZYM opened up and I was elated; but it was short-lived. Prices started to tank back down and I sold my shares along the way to protect the profit I made yesterday. By the end of the day, I bought back 10% of what I came in from yesterday and price was actually closed up for the day. Do I wish I sit on my hand on this one? Yes! Again, it is hindsight talking. I’m fine with what I’ve and the profit I’ve locked in before the weekend. I will evaluate my option again come Monday; perhaps, i can buy them back cheaper, or not.
Something told me to buy some more $BCRX and I did.
$GLUU made me a happy man today because prices finally rallied per my intuition. The premium I paid to buy back yesterday after I sold was worth it after all.
$AMRN also made me happy because I didn’t have to dump my swing trades I added this week. In fact, I like to keep my swing trades as part of the core position. This can only happen if price do not trade back down below my swing trade entry point. I will like to see a V shape correction on $AMRN here.
Meanwhile, I’m sitting on 42% cash to prepare for a possible bad May.
Current holdings:
ARMN, LRAD, TINY, MELA, GLUU, RBCN, BCRX, SZYM and 42% cash.
The trades I made in the journal were time-stamped in twitter
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