My next wrong pick

Ha!  I just qualify myself for being wrong; so I’m safe here.  Now, if I’m wrong about my being wrong, then I get a bonus!

With the market ripping up all morning and my TZA and SKF stopped out and my gain for the week evaporated into thin air; what can I do but to look for the next stock to hunt.  I think I found one.

AMRN

Fundamental speaking, they recently received FDA “limited” approval to their cholesterol reducing magic pill that is packed full of their patented Omega Fish Oil.  Because of the “limited” restriction being placed on the FDA approval, the price actions took a tumble and fell back to current level which I believe may be a bottom.

There are 4 keys to my theory to support a bottom here:

1) price is at 50% retracement of March’s low and July’s high

2) Bill William’s bullish divergent bar was formed yesterday and today price action triggered a buy signal by taking out yesterday high

3) The oscillator is turning up with today price action.

4)  Price is not too far off from the lower median line of the Andrew Pitchfork.  Btw, I drew the Pitchfork by lining up the middle median line so it went thru the middle of the uptrend.  Nevertheless, because price is below the pitchfork, caution must be placed in this trade.  My stop is below the recent pivot low of $11.20.

Giving these 4 supporting factors, I bought starter position on AMRN.

Btw, if you don’t like the way I took the liberty to draw my pitchfork, too bad.  Of course, you can always draw your own pitchfork the “right way” and draw your own conclusion.  As far as I’m concerned, all these technical mumbles jumbles are here to help me make a decision.  It is all there is to it.  A tool to give me  the confidence to make a decision to buy or to sell.

Yes, I may be “bias” by tweaking the technical indicators to fit what I want to see; but how is that an issue in any way when the “standard” technical indicators does not offer 100% guaranteed win to begin with?

From my experience, it is NOT the technical indicators that make or kill your portfolio, it is your money and risk management skill that ultimately determine your fate in being successful or not.   In other words, if you make trading decision by having a monkey throw a dart at the WSJ stock pages, you can still make money if you apply discipline and practice proper risk management.  But the question is, “do you have the confidence to take a trade from the monkey throw?”

Thus, if you feel the need to tweak the famous technical indicators such that YOU feel comfortable enough to rely on it to make a decision, I say “Go for it!”.

But you MUST practice risk management with discipline; otherwise, you will just blame the technical indicators for the “maximum pain loss”  instead of addressing your real issue at hand- which is your inability to cut losses quickly.

Below is the daily AMRN chart that shows all the 4 factors I mentioned above:

Good Hunting!

 

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