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Monthly Archives: August 2012

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.


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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Is everyone looking for end-of-day rally? (updated with new chart and yes “I’m wrong again”)

My bet is that it isn’t going to happen.

I only have to ask myself this simple question, “If I’m a fund manager, will I buy a boat load of stocks now?”

But then, what do I know?

I’m only playing the hand based on Newton’s law of motion.  Unless there is a powerful force countering the current downdraft today, it will continue down.

The 10 minutes SPY chart below is showing a persistent down trend.   It is going to take a lot of fund managers to buy this up to start an end-of-day rally.

Currently shorting SPY and AAPL again as day trade and also long on TZA and SKF as swing trade.

Good Hunting!

Market close update:

So we did have a end-of-day rally here and it really screwed me up on my day trades.  Fortunately, I don’t day trade the same amount I did on the swing trade; so my thrill at the stock-casino wasn’t expensive.   But I’m still holding my TZA and SKF as swing trade even though we have an “ok” end-of-day rally.  The reason is because of 2 factors:

1) a long-tails doji

2) a confirmed divergence b/w the chart and the oscillator on the daily chart

The long tail doji may represent a major indecision today.  Although we have an end-of-day-rally, failure to close on the upper quarter of the bar today means the bull hasn’t really won today.  Doji at this point on the correction can mean the the downtrend can continue tomorrow OR a reversal will take place tomorrow to the upside.

HOWEVER, because of the divergence being confirm on the oscillator, I’m willing to continue my bet on TZA and SKF.

Below is the daily SPY chart:

Yes, I know, I’m talking out of my ass here simply because I don’t have a crystal ball.  Price actions that ended up in a doji bar can be confusion; so trade cautiously and trade with discipline!

Good Hunting!

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What’s next with the submarine called NFLX

Netflix has gone thru many transformation since 2008.  It started off flying like a crop duster, bumping up and down over the farmland until it transformed itself into a P-51 Mustang in 2009 heading toward the sky.  From 2010, Netflix shed its old skin and took off like a F-15 fighter jet plane heading toward the stratosphere.  By mid 2011, Neflix was cruising on outer space as a space shuttle intending on orbiting around the earth.

Then something happened!

Netflix CEO Reed Hastings decided to write his infamous letter in mid-2011.

The fall was turbulent.  It fell thru the atmosphere like a hot knife cutting thru melting butter.  If you bought at or near the top, every hesitation would cause you pain and depleted your beloved coins.  The violent free-fall hit the support so hard in late 2011 that it bounced majestically back to the 130ish in early 2012.  But the big bounce was simply due to the force of the deadly fall more than anything else.  Eventually, gravity took it toll and Netflix resumed its nosedive once again.  It bounced again on the same support but only on a tepid level.

As of now, Netflix transformed itself into a submarine and dive into deep water.

But like all self-contained metal container that filled with living organism inside, it needs plenty of air supply to keep the occupants alive.  Thus, the question is, “does Netflix has enough air supply to keep shareholders alive while it is diving into deep water?”

As you can see the Netflix weekly chart below.  NFLX broke support and dive into the next support around 52ish.  If it continues to dive toward the next support at $41ish, I’m afraid air supply will run out and a dead spiral may happen.

I’m very curious about how Netflix is going to find the air supply here and I don’t think it is that easy when you are under water.  So, I’m testing my theory by buying NFLX put option even at this level.

The above parody is not to be taking seriously.  Netflix may well transform itself into a Transformer and fly off the water into the outer space in one moon shot.  That is why I’m buying put option only so my loss will be limited.

Good Hunting!

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Profit-taking time? (updated with chart)

Based on price action, I’ve a feeling that many people have their finger on the “profit-taking” button ready to press.  It’s almost like  everyone is waiting to see what everyone is doing.  All it takes is a fund manager to push the panic “profit-taking” button to begin the slide.

I’m currently shorting SPY and AAPL on a day trade and long TZA on my swing trade.  I may get my wish of getting some profit by end-of-day if some fund manager can just press the button and get it over with.

My bet is that by end of day, we will have a bearish engulfment bar on the SPY chart today.  This will mean a possible continuation of a correction that began yesterday.

No chart display today ’cause I’m busy watching my day trade position.

Good Hunting!

Market close Update:

Now that the day is over, my wish for bearish engulfment for the daily SPY bar for today is granted!  Seeing the possibility of a bearish engulfment bar , I committed additional fund to short the market (before market close) for the possibility of the continuation of down trend tomorrow.

Below is the daily SPY chart.  This is a bearish engulfment of a previous down bar!  What does that mean?  A higher probability of continuation?  Who know.  We will find out tomorrow.

Current position:

9.6% LT-equity

12.8% TZA & SKF (shorting)

77.6% cash

Good Hunting!

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