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Tag Archives: stock trading

Joined The Fly on $RBCN

I joined The Fly and bought $RBCN because the chart looks good for a breakout run.

Take a look at the $RBCN daily chart below.  Did you see the resistance around $6.78 that goes all the way back in early December 2012?  Price action today took out that resistance and is looking strong to gun for the next resistance at 04/10 high.  The two momentum indicators are pointing up and I’ve all the technical reasons to give me the confidence to jump in at this level.

RBCN_daily

Take a look at the weekly chart below.  I like the strong green weekly bar being developed this week.

RBCN_weekly

Fundamental speaking, I like the fact that $RBCN manufactures components for the LED lighting industry.

Below is the business profile from Yahoo Finance:

Business Summary

Rubicon Technology, Inc., an electronic materials provider, develops, manufactures, and sells monocrystalline sapphire and other crystalline products for light-emitting diodes (LEDs), radio frequency integrated circuits (RFICs), blue laser diodes, optoelectronics, and other optical applications. The company fabricates sapphire substrates and optical windows from the boules and sells them in core, as-cut, as-ground, and polished categories in two, three, four, six, and eight-inch diameter wafers in C, R, A, and M planar orientations. Its products include six-inch polished sapphire wafers for use in LED applications and in silicon-on-sapphire RFICs; two through four-inch diameter sapphire cores for making wafers for use in LEDs and blue laser diodes; and sapphire products that are used for windows and lenses in military, aerospace, sensor, and other applications. The company also sells optically-polished windows and ground window blanks of sapphire and various fluoride compounds, such as calcium, barium, and magnesium fluoride. Rubicon Technology sells its products directly to customers in Asia, North America, and Europe. The company was incorporated in 2001 and is headquartered in Bensenville, Illinois.

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My 2 cents.

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Bust out or breakout?

I’ve been stalking, trading, positioning $SZYM with more headaches than any other stocks I’ve traded.  Now, I think I’m at a comfortable position with the size I want giving current price action.

Take a look at the daily $SZYM chart below.  Price took out the high of 04/11 and is about to take out the 89xma as well. 5ma crossed over 15ma and the two momentum indicators are pointing up.  On top of all the technical supports for a bullish bouncing stance, my gut/intuition tells me this one is about to take off.  (caveat: my gut/intuition does not possess the property of a divine crystal ball, so take it as a grain of salt please.)

SZYM_daily

Now, will I be proven wrong again?  From my track record with $SZYM, I’ve been proven wrong time and time again.  Like a roulette game, after so many red, black should turn up any time now, right?

My 2 cents.

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Is this Spinning Top going to fall?

Today $SPY rally continues on and price action is now above the 2007 high once again.  On top of that, price action is now back over the up trendline that has started from 02/26 low.  However, I like to see price action takes out the previous high of 04/11 to be considered a full-on bull trend.

Take a look at the $SPY daily chart below:

SPY_Daily

Now take a look at the monthly $SPY chart again below:

SPY_monthly

Did you see the forming of a spinning top candlestick for the month of April?

Let’s take a closer look.

SPY_monthly2

A spinning top at or near critical historical resistance such as 2007 high can be a significant tell-tale sign.  I will be more cautious going forward from here in light of May being the month of patterned down month.

Below is the primer for Spinning top candlestick pattern:

Definition of ‘Spinning Top’

A type of candlestick formation where the real body is small despite a wide range of price movement throughout the trading day. This candle is often regarded as neutral and used to signal indecision about the future direction of the underlying asset.

Investopedia explains ‘Spinning Top’

If a spinning top formation is found after a prolonged uptrend, it suggests that the bulls are losing interest in the stock and that a reversal may be in the cards. On the other hand, if this formation is found in an defined downtrend, it suggests that the sellers are losing conviction and that a bottom may be forming.

Cautiously optimistic is the way to perceive current rally.

My 2 cents.

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Bullish Candlestick Pattern: “Morning Star” is shining on…

$AAPL.

I got stopped out earlier in the morning during the downdraft but re-entered my position on $AAPL after the dust was settled; therefore I’m still long $AAPL.  If the Morning Star bullish pattern continues to hold until day close, we “may” find the bottom on $AAPL.

Take a look at the Morning Star pattern (inside the circle).

AAPL_daily

Of course, $AAPL earning report after close tomorrow will be the deciding point of $AAPL’s future direction.

Below is the primer on Morning Star Candlestick pattern:

Morning Star

The morning star consists of three candlesticks:

  1. A long black candlestick.
  2. A small white or black candlestick that gaps below the close of the previous candlestick. This candlestick can also be a doji, in which case the pattern would be a morning doji star.
  3. A long white candlestick.

The black candlestick confirms that the decline remains in force and selling dominates. When the second candlestick gaps down, it provides further evidence of selling pressure. However, the decline ceases or slows significantly after the gap and a small candlestick forms. The small candlestick indicates indecision and a possible reversal of trend. If the small candlestick is a doji, the chances of a reversal increase. The third long white candlestick provides bullish confirmation of the reversal.

Broadcom Corp. (BRCM) Candlestick Morning Doji Star example chart from StockCharts.com

After declining from above 180 to below 120, Broadcom (BRCM)[Brcm] formed a morning doji star and subsequently advanced above 160 in the next three days. These are strong reversal patterns and do not require further bullish confirmation, beyond the long white candlestick on the third day. After the advance above 160, a two-week pullback followed and the stock formed a piecing pattern (red arrow) that was confirmed with a large gap up.

My 2 cents.

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Bounce Alert for Aggressive Play

I like $GLUU here.

As you can see from the daily $GLUU chart below, it is bouncing off the  Andrew Forks mid-line  with two momentum indicators turning up.  While the downtrend line still needs to be broken to the upside to be even considered a possible trend change.  I’m playing this one more aggressively because I’m sensing a bounce here.

GLUU_daily

Below is the $GLUU weekly chart.

GLUU_Weekly

Last time I got into $GLUU, I bailed out too soon and missed the gap up later.  Will I catch the ride this time?

My 2 cents.

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Where Ego Dares #2: Thought

Last time, in Osho’s essay, he postulated that The Mind is nothing more than a continuous thought process.

Key components: continuous + thought + process

Let’s start with thought.

What is thought, really?

The moment you utter a word in any language in your head, you have thought.

Why do we have thought?

I believe the three items below encompass the majority of the reasons

  1. we want something
  2. we describe something
  3. intuition

1) We want something

You are walking in the woods and you feel an urge to pee.  “I’ve got to find a place to pee.” becomes your thought.

2) We describe something

While looking for a place to pee, you’re thinking, “there are some tall bushes over there I can hide while I pee”.

3) Intuition

“Wait a minute, something doesn’t feel right over there,” becomes your thought as you approach the area.

I’m sure you can come with some other reason why we have thought; but most likely they can fall into one of the three categories above.

What if I’m solving a problem?

This is an interesting question!  You know why?  Because the thought involves in solving a problem can morph from one of the three to another.

First, you describe the problem, then you want the problem solves.  Later, your answer to the problem comes from your intuition.

While the three examples above are in extreme simple form, these three drivers of our thought are able to weave a continuous complex thought process in our head that gives birth to our mind.

Now, we have body and mind.

What is the deal with body and mind?

Well, our mind, being a complex thought process we weave together in the language of our creation, happens to be “floating like a cloud” as a result of the neuron firing process in our brain which is the command center of our body.

So, when the mind says jump, our body jumps.  When the mind says cry because it is thinking of a painful situation, tears come out of our eyes.

“Impossible! This sure-winner stock dropped like a rock right after I bought!”  When you think this, your body goes through the emotional state of disbelief and even anger and yet you decide to buy more to average down.

Here is another way to express your thought in the same situation, “Jeez stock dropped like a rock after I bought, I’m getting out right now!” Your body goes through the emotion of relief for getting out of the stock pronto.

You can obviously see the big difference between the two thoughts above.

How do one ends up picking either one of the above thoughts then?

Excellent question!

This is where your ego comes into the picture.

Before moving on with the discussion of ego, remember this from Osho?

If somebody is controlling the mind, then it will only be only a part, a fragment of the mind controlling another fragment of the mind. That is what the ego is.

So you have a thought process that creates a mind that says “this stock has to go up because my analysis of the fundamental is corrected” even though the stock price has been declining for the last month. This mind creates stubbornness in you..

Meanwhile, you have another set of thought process that creates a separate mind that says, “OMG! How can it be? My money is losing fast and I may be getting a margin call soon if I don’t do something!” This mind creates fear in you.

Now, you have “a fragment of the mind controlling another fragment of the mind”

– I am right against fear of loss

or

– stubbornness against fear.

When these two minds in us collide with equal force, you have created a “deer in the headlights” situation- you are effectively frozen in action.

Going back to the two earlier examples:

“Impossible! The sure-winner stock dropped like a rock right after I bought!”  When you think this, your body goes through the emotional state of disbelief and even anger and yet you decide to buy more to average down.

Which part of the mind has control in the above example?  Yes, the “I am right” mind.

Here is another way to express thought in the same situation, “Jeez stock dropped like a rock after I bought, I’m getting out right now!” Your body goes through the emotion of relief for getting out of the stock pronto.

Which part of the mind has control in the above example?  Yes, the “fear of loss” mind.

So, at the end of the day, it is all depended on which part of the mind has more juice to back it up.  In other words, the mind with more training and exposure usually win the day.

And which of the the mind do you think usually has control during the day?

You’ve got it, the “I am right” mind.

You know why?

It is how we are programmed to think by our society.  We mimic the “I am right” mind of our parents, the school teachers, and all authority figures we want to become when we grow up.

While this “I am right” mind works wonderfully in our society and in the business world, it can be a hindrance when it comes to trading.

Therefore, our task as a trader/investor is to train our thought process in the direction of “fear of loss” mindset along with the art of following price action.  In other words, we have to train this mindset so it becomes the dominant mind (aka ego) when it comes to making a final decision on the trade.

But it’s easier said than done. 

Let me show you how I make it works for me.

Overtimes, I’ve engineered my “I am right” mind to work on my position trades and keep it busy there while I train my “fear of loss” mind to cut losses during swing trading.  Yes, I disable the ability of the “I am right” mind to average down.  To do a conditional average down, my “fear of loss” mind will be the one to take that trade.

So far so good.

The beauty is that my “I am right” mind is not dominating 100% of my portfolio which will be quite dangerous if it is.

That is all for today.

Btw, I did not come up with all the above thought process on my own.  Since I’ve read many books in the past, I’m simply putting together thought processes from others in a way that works for me.

My 2 cents. 

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Did you hear that noise?

Sound like a steam engine of the north-bound train is kicking back into action.

Most of the charts I’m watching now act like they are coming back to life.

The $SPY daily chart below shows that, again, the Year 2000 high is a strong support. Price again bounces off this support instead of continuing the downdraft from yesterday.

SPY_Daily

The way I see this, we are still in a consolidation range inside these two multi-year highs. Because one successful attempt was made to break out of the 2007 high with several days over it before coming back down inside the range as opposed to zero day breaking down below the 2000 support, I’m cautiously optimistic that the bull is still alive and kicking. Of course, this is a matter of personal interpretation of the chart.

Nevertheless, I see enough today to jump back into stocks I’ve previously disposed of before.

My 2 cents.

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Three technical reasons supporting a BOTTOM for $AAPL

Reason number 1: We are at 50% retracement from the low of Jan 2009 and the high of Sep 2012. See the blue horizontal line below in the $AAPL weekly chart.

AAPL_Weekly

Reason number 2: The length of the drop from the high of 03/25 to the low of 04/5 is equal to the length of the drop from the high of 4/11 to the low of 4/19 (today).  See the blue zig-zag line.

AAPL_dailly

Reason number 3: We have a bullish piercing candlestick pattern in development today.  See the two candlesticks inside the circle.

Below is the primer for bullish piercing candlestick pattern:

Piercing Pattern

The piercing pattern is made up of two candlesticks, the first black and the second white. Both candlesticks should have fairly large bodies and the shadows are usually, but not necessarily, small or nonexistent. The white candlestick must open below the previous close and close above the midpoint of the black candlestick’s body. A close below the midpoint might qualify as a reversal, but would not be considered as bullish.

Just as with the bullish engulfing pattern, selling pressure forces the security to open below the previous close, indicating that sellers still have the upper hand on the open. However, buyers step in after the open to push the security higher and it closes above the midpoint of the previous black candlestick’s body. Further strength is required to provide bullish confirmation of this reversal pattern.

CIENA Corp. (CIEN) Candlestick Piercing Pattern example chart from StockCharts.com

In late March and early April 2000, Ciena (CIEN) declined from above 80 to around 40. The stock first touched 40 in early April with a long lower shadow. After a bounce, the stock tested support around 40 again in mid April and formed a piercing pattern. The piercing pattern was confirmed the very next day with a strong advance above 50. Even though there was a setback after confirmation, the stock remained above support and advanced above 70. Also notice the morning doji star in late May.

And for these three reasons, I’m comfortable to buy some $AAPL this morning.

My 2 cents.

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A Call from Next Week

Yes, we will get a call from next week to find out if 4/5/2013 low will be a support from today down day.

Take a look at the daily $SPY chart below:

SPY_Daily

It looks like 4/5 low is holding the ground for now with one hour to go.  Regardless, we will know next week how it will play out.  Meanwhile, I’m not going to sit heavily in stock waiting for judgement call.  I’ve been downsizing some of my position this morning and my cash is now 60%.

There is really nothing for me to do but to relax and rest.  Sometimes, you need to let the market goes and give it time to “digest”.  And it will be much easier to relax if you adjust your portfolio to increase cash.  If you are still heavily invested, some of you are likely to be tense and worrisome which is understandable giving today continuing bear stance.  For those who have a hard time moving from stock to cash: try this exercise, think of $CASH as a stock.  So, you will sell stock $ABC to buy stock $CASH.  That may do the trick.

Be safe.

My 2 cents.

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Three Inside Down = Play Defense

Today confirms that yesterday Bullish Harami is not so bullish after all; instead today is a day to play defense.  The Three Inside Down is a candlestick pattern that points to a possible bearish stance.

Take a look at the daily $SPY chart below:

SPY_Daily

Now take a look at the primer on Three Inside Down below:

Bearish Three Inside Down Pattern


BEARISH THREE INSIDE DOWN

Type: Reversal
Relevance: Bearish
Prior Trend: Bullish
Reliability: High
Confirmation: Suggested
No. of Sticks: 3

 

Definition:             Get the highest rated stock from Americanbulls for this pattern >>>The Bearish Three Inside Down Pattern is another name for the Confirmed Bearish Harami Pattern. The third day confirms the bearish trend reversal.Recognition Criteria:1. Market is characterized by uptrend.
2. We see a Bearish Harami Pattern in the first two days.
3. We then see a black candlestick on the third day with a lower close than the second day.
Explanation:The first two days of this three-day pattern is a Bearish Harami Pattern, and the third day confirms the reversal suggested by Bearish Harami Pattern since it is a black candlestick closing with a new low for the three days.Important Factors:The reliability of this pattern is very high, but still a confirmation in the form of a black candlestick with a lower close or a gap-down is suggested.

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At this point, a more cautious and defensive stance is warranted for those who are heavily long.

I’m currently sitting on 47% cash.

Be safe!

My 2 cents.

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