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It’s not about right or wrong picks, it’s about trade management

If the market turned south when you were 70% or higher loaded in equities, paper losses were forgone conclusion.  However, you could manage your portfolio so that the losses would be controlled if the carnage continued.

I was fortunate to have the gut to chase $DUST by Friday close; thus, I was able to gain the profit to offset the losses I took this morning.  I made several calls last week and only $DUST saved the day.  The others were either going nowhere ($CERS, $APRI) or took the other direction of my calls ($PPC, $DNDN, $PACB).  Was I upset?

Not really.

That was because I knew I was not a prophet who could foresaw price movements 100% of the time.   My intuition, at best, would give me 51% win ratio.  But the point here is not about how much winning picks versus losing picks.  If you can accept this simple truth that none of us has the divine crystal ball to work with; then you can stop chastising yourself for not seeing the current carnage.  Instead, spend the energy to manage your trades so you can prevent your portfolio from bleeding further.

As I had discussed this before, I used the “thought” of buying  back my positions I sold today at a cheaper price later to give me the confidence to execute my trades to cut losses.  Yes, I may be selling at the bottom but you cannot allow this “ego” thought to freeze you like a deer facing the headlight.  You have to be “OK” to miss the “possible” late rally so that you will allow yourself to cut losses.  Take a look at my $SZYM today.  If I hadn’t taken my losses in the morning time, I would be sitting in a much bigger losses.  Instead, I’m now salivating while waiting for the right time to buy back in for a much cheaper price.

Take heed to The Fly warning about averaging down today.  If today down day is just a  prologue; averaging down will be like opening your spigot to allow more of your blood to come out faster.

I’m not suggestion going all cash here.  Portfolio management is simply a process to minimize the risk by reducing the hi-beta or non-performance stocks so that cash will be available to buy back stocks at cheaper price if ones are fully loaded.

Go with the flow, my friends, go with the flow.

Now that I’ve done my mumble jumble on trade management. let’s take a look at the $SPY daily chart:
SPY_Daily

As you can see, today down day penetrates the support from year 2007 high.  The next level of major support is the year 2000 high.  If this 2000 high can hold the downdraft, we may still be stuck in a consolidation stage with the previous rally as an aberration.  However, if the 2000 high fails to support price; further downdraft will be quite ugly.  Yes, there is a lot of “ifs” here.  This beg the question, why will you want to be fully loaded when there is a lot of “if’s” in the face of the current downside storm?

Do some of us forget that the beauty of the stock market is that you can open and close your positions at any times in the day when the stock market is opened?  Why do you worry about holding stocks the way people are holding gold bar right now?  For crying out loud, stocks are liquid and you can always buy back.

This post is meant for people who are having a hard time deciding what to do with the fully loaded position and is gnawing their teeth right now.  If you are already managing your portfolio accordingly, my hat off for you.

Currently 57% cash.

My 2 cents.

 

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Where Ego Dares #1 – The Mind

Before we begin the discussion of ego and how we can make it work with us instead of against us, let me present a philosophical discussion by one of our deep thinker below regarding our mind:

What is mind?

Mind is not a thing, but an event. A thing has substance in it, an event is just a process. A thing is like a rock, and event is like a wave- it exists, but is not substantial. It is just the event between the wind and the ocean, a process, a phenomenon.

This is the first thing to be understood, that mind is a process like a wave or like a river, but it has no substance in it. If it has substance, then it cannot be dissolved. If it has no substance, it can disappear without leaving a single trace behind.

When a wave disappears into the ocean, what is left behind? Nothing, not even a trace. So those who have known, they say mind is like a bird flying into the sky- no footprints are left behind, not even a trace. The bird flies but leaves no path, no footprints.

The mind is just a process. In fact, mind doesn’t exist- only thoughts, thoughts moving so fast that you think and feel that something exists there in continuity. One thought comes, another thought comes, another, and they gone… the gap is so small you cannot see the interval between one thought and another. So two thoughts become joined, they become a continuity, and because of that continuity you think there is a mind.

There are thoughts- no “mind.” Just as there are electrons- no “matter.” Thought is the electron of the mind. Just like a crowd… a crowd exists in a sense, doesn’t exist in another. Only individuals exist, but many individuals together give the feeling as if they are one. A nation exists and exists not- only individuals are there. Individuals are the electrons of a nation, of a community, of a crowd.

Thought exist- mind doesn’t exist; mind is just the appearance. And when you look into the mind deeper, it disappears. Then there are thoughts, but when the “mind” has disappeared and only individual thoughts exist, many things are immediately solved. The first thing is that immediately you come to know that thoughts are like clouds- they come and go, and you are the sky. When there is no mind, immediately the perception comes that you are no longer involved in the thoughts- thoughts are there, passing through you like clouds passing through the sky, or the wind passing through the trees. Thoughts are passing through you , and they can pass because you are a vast emptiness. There is no hindrance, no obstacle. No wall exists to prevent them; you are not a walled phenomenon. Your sky is the infinitely open; thoughts come and go. And once you start feeling that thoughts come and go, and you are the watcher, the witness, the mastery of the mind is achieved.

Mind cannot be controlled in the ordinary sense. In the first place, because it is not, how can you control it? In the second place, who will control the mind? Because nobody exists beyond the mind- and when I say nobody exists, I mean that nobody exists beyond the mind, a nothingness. Who will control the mind? 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.

Mind cannot be controlled in that way. It is not, and there is nobody to control it. The inner emptiness can see but cannot control. It can look but cannot control- but the very look is the control, the very phenomenon of observation, of witnessing, becomes the mastery because the mind disappears.

Mind is nothing but the absence of your presence. When you sit silently, when you look deep into the mind, the mind simply disappears. Thoughts will remain, they are existential, but mind will not be found.

But when the mind is gone, then a second perception becomes possible: you can see that thoughts are not yours. Of course they come, and sometimes they rest a little while in you , and then they go. You may be a resting place, but they don’t originate in you. Have you ever noticed that not even a single thought has arisen out of you? Not a single thought has come through your being; they always come from the outside. They don’t belong to you- rootless, homeless, they hover. Sometimes they rest in you, that’s all, like a cloud resting on top of a hill. Then they will move on their own; you need not do anything. If you simply watch, control is attained.

The word control is not very good, because words cannot be very good. Words belong to the mind, to the world of thoughts. words cannot be very, very penetrating; they are shallow. The word “control” is not good because there is nobody to control and there is nobody to be controlled. But tentatively, it helps to understand a certain thing that happens: when you look deeply, mind is controlled- suddenly you have become the master. Thoughts are there, but they are no longer masters of you. They cannot do anything to you, they simply come and go; you remain untouched just like a lotus flower amidst rainfall. Drops of water fall on the petals but they go on slipping, they don’t even touch. The lotus remains untouched.

That’s why in the East the lotus became so significant, became so symbolic. The greatest symbol that has come out of the East is the lotus. It carries the whole meaning of the Eastern consciousness. It says, “Be like a lotus, that’s all. Remain untouched and you are in control. Remain untouched and you are the master.”

So from one standpoint, the mind is like waves- a disturbance. when the ocean is calm and quiet, undisturbed, the waves are not there. When the ocean is disturbed in a tide or strong wind, when tremendous waves arise and the whole surface is just a chaos, the mind from one standpoint exists. These are all metaphors just to help you to understand a certain quality inside, which cannot be said through words. These metaphors are poetic. If you try to understand them with sympathy, you will attain an understanding, but if you try to understand them logically, you will miss the point. They are metaphors.

Mind is a disturbance of consciousness, just as waves are a disturbance of the ocean. Something foreign has entered- the wind. Something from the outside has happened to the ocean, or to the consciousness- the wind, or the thoughts, and there is chaos. But the chaos is always on the surface. The waves are always on the surface. There are no waves in the depths- cannot be, because in the depths the wind cannot enter. So everything is just on the surface. If you move inward, control is attained. If you move inward from the surface you go to the center- suddenly, the surface may still be disturbed but you are not disturbed.

The whole of the science of meditation is nothing but centering, moving toward the center, getting rooted there, abiding there. And from there the whole perspective changes. Now the waves may still be there, but they don’t reach you. And now you can see they don’t belong to you, it is just a conflict on the surface with something foreign.

And from the center, when you look, by and by the conflict ceases. By and by you relax. By and by you accept that of course there is a strong wind and waves will arise, but you are not worried, and when you are not worried, even waves can be enjoyed. Nothing is wrong in them.

The problem arises when you are also on the surface. You are in a small boat on the surface, and a strong wind comes and it is high tide and the whole ocean goes mad- of course, you are worried, you are scared to death! You are in danger; any moment the waves can overturn your small boat; any moment death can occur. What can you do with your small boat? How can you control anything? If you start fighting with the waves, you will be defeated. Fight wont’ help; you will have to accept the waves. In fact, if you can accept the waves and let your boat, however small, move with them and not against them, then there is no danger. Waves are there; you simply allow. You simply allow yourself to move with them, not against them. You become part of them. Then tremendous happiness arises.

That is the whole art of surfing- moving with the waves, not against them. With them- so much so, that you are not different from them. Surfing can become a great meditation. It can give you glimpses of the inner because it is not a fight, it is a let-go. Once you know that, even waves can be enjoyed… and that can be known when you look at the whole phenomenon from the center.

Just as if you are a traveler in the forest and clouds have gathered, and there is much lightning, and you have lost the path and you are trying to hurry toward home. This is what is happening on the surface- a traveler lost, many clouds, much lightning; soon there will be a tremendous rain. You are seeking home, the safety of home- then suddenly you reach there. Now you sit inside, now you wait for the rains- now you can enjoy. Now the lightning has a beauty of its own. It was not so when you were outside, lost in the forest, but now, sitting inside the house, the whole phenomenon is tremendously beautiful. Now the rain comes and you enjoy. Now the lightning is there and you enjoy, and great thunder in the clouds, and you enjoy because now you are safe inside.

Once you reach the center, you start enjoying whatsoever happens on the surface. So the whole thing is not to fight on the surface, but rather slip into the center. Then there is mastery, and not a control that has been forced, a mastery that happens spontaneously when you are centered.

Centering in consciousness is the mastery of the mind.

So don’t try to “control the mind”- the language can mislead you. Nobody can control, and those who try to control will go mad; they will simply go neurotic, because trying to control the mind is nothing but a part of the mind trying to control another part of the mind.

Who are you, who is trying to control? You are also a wave- a religious wave of course, trying to control the mind. And there are irreligious waves- there is sex and there is anger and there is jealousy and possessiveness and hatred, and millions of irreligious waves. And then there are religious waves- meditation, love, compassion.But these are all on the surface, of the surface, and on the surface. Religious or irreligious makes no difference.

Real religion is at the center, and in the perspective that happens through the center. Sitting inside your home, you look at your own surface- everything changes because your perspective is new. Suddenly you are the master. In fact, you are so much in control that you can leave the surface uncontrolled. This is subtle- you are so in control, so rooted, not worried about the surface, that in fact you can enjoy the waves and the tides and the storm. It is beautiful, it gives energy, it gives a strength- there is nothing to be worried about it. Only weaklings worry about thoughts. Only weaklings worry about the mind. Stronger people simply absorb the whole, and they are richer for it. Stronger people simply never reject anything.

If you have read all the way here, I congratulate you.  You have the motivation and interest to learn.

If you’ve skipped the reading, either half-way or from the beginning, then you are impatient and is only looking for quick fix that interest you.  From my experience, you may not have the commitment to improve yourself in a way that you can master the skill you need to trade successfully.

If you’ve skipped the material above because you already know the material (either from a book you own or borrow), a big congratulation is in order.

Ok, so how is the above discussion of the mind help me with trading well?

Good question!

Remember the part about centering?  That where we all want to go as a trader.  When you are centered, you look out the window and you see all the volatile price action; so, instead of being in the middle of a storm where you will be subjected to all sort of emotional responses which can prevent you to make the right decision, you are in the perfect calm stage to make the right decision by getting out when you see price action is going against your entry point.  In other words, you will be in a state of mind that allows you to cut your losses quickly.

I will discuss more of how we can approach our center in the future “Where Ego Dares” series.  Yes, I borrow the title from the movie called “Where Eagles Dare” starring Richard Burton, Clint Eastwood.

And for those who are interested, the philosophical discussion of the mind is an excerpt from a book by Osho.

My 2 cents

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Don’t call me chicken

Because I’m buying $PPC.  Thanks to the alert from Vertigo.

The fundamental makes sense, China is killing a lot of chicken due to the bird flu crisis.  We may have shortage of chicken from China and $PPC may run because of this.

Take a look at the weekly $PPC chart below.

PPC_daily

As you can see, price action may be taking out the current consolidation to the upside.

My 2 cents

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Biting the $DUST

I’m going to chase the $DUST because I believe it is going to take out the top set in May 2012.  If gold price is being clobbered, the gold miners will be decimated.

Take a look at the weekly $DUST chart.  My sense is that last May high will be taken out by next week.  Perhaps, gold is no longer a safe haven because people are coming back to buy stocks as you can see we have made new high on the DOW.

DUST_weekly

Come to think of it, we may even take out last year high today… there are still 35 minutes for this to happen.

My 2 cents.

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Bounce Alert!

I’ve been managing $BCRX since last week after getting the alert from RaginCajun.  I elected to forgo the quick profit from the gap up the next day after my entry because I sensed that this one could be a runner.  Thus, I’ve bought and sold shares of $BCRX to manage my risk so I don’t get slaughtered along the way.   I was down to 25% of original position from yesterday and now I’m back to 110% due to the positive price action this morning.

The chart below clear shows a bounce.

BCRX_daily

Time will tell if this will become a runner like I sense it is.

My 2 cents

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Bottoming Alert!

I’ve been watching $DNDN on and off and today the quantum computer in my head is alerting me that we may be seeing a bottom here.

Take a look at the daily chart below:

DNDN_daily

Did you see the low from earlier this week landed right on the 78.6% Fib retracement?  Did you also see how the two momentum indicators below both turn up and how the price action today is reflecting a “rounding up” pattern?

Price action today also crossed over the 5 min moving average line.  All of this give me a level of comfort to buy a starter position.

Look at the weekly chart below:

DNDN_weekly

Again, the weekly chart is just to show you the prior landscape.  If $DNDN is bottoming out here, we are in the process of starting a 3rd (impulse) wave of Elliot Wave Pattern.  FYI, the 3rd wave, if it is one, is usually the longest wave of the 5 waves pattern…

My 2 cents.

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Breakout Alert!

Yesterday, I posted a thesis on possible breakout of $CERS within a couple of days and speculated accordingly.  It is my duty to inform you that the breakout occurs today.

Yippee Yapa doo!

Ok, now that I got that wave of excitement out of the way, let’s look at the charts a little bit more:

Below is the daily $CERS chart:

CERS_daily

 

The breakout is clean and solid.  Notice that it also took out the upper range of the Bollinger band.  That usually mean the bullish force is tremendous here.

Below is the weekly $CERS chart.  This chart is just to show you the possible potential giving the prior landscape.

CERS_weekly

 

Per my trading strategy, I added to $CERS today.

My 2 cents

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How do you double $CERS yourself?

By buying the breakout of a double-top (Mar 2012 and Mar 2013) of $CERS.

Take a look at the $CERS weekly chart below:

CERS_weekly

I had traded and made money on $CERS years ago and recently missed the run from low $3 to current price.  Interesting thing was that when it was trading at low $3, my mind was saying “Hey, you better get ready for this one!”.  But I ignored that inner voice by forgetting to follow up with it.  But now that it was trading at critical breakout point, I cannot ignore it any longer.

Below is the Yahoo-Finance Profile description of the company if you are interested:

Business Summary
Cerus Corporation, together with its subsidiary, Cerus Europe B.V., operates as a biomedical products company that focuses on developing and commercializing the INTERCEPT Blood System to enhance blood safety. The company’s INTERCEPT Blood System is based on its proprietary technology for controlling biological replication and is designed to target and inactivate blood-borne pathogens, such as viruses, bacteria, and parasites, as well as potentially harmful white blood cells, while preserving the therapeutic properties of platelet, plasma, and red blood cell transfusion products. Its INTERCEPT Blood System for platelets is designed to inactivate blood-borne pathogens in platelets donated for transfusion; and INTERCEPT Blood System for plasma is designed to inactivate blood-borne pathogens in plasma donated for transfusion. The company is also developing INTERCEPT Blood System for red blood cells, which is designed to inactivate blood-borne pathogens in red blood cells donated for transfusion. It markets its platelet and plasma systems through its direct sales force and distributors primarily in Europe, the Commonwealth of Independent States, and the Middle East. The company has collaboration agreements with Baxter International, Inc. for the development and commercialization of the INTERCEPT Blood System. Cerus Corporation was founded in 1991 and is headquartered in Concord, California.

My 2 cents.

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APRIL for $APRI for Triangle Breakout

Although we have a another up-day for $APRI, price is still at the beginning stage of a triangle breakout in the weekly chart.

Take a look at the weekly chart below:

APRI_weekly

 

What it means is that if the breakout to the upside happens on the weekly chart, we are still in the infantile stage of a run.

My 2 cents.

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