Thu May 2, 2013 10:24am ESTComments Off on Bouncing off Support
$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.
Wed May 1, 2013 3:59pm ESTComments Off on Hanging Man bearish confirmation alert!
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.
Tue Apr 30, 2013 2:01pm ESTComments Off on Calling a bottom here
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…
Sun Apr 28, 2013 1:18pm ESTComments Off on Where Ego Dares #3: Training
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.
MELA Sciences, Inc., a medical device company, designs, develops, and commercializes a non-invasive point-of-care instrument to aid in the detection of melanoma. The companys principal product, MelaFind, consists of a hand-held component that employs high precision optics and multi-spectral illumination; a proprietary database of pigmented skin lesions; and lesion classifiers, which are mathematical algorithms that extract lesion feature information and classify lesions. Its hand-held component emits light of multiple wavelengths to capture digital data from clinically atypical pigmented skin lesions, which is then analyzed utilizing classification algorithms trained on its proprietary database of melanomas and benign lesions to provide information to assist in the management of the patients disease, including information useful in the decision of whether to biopsy the lesion. MELA Sciences, Inc. offers its product to dermatologists. The company was formerly known as Electro-Optical Sciences, Inc. and changed its name MELA Sciences, Inc. in April 2010. MELA Sciences, Inc. was founded in 1989 and is based in Irvington, New York.
My 2 cents.
This is not a recommendation to buy but simply my documentation of why I bought this stock.
Thu Apr 25, 2013 3:07pm ESTComments Off on Nanotechnology – our emerging tech to replace science fiction
I’ll let the charts tell the picture.
Below is the weekly chart for $PXN (ETF for Nanotech)
Below is the weekly chart for $TINY
Notice price was bouncing off the floor.
Below is the daily chart for $TINY
There are the usual resistance; but in time, you cannot avoid the emerging of the nanotechnology to change every aspect of our technological life. There is a new tech world out there that will bring science fiction into reality sooner than we think…
Disclosure: $TINY is in my long-term position portfolio.
Wed Apr 24, 2013 1:36pm ESTComments Off on 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.
Take a look at the weekly chart below. I like the strong green weekly bar being developed this week.
Fundamental speaking, I like the fact that $RBCN manufactures components for the LED lighting industry.
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.