1.11.2017

Bounce Play: VITA

In the stock market world, we should all learn how to earn money during uptrends and downtrends. This is because of the simple fact that the market cannot go in one direction all the time. It shifts constantly from one to the other. 

For my neural networks, one is far easier than the other. Just look for the outlier, the strong stocks and then buy high and sell higher. If it doesn't continue on upwards, then just sell quickly or cut losses accordingly. Simple yet very effective. 

The other side is buying downtrends or bounce plays. These are the stocks that have been battered and broken and don't seem to have any immediate upside. But if you are able to catch this at the point of reversal, oh so juicy returns in a short amount time!

VITA was one of these stocks that came from a recent high and just seemed to resist making any kind of significant bounce. It just continued to go lower and lower and lower for a couple of months. It didn't look like there was any end in sight. Especially when looking at the daily charts. No sign of strength right? 



Sometimes what I do, when the daily charts don't give me any clear picture, I switch to the longer time frames. 

Now, let's take a look at the weekly chart and it looks much better. There seemed to have been a support formed at the 50MA and darvas levels. 



When I saw this, I instantly made my plans and set the corresponding buy (as near to the 50MA as possible) and cutloss points (break of the 50MA). I was ready and lying in wait on the first day of the year. 

Fortunately, I made the right decisions and everything worked according to plan. 



Wasn't able to sell at the high of the day but that's OK. It went far and beyond my expectations for the first trade of the year. It's a different kind of rush to be able to buy at the almost absolute bottom. And then watch it bounce in a most spectacular way.

I imagine it must be just like what this sterling earthling felt when he caught the cup of beer one-handed in a sea of people. 



Here's a toast to catching more fantastic bounce plays in the future.