Investacup recap Week 3

Obviously the story of the week was $NOW.

From a high of 8.15, it fell all the way to 4.11. Then it gave several wonderful bounce plays in between. Within the tribe, there were numerous people who benefited from the volatility. Even in the investacup competition itself, there were people jumping ranks by the hundreds! For sure those contenders were able to ride the massive bounce plays. Kudos to everyone for being able to ride the waves!

Personally, I was not able to maximize the NOW bounce since I was away from the keyboard on both times that the bounces were materializing. When I got back to the computer, the price was already above the optimal buy point for me. So I just let it go and looked for something else.

Remember, the stock market is not like Pokemon. You don't have to catch them all. You can afford to let some of them go. 

With that in mind, my system selected several other stocks that were also ripe for bounces but would theoretically move in a much more controlled manner. When I say more controlled, the move wasn't supposed to be moving up and down 5-10% in a matter of minutes. Too much excitement for a virtual competition. My stock picks for the week were SECB, MWIDE and again, CHP. 

This week, I'll be focusing on CHP. AGAIN.

For some strange reason, it gave the exact same pattern during the morning of 10/12 (Figure 1).

Figure 1

Could it give the same result? Looks like it for now. We shall see what happens next week. I've placed my position (1.98 buying) and possible target prices (Figure 2). Those target prices are just there for my reference. I'm already prepared in case they don't reach them. Make your own plans.

Figure 2

Ranking after week 3. 

Milestone 1 achieved --> Don't be in the negative. 
Milestone 2 achieved -- > Be in the top 100.

Dare I try to reach Milestone 3? Be in the top 50?

The tricky part though is making sure that I don't go down in rank too much. EVERYTHING gets tougher from here on out. For sure all the traders in the upper echelon of the competition are all in a class by themselves. Just being in the top 100 is a win already in my books. 

Caution is Essential

The past few months there has been a drought in breakouts. The usual breakout trader would be very very hard pressed to make some money. 

However, the market has given several wonderful bounce play scenarios. Granted, the bounce plays we are currently experiencing are very different in structure from the usual bounce plays. Those bounces came from a recently concluded super play or parabolic play vs the ones now which are in a downtrend. So the two bounce plays have vastly different rules on how to play them.

The previous paragraph highlights one of the more important things that most traders overlook when buying or selling stocks. The proper identification of plays will help to temper expectations. Bounce plays in an uptrend will always have more strength vs bounce plays in a downtrend. The same is true for breakouts. This is key in making successful trades.

Here are some recent examples:

DD 6/22/2018

This previously much loved stock has fallen into hard times in the past year and a half. It has been stuck in a slow downward spiral and has been looking for a significant bounce. For chartists, one reason for this could be because the prices were far from any strong supports. (Figure 1)

Figure 1

Now on this particular week, it suddenly picked up it's freefall to oblivion. It broke down from S1 and was going to hit S2 and maybe S3 as well. My sensors were screaming for me to place some orders since the opportunity was too good to pass up. 

Since S2 and S3 were also very near psychological supports of whole numbers, 21 and 20 respectively, this could be a good signal for bounce players to get in. During the morning, S2 seemed to have held and was showing that just maybe the selling was over. Several tranche buys were deployed near S2 and conveniently eaten up.

Figure 2

At the end of the morning session, the price rebounded very well and was moving according to plan (Figure 2). Since it already went up by a good percentage I set my initial tranche sells at 24, 24.5 and 25. In the afternoon session, only a partial shares of 24 were hit and the price seemed to be going back down. In normal instances, I would have held and waited EOD to see what would happen. But since the little robot's school already started again and her schedule has me away from the keyboard from 2pm to 3pm on this particular day, I had to make a change in strategy and changed my exit to a tactical one. 

Again, my confidence in these kinds of bounce plays is not that high yet so I cannot risk leaving my positions open especially when I cannot monitor them. So I sold it all at a much smaller gain than the one posted above. 

MWIDE 07/18/2018

This stock has been in a choppy uptrend and finally made some waterfalls since June. On this particular day, much like DD, it increased it's breakdown speed and even made an iZS on the weekly. However, it was seen to hit a particular support area as seen in Figure 1.

Figure 1

For me, this was a good place to put in my first tranche buy. Also, one scenario that my central processing unit came up with was it might make an iZS intraweek but close above the 100ma by end of week. Not a bad return if that does happen right? 

What more if it reaches the 20ma daily? Or even the 50ma weekly? Those are just some of the scenarios that were in my plans. Pretty good RRR I'd think.

Unfortunately, like the DD trade, I had to sell early because of the little robot's schedule. Though I wasn't able to maximize the profits on this trade, everything still went according to my scenario planning as seen in Figure 2.

Figure 2

Some people might say that I should have taken the risk and held on to my positions in the event that my plan did push through as what happened in the two instances. Yes, that could be true, but in the current market and my current situation, I was more inclined to err on the side of caution. 

These were new plays that were being incorporated into the system and the learning part was the most important thing for me. Any potential profit lost was acceptable since my processors need to get the required reps first to fully integrate it in my system.

Added bonus is having the peace of mind that I wasn't risking a lot while I couldn't monitor the stock movement properly. 

Trade dissection: ISM

Welcome to another of my trade dissection posts. I'll try to post more of these in the future. Just need to make more trades that are worth dissecting.

First of all, I purposely didn't trade this during the time it was still in the yellow box (Figure 1). 

Why not? It's because I didn't understand the setup. I have a general rule of trading only something that I understand and know well.

Yes it was going to AOTS soon. But for me it could still trade within a range since it's too close to the identified recent resistance for me. The reward wasn't as good. So no trade yet however it was moved to my watchlist.

Figure 1

After breaking the identified resistance, I was waiting to see what it would do next. I made a box and visualized what it could do (Figure 2). My bias was it would go down and hit the box bottom and then make the next move up. Sort of like a breather so it can gain some more strength.

Figure 2 

This (Figure 3) was the reason why I was not convinced of it's move yet. Switching to the monthly chart, we can see that it seemed to hit the darvas and 100ma resistance.

Figure 3 

Aaaaand Ms market proved me wrong. As can be seen in Figure 4, it made a breakout from the identified box and would then be halted. I missed this trade because I was too focused on my bounce plays for that particular day (DD and VITA). No worries though, I know that if a stock is really good it would still give buying opportunities somewhere down the line. Just have to wait and make the necessary plans.

 Figure 4 

So what happened next was this had all the ingredients for the sell on news phenomenon as seen in Figure 5.

- you start with the double serving of disclosures and trading halt
- a generous serving of gap up. about 8%
- add in a sprinkle of increased volume. More or less 6M shares worth in the opening minutes
- and finally a dash of adrenaline and danger for those who got too excited and would buyup

It hit the next identified resistance in the monthly which was 2.6 and went crashing down.

 Figure 5

After watching everything crash and burn in the early morning I waited for things to settle down. As usual, I made plans and identified the potential bounce areas where I would wait. 

Went and took a nap as well.

Woke up at about 1030 earth time and was pleasantly surprised to see that the price seemed to be holding very well(Figure 6). Switched plans to buy at the unchanged or near it.      

 Figure 6

And the rest was history (Figure 7).

 Figure 7

Wasn't able to sell at the highs though. My schedule right now is causing me a lot of problems. But I was able to salvage a good enough gain. 

Ms Market will always reward those that can make flexible plans. Those that can make changes on the fly and execute them. Opportunities are still out there. It knocks on the doors of those that prepare. Are you prepared?

A trifecta of bounces

This was certainly a week to remember. I scored a rare triple hit combo.

So many successful and profitable bounce plays. Where do I start? Maybe with the one that failed.

March 19

I was with my family at the airport waiting for our flight. I spotted MoneyGrowers plotting and saw the chart of MRC with the massive drop. I remembered the potential bounce areas since I finished reviewing earlier that morning and just placed some bids which were hit at the close. Boarded the plane feeling content even if it closed a little lower than my aep which was a little over 57 cents. Wasn't too bothered by it because only my initial tranches were hit.

March 20

The day started out bad since I had to cut my positions when MRC tanked in the early hours of the morning. On to the next stock on my watchlist then. 

NOW was number two on my watchlist since it was well into it's second consecutive 20% drop. 

Remember, massive drops = massive bounces. So at about 10am in the morning it hit my identified support areas. Darvas + Fibo 78.6.

I watched the support hold and started placing my tranch buys. The next 45 minutes went by quickly. The price held and was starting to creep upwards. By this time I was already at full allocation with both ports. 

This time, the waiting game begins. I wanted to see if it could clear the 50ma and hold above that maybe sometime after lunch. But the bulls were too strong and pushed it all the way over the 50ma and into a nice green candle by lunchtime. 

This prompted me to believe that this was a good ODR play. I only needed to watch it until closing to make sure that 10 would hold. Why 10? It was a good round number and would make it easy to put a stop on it. Plus the fact that I already have a good profit if I sell there. In the afternoon session, 10 was broken but I was able to sell all my shares around that area. Not bad for a couple hours holding time. 

But wait, that day wasn't done yet!

I looked back at MRC but I already missed the optimal buying window so I had to go to the last stock on my watchlist. 

PXP. 

The drop wasn't as violent as NOW or MRC but it was behaving very well. At about 245pm, it was hovering over two support areas, the 100ma and the Fibo 78.6. 

Those two points stated above led me to believe that this could have found a recent bottom. I proceeded to set my initial tranches and even bought some more near the close. For these kinds of bounce plays, the key for me is to watch the opening the next day if there is strength. 

March 21

Unlike the day before, this day started out pretty promising. PXP made a gap up and seemed to be gathering some strength before making a push to break the 50ma. So far so good right? 

Then the price went bananas in the next 15 minutes. Buyup after buyup. As with NOW, I made a stop of 13. 

Same reasons, same concept. For me any sell above the price of 12 was already considered a bonus. And it was a pretty sizable bonus even if I didn't put it my whole allocation.

After these two massive trades, I was ready to call it a week. I did one final scan and was intrigued by another stock that was crashing big time. 

VUL.

This setup was actually a first for me since I've never traded it with actual money before. Just did paper trades and that's it. This was the reason for the lower allocation. So let's take a look at VUL. 

What made it special was that after it's massive move, it never made any significant bounce yet. That 3/8 candle was a fake and unfortunately trapped more people. It just kept breaking down from all the significant MAs. Now on this particular afternoon, it was making a small cute candle and it reminded me so much of the SSI trade of I think Zee last 11/17/15. Go check it out. You're back? Good. 

So I placed my orders and got it just before the close. Again, the wait for the next day's open begins. 

March 22

The open started strong enough. A small gap. Then before 10am it blasted all the way above 80 cents which was the over the high of the previous day. That just means that the bounce is well on it's way!

My initial target was the reverse Fibo 23.6 levels. But judging by the move and the board, it looked like it would have difficulty reaching that level. This was the reason for me to sell at the levels that I did. 

And this ends my short and detailed walk-through on my bounce trades this week. I'm sure some would ask if I felt remorse or regret that I sold at the levels I did since the prices still went up after my selling. I was happy with all my selling. Profit is still a profit. 

And bounce trades are very tricky, sometimes all it takes is just one person to do a sagasa sell and like a house of cards, everything will fall apart faster than the blink of an eye. 

Form a wall

So.

Group buys. 

I've been hearing about it being discussed a lot recently. For the uninitiated, it means that someone will tell a group of people to buy at an identified support. Like a wall. 

In the NBA, it works. As seen here in this video clip below. Turn up the volume to hear the coach tell it to his players.

Defenders literally just made a human wall to impede the person who is inbounding the ball to see the person he's going to pass the ball to. Easy. 

Now, in the stock market, it's a little bit different and sometimes doesn't work. Let's say the people involved in the group buying are the nova corp ships in Guardians of the Galaxy. 

When the 'leader' of the group says, let's all buy at this price to support our beloved stock! 

We cannot let it fall! 

We will support it as only we can! 

They will form a wall, like this:

Pretty impressive huh? 

But in reality, if Ms Market really wants to break supports, IT WILL BREAK SUPPORTS.

The wall that they built can come crumbing down with just a simple selldown.

And what happens to the people in the wall? 

Instant investors or 'ipits' just like the unfortunate pilot in one of the spaceships. 

So. 

Going back, group buys. 

Obviously I'm not a fan. We do not advocate it in the tribe. It only appears that way sometimes because we all follow one system. And in the unlucky instance that we are unwilling members of a wall, we know how to eject or cut fast to lessen the risk. 

*I admit this could have been better executed by Money Growers with one of his patented videos + dubbing. 

A Tale of 2 Traders: SSI

This is a story of two traders who bought a stock. This story is completely true. The names have been changed to protect the identity of the buyers. 

Once upon a time there was a stock IPO. This certain trader, YP, loved the fundamentals of the stock. He thought the owners were reputable people and their name recall would carry their stock to the moon. YP knows Alpha is a technical trader, though has no idea that Alpha is ZFT trained. 

We begin our story sometime in back in July or August of 2015, YP would ask me from time to time what I thought of SSI. 

iAOTS with no sign of support

When it went back to the IPO price. I said, sell.

When it went to 6. I said SELL.

When it went to 5. I said SELL.

When it went to 4. I finally asked, why are you asking me for my advice if you're not going to listen? The chart is telling me there is no support or reason to buy yet. 

The only thing that he said was that he's already in too deep and would rather just become an investor. He still believes in the owners. That the owners won't let the stock be down for long. 

Fast forward to now, about a year and a half since that time. Finally, SSI looks to be showing some signs of strength. Slowly it seems to be on the long road to recovery. 

By my rough estimate, YP's average should be somewhere around 7-9 pesos. So from about a 60-80% loss, it should be now down to about 40-50%. Not bad. (Pardon my math, despite being a robot and a trader my math is very very bad)

As for me, I bought SSI using nothing but charts and was able to be up by a good amount. The road to breakeven for him is still ongoing. If ever it gets there for him, I'd like to believe that I'll be there cheering him on since I would have made another entry for SSI.

I hope that this story could be used as a sort of caution for people to stop loving a stock. Because it might be too late for some to realize that stocks won't love you back. 

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.