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?

Q&A: Bear market

I've gotten several PMs asking what I did during the past couple of months. In the real world and in the PSE. 

For the whole latter part of May I took a break from the market. A well deserved vacation with the family right before the little one starts school again. Always a good idea to recharge and get back to your WHYs. 

In the PSE, it was more of the same. After looking at the charts when I got back, I didn't miss much.

The general sense of weakness is still prevailing. Dozens of stocks hitting 52 week lows. iZS and iAOTS galore. 

So what's the best strategy during this time?

- Take some time off. Maybe this is Ms Market's way of telling you to recharge.

- Do some practice trades on unfamiliar setups. There are so many possible divergence or downtrend setups to work on. 

- Or even take up a new hobby!

- For part time traders, get a sideline or do well at work. 

- You can even try looking at other markets or alternatives. There is a whole other world out there. The PSE is just one market out of dozens.

Crypto. US/HK/China/SG/European market. FOREX. 

Here's something I told the current proj seed batch when they asked if I changed how I filter or choose stocks right now. 

Again, you don't need to trade just for the sake of trading. That is foolishness. We should be able to survive during bull and bear seasons. If limiting your trades to protect your capital is your strategy for now, then do it. 

If there are others showing green ports during this time, do not be pressured. You don't know their journey. Maybe their system is more on buy on support or purely momentum based. This is their market. Their time to shine.

Your time will come. Remember that.

Your. 

Time.

Will. 

COME. 

and when it does you have to be ready to take advantage. 

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.