Last few days in this bull mkt, I chose two stocks to enter, which were going down- phcc and fre. But, my timing was wrong for both of them. I like to take risk with stocks gaping down. My rational is people fear more loosing money than winning due to greed, and they usually oversell thier position. I bought fre at $50, thinking it is a support, but hindsight I am wrong. With phcc I bought at $21 thinking $20 is the support, but now it is trading at $19.50. I know that, shorting is better policy, but I am trying to learn like mutual fund manager, where shorting is not allowed. If I can figure out ( not exact point, but nearby) when the institutions and hedge funds move in to stabilize the falling price, or get out like mstr, I shall be successful. Any advice?
There is a difference between concept and realisation. When realisation comes one must use his eyes and not trade theorical numbers. That means monitoring the support with indicators or micro-patterns like MSH or MSL for example http://perso.wanadoo.fr/harrytrader/_sgt/m1m2s2_1.htm - MSH (Market Structure High): A very common pattern composed of 3 candlestick marking a potential reversal. The trigger occurs when the 4th candlestick breaks the low of the 3rd one. MSH failed when prices turn back to the high of the 2nd one. FMSH is also a pattern giving an opposite signal. - MSL (Market Structure Low): A very common pattern composed of 3 candlestick marking a potential reversal. The trigger occurs when the 4th candlestick breaks the high of the 3rd one. MSH failed when prices turn back to the low of the 2nd one. FMSL is also a pattern giving an opposite signal.
Look at the long term trend on both FRE and PHCC on monthly and weekly using MA both were in a downtrend so buying dip will not work. While MSTR wasin an uptrend on a larger time frame.
why the heck are u trying to go long a stock that is clearly down or extrememly negative. there are other better stocks to play in the market, chose the trending stocks and use support and resistance based on good trend line.
stop thinking you know where the stock is going when there is bad news. no one can know that. support is useless if there is bad news. remember sometimes charts make news and sometimes news makes charts.
I made tons of money before with dyn, wmb, nt the same way. I do play trending stock like mstr, hov, untd etc. Like what john henry said, " identify trend, then play fat middle part of it". But, biggest money is made contrarian way; 'go against the flow'. I only need advice from people, who are playing with distress stocks, and are successful. For example, when hedge funds or institutions move in to buy more than 5% of a particular stock; they have to declare to the world. Falling price stocks are usually stop by big guys. So, idea to follow them is not bad. Both companies- fre, phcc are fundamentally strong. They will bounce back strong, I am sure of it. The price I paid without the hindsight is reasonable, because no one can pick the bottom or top. Only thing, I have to wait a little bit longer with stoploss of 12% instead of 2% to catch the big gain. Although, I use 2% stoploss for trending stock. Meantime, I have decided to buy in the money call option for both stocks, expiry date 3 months.