I tried to get in on SPSN. Actually I got a fill and then got nervous cause of the price action. I didnt follow my rules and messed up the entry. The rule is that we want to see a double bottom before we enter a bounce daytrade on equities that sell off 20% or greater in a day. Closed out the trade for a small loss of 100 dollars. It was a good buy at 9.75 and just wish I had followed my rules. In the future, I will follow my rules and buy on the second bounce. Its difficult following your own rules with actual trading and only through constant intraspection will I move myself forward. I missed out on a possible 2500 dollar move. Its ok though. We will get it on the next one. Double bottom on panic selloff. Once fill is achieved at double bottom, set stop a bit down. Then monitor. Close out position by end of day and use Fibonacci lines. THis equity doesnt seem to be following the lines and thats what got me scared. Its not retracing powerfully enough. It could retrace more in one day, but its too risky and I dont know this company.
Just looked at Spansion. If I had kept that fill at 9.81 then I would have been golden. Just got spooked by the price action. At first, I could not get a fill in the morning for some reason. Then I got spooked. Just looked back at the quote 10.3. Argh.
In review of today, the SPSN trade had me spooked. At first, I could not get a fill on IB although I moved the indicator to "market". No fill for 5 minutes. Then I got a fill and had a stop placed. The price wondered down to the stop, but the stop did not execute. This scared me so I closed my position. However, the trade went almost as planned. The V bottom wasnt as fierce as a I liked and the chart was simply moving too slow. These are the problems with real daytrading. Not everything works as planned like IB not filling the order or the stops not working. You think and believe there will be a good retracement, but the price action looks stale and spooky. I think SPSN will retrace up to the 50% Fib line, but I was just interested in trading on the day. I didnt want to wait a few weeks to see if my thesis comes true. About an hour or two later, I looked at the screen and saw how the SPSN price was at 10.2. The reaction on my face was "f*ck". The SOLF trade is not over yet. On April 12th, the low of the day was at 12.66. Then on April 16th, the high was at 17.69. Retracements are usually 50% the height of the advance. 17.69-12.66= 5.03 5.03/2= 2.52 17.69-2.52= 15.17 On April 17th, the price was at 15 dollars. So the price retracement has been achieved. However, we usually see a double or triple bottom before we move on to the next leg. That double bottom will probably be achieved tommorrow at 15. Once the price target of 15 is reached then we can move forward to 20. 15 is my price-line and no lower. This is not my theory, but the DOW theory and it shall be tested. I have a lot of knowledge, but real trading requires more then just knowledge. Its like football. Knowing about football is one thing, but playing the game is a different story. It requires coordination, timing and not being afraid to make a decision. My next trade might be in MNT. There was a waterfall selloff in the afterhours. Again, we are looking for a double bottom. When the price inflects at the double bottom, we go long and set a tight stop underneath the bottom point. I will be looking through the scanner tommorrow to see if this is the equity to trade. I love earnings season because these equities can be pushed down to, for example, 9.75 and then rally up to 10.25 in a matter of an hour. 5% in an hour, not bad. You just cant get that kind of predictable price action. We know that stocks usually dont go to 0 and they dont keep falling. A massive 20+% fall is usually followed by a bounce. Here is a famous example. Sept 3rd 1929 DJIA HIGH= 386.10 Nov 13 1929 DJIA LOW= 195.35 Height= 190.75 Dec 7th, 1929= 265.65 190.75/3= 63.58 63.58+195.35= 258.93 This is so easy to calculate on paper, but when your in the middle of a market crash during the Great Depression, its a hard call to make. Just like today was a difficult call where I got spooked and closed the trade before it could run. This is the challenge behind trading...This is why hedge funds and institutions like to employ former athletes. They want people who have the balls to make these decisions. This is my biggest fault right now. I have to get my emotions under control. Those who threw themselves out of windows in 1929 were wrong. The price of stocks do not go to zero. Instead, they could have just taken the loss and sold. Then waited until the inflection point. They would have made some cash back. I wonder if the Fibonacci concept or the Dow theory was widely popular back then. During panic sell-offs, we will see a bottom. The bounce will usually be 1/3 to 1/2 off of that bottom. Using 1/3 as the bounce point and selling right before then is the safest. The hard part is determining the bottom. I say a stock has to double bottom before I have confidence, but it can also have 1 bottom or 3 bottoms. Finding the bottom is the difficult part, but the rest is easy.
We have a volatility event in the pre-market with MNT down 17%. It had traded much lower in the afterhours session. Now we must review our procedures for waterfall selloff trades. Wait for the double bottom. Sometimes the double bottom is not put in and it makes a new lower low. Use Fibonacci and other retracement principles. Take profit on the way up. Do not wait for it to hit the target. The most important rule is that I do not ever trade bio stocks on waterfall selloffs. Never.
Another premarket event with RNOW as well. I will look at both. Usually I take the one that sells down the most. The bigger the selloff, the larger the bounce. When everyone is the most fearful, then the bigger bounce later on that we shall have. Again, this is pure daytrading and I dont plan on carrying positions after the bell.
RNOW appears to be the more attractive panic sell target. It has a smaller float then MNT and there is more short interest out RNOW as well. This is important because stocks with small floats and lots of short interest (notice low volume) will yield faster results on the chart. Sometimes you make an analysis and wonder why it doesnt come true so fast. A smaller float yields faster results. Now the numbers below might fool us. There might be naked shorts corrupting the float. The data you see is never 100% accurate. Just like the charts you see on stockcharts.com DO NOT account for extended hours trading. Therefore, the candlesticks you see might actually be different then the ones shown to you or the tape could be painted at the end of the day thus corrupting the chart. Painting the tape happens often on the AMEX. Average Volume (3 month)3: 257,902 Average Volume (10 day)3: 209,333 Shares Outstanding: 32.88M Float: 16.67M % Held by Insiders4: 39.41% % Held by Institutions4: 62.80% Shares Short (as of 12-Mar-07)3: 3.62M Short Ratio (as of 12-Mar-07)3: 15.9 Short % of Float (as of 12-Mar-07)3: 15.50% Shares Short (prior month)3: 3.02M
Im impressed with www.prophet.net. It has the ability to display multiple charts at a time from a list of symbols. You can develop a focus list and place it up on that site. Then you can scan through the charts quickly to find the right ones for you. I was noticing IMH has come to the top of what appears to be a bottoming reversal formation. Its too late to buy it now unless it can go through the resistance.
Further, he believes that "the stigma of credit cards is going to go away" and that Capital One Financial (COF) , which he also owns for his charitable trust, should go higher. I like your journal, you are honest a good first step and a solid foundation to trading.
Im going to stop posting for a little while because my life has become busier and I have certain responsibilities, but I plan coming back in a few weeks to keep going. Here is a nice analysis I did in a prior thread on FTEK. Let me know what you think because it took a lot of time to come to these conclusions. Check it out. Its technically perfect. This stock makes the most sense to long right now. Start from 2005. Using the golden number thesis, this is what I come up with... 6.85X1.618= 11.08 Next top=10.13 10.13x1.618= 16.3 Next top=18.80 18.8X1.618= 30.41 Next top= 29.68 29.68x1.618= 48 Average Volume (3 month)3: 387,452 Average Volume (10 day)3: 397,389 Shares Outstanding: 22.09M Float: 17.07M % Held by Insiders4: 41.03% % Held by Institutions4: 32.10% Shares Short (as of 12-Mar-07)3: 476.29K Short Ratio (as of 12-Mar-07)3: 1.1 Short % of Float (as of 12-Mar-07)3: 2.80% Shares Short (prior month)3: 460.76K There is only one trick here and I cant tell if the bottom is right now or 6 dollars lower. If you multiply all the notable lows by 1.618, then you get the next lower price target. Here is the analysis: 3.94X1.618= 6.31 Real low=5.1 5.1X1.618=8.25 Real low=7.24 7.24X1.618=11.71 Real low= 10.07 10.07X1.618= 16.29 Real low=???? Notice how the calculated low was actually higher then the actual. So if we calculate a 15% error possibility then the actual low might get to 13.84. The trend channel suggest the bottom is at 14 dollars. I looked at the 50 WEEK moving average. The price has not notably gone below that average since 2004 where it appears to have danced along it. (note, this is the weekly chart I talk about and NOT the daily) During each of the lows, the price stayed around the 50 week moving average. In 2006, the price went 10% below the line. The line right now is set at 19.67. 19.67X.9= 17.7 worst case scenario. As for the Bollinger Bands (again talking on the weekly and not daily chart), the analysis is the following. In 2006, the price seemed to brush right up against the lower band before turning up. In 2005, the price danced around with the 20 WEEK moving average or mid Bollinger Band. The price right now appears to have done a double bottom with the lower band. In analyzing the relationships of the lows, I have found the following 5.1/3.94= 1.2944 7.24/5.1= 1.4196 10.07/7.24= 1.39088 You would think the new low would be put in somewhere around 14 with this relationship. However, I noticed that the bottom trend line changed from 2004 to 2005. The pitch became 33% steeper. So I drew lines along the 50 week moving average which has been a reliable pivot point since 2004. I found that the pitch of the 50 week moving average changed in early 2006. The resulting pitch would put the bottom between 20-22. I studied the RSI and noticed that when it got under 50 on the WEEKLY chart since 2004 then that was the time to buy. My prediction is that this will go to 40 dollars in three months time. **Then it will be time to sell FTEK off along with every other stock in your portfolio** FTEK has reliably predicted every market pullback since 2004. When FTEK reaches its price target, then its time to get out of the market or short it. When FTEK does fall, it falls hard along with the market. The financial rags are going to be pumping FTEK which is a plus. Morningstar just did several articles and their analyst puts a price target of 40 dollars on FTEK stating it was a buy right now. Stock Price As of 04-19-2007 $22.72 Fair Value Estimate $32.00 Consider Buying $24.70 Consider Selling $40.10