Warning: Following my trades may be hazardous to your financial health. See Disclaimer.

Wednesday, May 30, 2012

YELP - Some Intraday Accumulation

Large volume without further downside.  Doesn't it sound like accumulation?  Larger picture the down trend still look insurmountable, but here it's looking a bit encouraging at the ALL TIME LOW.

Here are the bigger pictures.  Upside volume are still badly needed to change the landscape.

YELP Daily

YELP 60 Minute

FB - Target Reached

Sticking to My Plan

Per my May 22 post, I am layering in my short positions in 3 stages, with the premise that the market is due for a bear market bounce.  The premise can be wrong, but based on the longer term chart, it is better odds than 50 percent.  Now given the premise, I don't know how high the market would bounce, especially on lighter volume.  That's why I layer in at each pivot point, up to where I will have a full position, just in case the market goes down without looking back.  As of yesterday, 2 of my 3 planned entries to the short side have been executed (see pink arrows), via SPXU, VXX, TZA.

There is a fine line between what I am doing and "averaging down" which is a taboo in trading.  Here I have a plan, and each entry is a partial position (progressively larger in size).  I may be guilty in the sense that I am unsure of where to enter a full position if I were to make just one entry.  I can also be accused of "front running", but that can also be diffused by the fact that I'm entering partial position each time.   I am the first to admit that I am a terrible chaser.  I can't wait until the market snaps back down to enter my shorts.  I am also terrible in applying "pyramiding" as preached by Jesse Livermore.  It's complicated and there are endless trading styles. That's why trading is also an art.

Tuesday, May 29, 2012

PWRD - Earnings

I have been watching PWRD for a while for the whole gap closure, and then the earnings tonight.  These are the two things that kept me from going aggressive with the long setup.  And both of my concerns came true.  Gap was closed last session, and the earnings after the bell caused PWRD tankage as much as 20%.  It's recovered some by now but we'll see how it trades tomorrow during regular trading.

A few remarks:

  1. Honor your concerns for any given trade.
  2. Earnings are crap shoots. Stay out or play light.
  3. All setup can go wrong.
  4. Jinx is alive and well in my trading.  It is painful even with just 200 shares.

FB - Target

Target of $28 makes sense.  It's the rectangle target of the recent consolidation ($28.20).  It's the 123.6% Fib extension ($28.05).  And it's the original IPO pricing before raising it to $38.

Friday, May 25, 2012

Amazing Dances from SYTYCD Audition #1, 2012

An engaging and moving dance audition by Hampton Williams in So You Think You Can Dance aired last night on Fox:  http://www.fox.com/dance/  

Song: "Evanescence-My Immortal", sound recording administered by: Wind Up, EMI.

Here a 2 year old girl Stella was asked for an impromptu ballet performance after her Mom successfully moved through with her own audition. Sweet and impressively talented especially from a 2 year old!  Note how the same song ended up with a totally different interpretation and reaction!

AAPL Intraday Volume Analysis - Take 2

Upon the success of shorting AAPL based on volume and price action yesterday, I tried to repeat again today.

Notice the volume on the first 3 bars of today's 5 minute chart.  They were the biggest volume bars of the day (so far).  Now despite the fact the descending channel was broken with "descent" volume, they were no where close to these 3 bars representing the overhang supply.   As the price began to flag (around the 50% Fib of today's range by the way), I shorted as soon as the low of the previous bar was breached.   I would normally be prepared to go long on such high pole, but today I was armed with the volume "bias" and actually successfully faded the intraday trend.   Now, all setups can go wrong but you'd just have to be prepared for when it does go wrong.  In this case, I successfully got on the right side of the market for my trade.  Nice!


Exited on the first higher high.  A good $2 trade!


You can see the cyan horizontal line marking the "line of sand" for the overhead supply.  Despite the end of day attempt to rally with increased volume, the effort looked absolutely strenuous and futile!!

One final note: Volume analysis would not work on low priced or low volume stocks!!  That's why stocks such as AAPL, CMG, PCLN, and the like, are better candidates and that's why TraderFlorida trade them, imo.

Thursday, May 24, 2012

AAPL Intraday Volume Analysis

TraderFlorida wasn't around this morning, but this is what he would have said:

Look at the first bar of the day that failed to hold the previous day's high.  This represents 1.06 million shares of overhead supply.  The first attempt to take it out again had only 472k.  Not enough volume.  Then another attempt with 338k - not enough.   And finally 243k.  There is just no volume to take this thing higher.  That's why I reshorted as soon as the breakout failed.   For trade only.   With Greece and all the uncertainties, who would hold longs over the long weekend?   I know I wouldn't.  Market hates uncertainties.

UPDATE:  AAPL is toast.  Get the jelly out!  $6 for the day so far. That's pretty descent for a day trade.  Ah ha, I just love this.  If the low of day is taken out, I will add to my short.  With that being said, have a good one!

Wednesday, May 23, 2012

PWRD - Gap Filled

PWRD has had the gap with handle pattern for a long term.  The one thing that made me hesitate was the impending gap fill.  Today it finally happened.  Now the odds may be better with the long position.  However, earnings is due in a day or two (Chinese company so may not observe Memorial Day?).   So it's a bit of a crap shoot as always with earnings.

Be Slow to Take Profit

Be slow to take profit and quick to take loss.  Well, that's one of the trading adages.  Supposedly, if one heeds the adage, even if one is only right 3 out of 10, he can still make a small fortune. We tend to do the opposite: take profits too quickly and sit on losses too long.  Aside from fear and greed at work, for me jinx make it especially hard to execute.  Think about it.  Why did we condition ourselves to do the opposite?  Well, easy, empirical data by way of experience. Once we see the profit turns into loss once too many times, we begin to take profit early.    Now the whole thing is a big topic, so I am just going to focus on a small facet of it.

I am usually very quick at taking profits.  But this time I said to myself, I am going to be patient and ride on my winner -- shorting AAPL at a good entry of just below 560 (see first yellow arrow).   The whole morning I had several opportunity to take profit, but I held my urge.  Every time the green dissipated, it was painful.  But I said to myself, no pain no gain;  this is what one needed to go through to get bigger gain.

Now the horizontal resistance was finally breached.  Guess what?  TraderFlorida, the AAPL guru, actually talked down about the volume, or the lack of it as usual.  So I actually added to my short position when it went up again because I don't see volume confirmation and the price could be just running on fumes.  Then it actually popped out of the rising channel, WITH VOLUME!   I finally bailed, successfully in turning a profit into a loss.

Lessons learned:

  1. Own your own trade.  Listening to others will only confuse yourself.
  2. Never let a winning trade turn into a losing trade, even if it means exit at breakeven and lose the profit.
  3. The adage does not account for how often the draw-down exceeds cost before the target is reached.
  4. Jinx is well and alive. All the pain endured didn't pay off.

Interpreting Volume

I am the first to admit that gauging volume is not my forte and I normally use other indicators derived from volume that are easier to understand.  For for some traders, particularly TraderFlorida, volume is key.

Let's take a look at the ORCL daily. See the 3 attempts of trying to break out of the horizontal resistance as circled below.  Look at the corresponding volume -- low!  No volume to support the break out and the resulting outcome of the failed attempt is devastating.   But this is the easy one.  It's too obvious.

Let's look at the AAPL daily.  I forgot to draw circles but you can see excluding the partial candle (2 hours into trade today), it has had 3 days of rally.  Also look at the corresponding volume for the 3 days.  They are about on par with the 30 day average of 23 million shares.   However, TraderFlorida (who's been the authority on AAPL trades BTW) maintains that the bounce has no volume, or has no volume to support it and therefore he is short.  I simply don't get that argument.  The volume is certainly much larger than (just about) every single day of down trend in the last 2 weeks!

Is the volume "light" relative to the down volume back in April?  Is the volume "light" because it did not dwarf the 30 day volume average?  Or is the volume "light" because a counter-trend move demands much bigger volume for validation?  I am going to read that William O'Neil book over again.  I am just not getting it.   BTW, I am short the market and a bit of AAPL.  It's just that I didn't short because of the volume.

Negative Money Flows

Despite the rallies so far this week, money flows for both days were negative.  These are just further evidence that this bounce is suspect -- bear market bounce.

Tuesday, May 22, 2012

Fading The Market

I am at it again, naughty and fading the market.  Take heed for those who wisely use me as a contrarian indicator!  Unlike the past, I won't be aggressively shorting.  Got an initial position in SPXU.   134 will be the next add.  Final add at the 135.76 major resistance.  Stop loss on break of 50 day MA.

The sell signal is still on.  SPY is currently backtesting the 50 MA on the 60 minute chart. VXX is below 20 again.  Buydonthold.com maintains its sell signal as well.  And I heard the chartist.com went 100% cash yesterday.  Unfortunately, Dr. Fly is going all out with longs upon surviving the carnage without being shaken out.  And TraderFlorida has exited all of his short positions and sitting on 100% cash.

The market is due for a bounce for sure, but the thesis is that this is a bear market bounce and the low will be retested. As such, I will avoid counter trend plays.

Monday, May 21, 2012

BBY - Daily

Bounced off off 76.4 Fib on the daily.

YELP - Buy Target Reached

As outlined in my YELP post earlier this month, YELP's full target was 16.52.  I bot at 16.70 on bounce off the target on good volume.  But strong overhead resistance ahead.   It's now retraced 50% of the drop from a day ago.

Friday, May 18, 2012

An Epic Day Living Up To Expectation

It was option expiration, the Greeks were looking to drop the Euro, but most of all, it was FB's first day of IPO.  And no, FB did not finish up 10% or even 5%.  It finished barely flat with a few cents above the offering price of 38.  At times, it look really pathetic to see how the underwriters desperately defended 38.  It was an epic day.

Essentially FB stumbled out of the gate when trading was delayed for some 30 minutes because Nasdaq couldn't handle the trading demand.  It choked and all of the FB proxies got murdered.  Here are the forensics for the victims that I track:

GSVC, a fund company that owns FB shares, down over 18%.

ZNGA, Facebook's major revenue generating partner, down over 15%. The trading even got halted twice during the day!

RENN, the Chinese facebook down over 21%.

YELP, another social networking company, down over 12%.  It reached the, at the time far fetched, target as documented here.   I picked up a few shares there at 18.21 just because I planned for it.  The_Real_Fly picked up more earlier today on top of his 30% allocation in his portfolio.  I hope he's not leveraged with margins!  (He's now up 3% year to date from 20% just a month back.  Mean reversion at work.)

I was surprised to see that SINA, the Chinse twitter, came out relatively unscathed, down only 1.5%.  

It was epic.  It felt like the end of the world.  You can say all these were highly speculative and broken charts to start with, but look at GOOG.  Just earlier this week, it had a strong breakout of the 50 Fib neckline with volume confirmation.  Today, the shares were sold off in volume!  Down 3.6%.  No matter how good a chart look, stop loss is paramount!

When the tsunami comes, it doesn't matter what kind of boat you're in, you get swept away just the same.  Even the charts that had been sitting pretty watching the rest of the market suffer in the recent past, they couldn't escape the selling today.

AMZN broke down of the consolidation and started to fill the gap.  Down over 2%.

Can't go without mentioning AAPL.  It finished flat, but it really looked and felt bad because in the morning AAPL rallied as much as 2.5%, and it gave up ALL of the gain and finished near the low!  FloridaTrader has been simply amazing.   Too bad it's too late to shadow his trades as per my earlier post, Allow the Knife to Stick to the Ground.  He said it himself, if you're not short as earlier as he did, he wouldn't want to chase with the short because a bear market bounce can come any time, especially given the oversold conditions we're in right now.  On the other hand, he can afford to hold on or even add to his short positions because an oversold condition can last for days and he has ample cushions to work with.   He's certainly in an enviable position.

All the people on the sideline can do now is to be glad they are on the sideline.  Don't be greedy and chase to get in on the short bandwagon.  Just sit this one out and wait for the market to bottom, which will not be a one day event by the way.   So time to do some studying and go back to your hobbies.  The last thing one can do now is to be naughty and play hero: go stand in front of the freight train and go aggressively long.  That said, if you really want to risk your trading "life", the payoff could be big. After all, we are at the 129.31 target with the SPY, see Market Musing & Targets I posted yesterday.  It's best to wait for it to bounce and retest.

Epic day!  Enjoy the weekend!

Allow The Knife to Stick In The Ground

That's a quote from @FloridaTrader, "allow the knife to stick in the ground."   It's a very graphical and useful advice.  He means to not try to catch a falling knife, as when a stock is in a steep down trend.  For example, WYNN.

Look how many support levels it broke through?  I love many of his (possibly) southern expressions.  "Don't chase the dog unless you own a dog kennel."  LOL, another good one.  It's not right to chase short, and it's not advisable to buy and guess the bottom - unless you're day trading - so best just to sit on the side lines on stocks like this.

It would be interesting to see if the knife is ready to stick in the ground for WYNN...

Thursday, May 17, 2012

Market Musing & Targets

Since the 2011 October bottom, the false leading indicator I subscribed to for the exact 6 deadly month had been advising short-selling the market.  Along the grueling 6 month journey, there were a few double tops which re-kindled the hope that the market was finally heading back down.  See the circled areas.  You can see how already-up-to-my-chin I was near the "top" at the end of February (see Market Has Made Up Its Mind).  In retrospect, the market was only 2/3 done!  But look at the weak volume at the beginning of March -- surely felt like the market top!!!  The market being at its best, finally flash out the final double top a month later (the first rectangle on the chart).  But by then, I've been bruised all over and lost the will to fight the market.  I held only laughable number of shares of bear ETF's (VXX, SPXU, SDS, TZA, SH), and by the time the market retraced 23.60% of the bull run (shown as 76.40 Fib on chart), I've sold out of my last bear shares and actually started accumulating some longs.   Now the market is indeed in the "never look back" mode that I was looking for 2 months earlier and void of any bounces on its way down.

Today's 1.4% selloff reached 76.40% Fib of the rectangle target.  From experience, it should bounce before proceeding to the target of 129.31 area, which happens to coincide with the 129.42 horizontal support. It would make sense to back-test the 200 day EMA (magenta line), especially with tomorrow being the historical FB IPO.

Speaking of the FB IPO, it's only intuitive to think that it would "hype" up the market, based on the past experience: the more IPO's the higher the market goes, and the high the market goes, the more IPO's, etc.  They feed off each other.  However, the shear size of the FB IPO, which will be the largest ever (surpassing V - Visa), introduced a new concept -- that funds would sell other stocks to raise cash in order to jump onto the FB bandwagon.   So the market sold off.   Market just never ceases to amaze me -- and has never been willing to drop its snobbery and accept me as friend.

UPDATE: With all that blood on the Street today, my IRA was down a mere .09%.  Thanks to holdings such as TLT, PEP, HNZ, JNJ, and for today only, CEF, to help offset losses in other issues.

Getting Burned From The PNRA-CMG Pair Trade

My luck ran out on the PNRA-CMG pair trading today.  Not sure why such discrepancy in the price movement between the two today.  PNRA down 4% while CMG only down 2%.  You can guess which one I am short and which one I am long!  May be it has something to do with the options expiration tomorrow?  Just in case it's the case, I am going to hold both positions till next week.  Regardless, the lesson is that nothing is safe from disaster, and you have to be prepared.  Second lesson:  I'm still cursed and my trades are still jinxed!

WNR - Bullish Case Developing

The pivot (cyan horizontal line) in the 60 minute chart was taken out today with volume.  Now flagging to take out 18.88.

On the daily, the descending trend line was also broken, but now need volume for the rest of the day to validate the breakout.  Ideally a break of 18.88 with volume would confirm the buy signal.

ZNGA - Cup With Handle

I see a glimpse of hope for ZNGA - a cup with handle structure in its 60 minute chart.  However, as the prevailing trend has been down before the pattern was formed, its reliability could be compromised somewhat. Playing light.

Tuesday, May 15, 2012

AVP A Red Herring for PWRD?

What's happened to AVP today is what I fear for and what stopped me from going aggressive with PWRD.  The steps AVP took:

  1. Cup with handle pattern.
  2. A huge volume gap up.
  3. Consolidate nicely above the 23.6 Fib level.
  4. Gap fill and support at 200 day MA and 50 Fib
  5. Gap down after earnings.

Take a look at the PWRD chart:

It, too, started with a nice cup with handle pattern, nice huge volume gap up, consolidation at the 23.6 Fib, support at 200 day MA.   I'm already leery of the impending gap fill at the 50 Fib.  Also, guess what?   Earnings are only 5 trading days away next week.  One can't help but envision a similar outcome as AVP.  Otherwise, the big picture as per my original post is still in play in my opinion.

I hold a token 200 shares of PWRD.

Sell Signal Is Getting Stronger

The good old trustworthy $BPCOMPQ intensified its sell signal after some flickering in the beginning of May.

At the same time, Moosistory.com had switched back to long bonds after the first week in May, after being whipsawed in going from long bonds to IWM to SPY in the past 3-4 months.

Buydonthold.com also flashed a new sell signal today -- also after switching from neutral to buy to neutral in the month of May alone!

It surely is a difficult market.  Nothing is easy.  We're supposed to be shorting as we approach a major support - risking an imminent bounce...

Monday, May 14, 2012

Is MACD Overrated?

Continuing with my thesis of wild goose chase in search of the non-existent holy grail of trading system, I've concluded MACD is way overrated.  Look at the AAPL intraday 5 minute chart below.

Do we see MACD positive divergence?   Surely we do.  We got lower low in price, yet MACD is higher and crossing over to the upside.  Not shown is the ADX reading of 15.48 -- not strong trending at all.  STO also was just coming out of the oversold area.  Yet, TraderFlorida posted that he's adding to his short on this bounce.   Boy, he's been red hot on AAPL and continued to be.  Let's see how the day panned out.

May be the MACD indicator, much like head & shoulder pattern, are simply overrated and too unreliable that it should be dropped from my charting?!   Surely all indicators are not reliable all the time, but too many indicators can confuse us, causing missed entries and premature exits.

On The Coattails

Over the years, I've subscribed to numerous investment and trading services, and followed forum posters and financial bloggers.  Yet I find myself constantly phasing out the old and ushering in the new.  Why?  Because none of them consistently work to your satisfaction!   Most of them out right caused you to lose more money than you would have otherwise.  Some of them don't fit your trading style -- pumping-and-dumping penny stocks , making too many trades, making too few trades, etc.  Sometimes, you feel betrayed by some posters because they did not post when they bailed, leaving you holding the bag.  Most posters look impressive and make calls like geniuses when the market goes up, but when the market corrects, all of them suck wind.  There are exceptions, but they are hard to find.  I am equally guilty if any readers make trades as a result of reading my posts.

As hot as the_real_fly was in the beginning of this year, every single move he made in the past month has been wrong.  His calls on YELP was particularly disastrous.   I wrote a post earlier this year on "mean reversion" as applied to one's trading success (see here).  At the rate the market is going against his longs, my theory may actually come true, that the_real_fly is going to lose most of his 20% year to date gain soon.  UPDATE: Fast forward 3 days later, he is now up 6% year to date.

TraderFlorida has been hot since I've "monitored" him over the past months.  He's calls on AAPL short has a success rate of 95%.  But should I be leery if I start following his trade that thing would start going wrong for him and the market starts moving the_real_fly's way?  You bet.   The proprietary long term indicator called the market top and the bottom with 100% success rate, but 7 months ago when I finally decided he's got the market edge, Operation Twist started and his leading indicator went upside down.  As a result, I lost big over the grueling 6 month shorting when the market had one of its biggest rallies in history -- all because of the false confidence level based on the leading indicator's past performance.

There is no holy grail on the coattails of others.  You must own your trades, even if you get in because of someone reputable. That means you still have your own target and stop loss in mind.  That's my two cents for the day.

Friday, May 11, 2012

Step Aside

While the put/call ratio is too high all day (too many bears crowding out the market), most of the bounces on my list have been under anemic volume (60 minute charts).  As such, it's best to just step aside.  The sell signal is still on, so I just hold some token shorts.

Defensive stocks such as PEP, HNZ, XLU, etc. are some that have been holding well during this time of uncertainty.  But if I don't already have them, I wouldn't get in.  I have them in my IRA, but my trading account is now 95% cash.

ZNGA - Where's The Next Bounce?

It's a falling knife. Unfortunately, I have 200 shares of it.  Story plays (where one just "likes" the company) rarely worked for me (hint: PALM, AONE, CROX, etc. from my own past woes).  ZNGA is ocial networking, gaming, Facebook, ...etc.  It's hard to imagine, especially with Facebook going IP next week, that it's taken to the woodshed like this.  But market doesn't lie. It is what it is.  I don't intend to average down - that's a good rule to follow - but I intend to "trade around" at pivot points to improve my cost basis.

ZNGA has really lost all support.  The next level I can conjure up is the 7.11 target based on the daily chart, or 7.18 target based on the 60 minute chart.  Let's just wait and see.

Thursday, May 10, 2012

CMG - Bound Between Time Frames

Rejected by the 50 day MA, but bounced off 20 week MA.  So far the volume during the bounce has been light, thus I'm favoring a back-test of the 20 week MA.



PNRA - 60 Minute

Somehow the volume looks anemic on this bounce.  I am thinking may be till 50% at most before headed back down...