Stocks are bought on expectations, not facts.

I'm Back...

...and all the more confused. :)) But I think Credit Suisse (311) deserves a hat tip. He was today's sweetheart, buying up aggressively stocks like AP and most of all, EDC. Anyway, This is my second day back from my vacation and I'm missing my freedom already. I don't understand how the market works anymore. Hahaha!! Short-term signal are definitely not working. Case in point, ICT. Bullish yesterday, bearish today. What the... Hmm, I thought before I needed a greater tolerance for drawdowns but that's very uncomfortable for me so I still need to find a system that works. Momentum, most definitely, is no longer working. You need to be smarter nowadays. Haha! :P It's like, when you like someone, you can't just keep on chasing that person or else you'll be left hanging, just like the 10% drop in DMC and ICT a few weeks back. ;)) Mark doesn't know how to follow through. He's a very difficult lover. 

The usual setups I look for are failing. But I did notice something recently that works. It's a setup that would usually scare the pants out of me but why fight it if it seems to be working? It's a sort of bear trap scenario. I confirmed it this morning when CEB rallied. I found it in AP, possibly in DMC, MBT, and AGI. This setup is characterized by an acceleration of the downtrend coupled and/or a bearish candlestick after a bullish one. A rally follows soon after. 

Check it: 

Speculative Bottom Strategy

I noticed, the longer I've been trading, the shorter my holding period becomes. When I was still starting out, I was a full fledged position trader. My maximum holding period was three months. I never day traded or held a stock just for one day. Well, things have definitely changed. The setups I like now were setups I didn't even dare trade. In momentum trading, I generally believe it's better when the price is located at the highs, and shallower corrections are preferred over deep ones. These days, such a belief system is no longer ideal. In fact, they can just get you killed. You can't just hit anything that moves nowadays because momentum is not always sustained. 

I was trying to remember the setups I looked for when I was a position trader. I remember my "low risk" speculative bottom strategy. (Contraditory ba? Low risk but speculative? Haha!) Basically, I look for stocks that have corrected already. Then I look for signs of a slowing downside momentum. I have two buying opportunities: 
1. On a small bodied candle (buy as low as you can);
2. When it looks dried up already. 

I practiced this yesterday on MPI, EDC and FGEN, to which I got interesting results. 


Following this setup, MEG, SECB and PNB looks bullish to me. Now, I'm trying to figure out the ideal holding period in this kind of setup... 

All Eyes On You, SMC

Because I haven't posted anything until today, let me make it up to you by posting a second entry. Aside from the breakdown, today was something special because of SMC. After three weeks, was it? SMC resumed trading today. The shares that were offered at 110.33 were also available for trading. Last week, my officemates and I were thinking that SMC would trade above 110. Oh boy, were we in for a surprise! I noticed SMC during the pre-open when I saw Pau's tweet. He said it was retail vs. the big boys. True enough, the postings only bloated up by the open. 

Watching SMC intraday was stressful. It felt like a roller coaster ride. After fighting it out at the open, SMC was able to open at 110 but was immediately met with resistance and was sold down to as low as 108.10. It was then able to rally back to 110 but half an hour later, it was back to 108.10 and even took on a new low of 106.10. Just when you thought it has bottomed out as it was able to rally back to 108 there abouts, it was met with resistance yet again. It broke 106.10, reached a low of 105.70 then boom! It was bought up to close the day near the highs at 109.50.

Of course, the bulls and the bears battled it out at the pre-close too. I wasn't able to take a screen capture of it but around 11:57 am, the bears threatened to close SMC at 106.50! SMC looked like this just before the close: 

So, SMC holders, okay pa rin ba mga puso nyo??

Breakdown Wonderland

Mark(et) has left me speechless for the past couple of days. Sorry for the irregular posting. 

Today was just terrible! Last night, the Dow closed -85 points from as much as -133 points. We reacted by taking a nosedive at the open. When the information has been discounted by the market, we consolidated for a while, formed what seemed like a bullish inverse head and shoulder pattern (intraday - weak reliability), which failed, thus continuing the downtrend, slowly but surely. I wonder, if the Dow fell by 200 points, would we have gapped down but still be able to bounce intraday? But because the Dow didn't fall triple digits, what happened instead was an open near yesterday's close, then it's all downhill from there. In effect, the decline was more healthy, so to speak, unlike a massive gap down, which usually attracts bargain hunters that drive the market higher, intraday, at least. 

In the office, most of us are short-term traders. When a stock shows promise of upward momentum, one trader usually shouts that it's the last chance to buy. Today, someone said instead, "Last chance to die." I think Mark has been cuh-razy! I was listening to Adam Lambert's "Whataya Want From Me" and I couldn't help ask Mark the same question. Alam mo un? You're doing everything you can but for some reason, it's just not working out. As in the song, "I need a second to breathe." 

Oh, another one. Tell me if I'm the only one who can relate. :))
"Bum bum be-dum bum bum be-dum bum. What's wrong with me? Why do I feel like this? I'm going crazy now...It's a thief in the night to come and grab you. It can creep up inside you and consume you, a disease of the mind, it can control you. Your mind's in disturbia. Release me from this curse I'm in."