A Different Approach

Hell YEAH (Take 2)

I remember exclaiming "Hell, yeah" just a few days ago. I ate my words the next trading day, but here we go again! I hope this time, it's final. 

When I woke up this morning, I had a pretty good feeling about the market. When I saw the closing prices of the major US indices, something just came over me and I regained my initial positive view. I guess with the market being down for so many days now, my Reason argued that we've had enough panic and the mixed US closings was encouraging enough for the bulls. On my way to work, I was already thinking of my new game plan.

Well, I bought AGI and MPI the other day right? I forgot to mention, I sold them yesterday. Haha! The chart setup I found in AGI and MPI was prone to whipsaws. I can attest to that. So, obviously, that game plan was flawed. This kind of setup is what I usually look for but I'm not so comfortable with the market right now that my holding period has shortened once again. You usually need more patience in trading this kind of setup and patience is something I don't have now given my uncertainty with the market.

Anyway, yesterday, I visited my trader friends downstairs. I had to show Trader M how to get daily data even before PSE releases the official Quotation Report. So, we were all talking about our trades and my TA mentor, Trader M, sort of reminded me of the kind of chart setup I'm supposed to look for by "stock"dropping. I gave that some thought and realized, this is the time when the strongest stocks are most obvious. How? Because they're the only ones trading near their highs! As I reviewed the charts, I took note of the issues that seemed "NR" to the market's recent decline. 

This is the list I came up with: 

1. HLCM

2. SMC

3. AEV

4. SECB / ORE

Notice something. All the issues I listed above are on their all time highs. No resistance! :P Anyway, I am most bullish on the first three. I bought them today. Oh, there's another stock on my watchlist but I didn't include in that list. It's ACR. I just took note of its range (1.38 to 1.44). When I saw it trading at 1.46. I lined up at 1.45. Luckily, my order was matched. 

Aside from looking for different chart setups, I also decided to make my position sizing smaller. The market may have bounced today but we're not yet out of the woods. Given the steep decline, I think the psychology of the market is to sell on rally. Additionally, when people get to buy low, they sell high. This is the reason why I like all time high fliers. You can't buy it low, so you buy high and try to sell higher! Plus, no one is "ipit" in these kinds of stocks. :)

Low, Low, Low

Today was another long and discouraging day. Two days ago, I thought we were ready to bounce. I bought AGI and MPI then. Apparently, there's a global sell-off and we weren't spared from it. Major US indices fell more than 1.5% last night. Shanghai Composite and Hang Seng Index fell 2% today. With today's 70 point decline, The PHISIX once again looks vulnerable. In fact, if we break 4,050, it would seem as if that the consolidation around 4,050 to 4,150 is the rest before gaining downward momentum. In fact, this very flat consolidation can be a very strong continuation pattern should a breakdown occur. 

But really, wala na ba talagang bounce?! Boring! Hahaha!

I wonder if now is the time of the basuras. LND and APC has started to move. Can they finally reach the elusive 1 peso? I was eying LND last Monday but I got distracted with AGI! :P Congrats, Amorito Girl! =D>

EMA 20-50 Crossover System

Hey guys, I wrote this system in Amibroker earlier. It's the EMA20 to EMA50 crossover system. The system is basically a trend following system and can still be optimized by integrating money management rules. It's inspired by Ed Seykota and Donchian's MA Crossover systems.

A buy signal is generated when EMA20 crosses above EMA50. A sell is signalled when EMA20 crosses below EMA50.

I intentionally included only the start of the bear market Oct 2007 since that is when I first got interested in the markets. I have a longer term result set (2000 onwards) but admittedly I don't have data since the 80s.

Individual backtesting results on selected stocks:
10/1/2007 - 10/31/2008 - bear market
Average profit: -9.63%
Average holding period: 25 trading days
Best Profit: 6%
Worst profit: -22%

11/1/2008 - 3/31/2009 - sideways market
Average profit: 2.51% (near breakeven if we include commissions)
Average holding period: 19 trading days
Best Profit: 50%
Worst Profit: -23%

4/1/2009 - 11/12/2010 - bull
Average profit: 38%
Average holding: 81 trading days

Best performers and current open positions based on system:

For AP's sake :)
AP 2/6/2009 entry, now up 641%.

Great in a bull market. Very stressful in a ranging market.

Hell, Yeah!

Bounce! 

Pacquiao's fighting spirit must be contagious! :)

Sink or Swim

What a terrible week! I don't remember having this kind of week in a long time. For sure, this correction opened a lot of eyes, including mine. If you come to think of it though, we're not yet dead, so to speak. We're just wounded. It hurts to see profits vanish and some, turn into losses. I, myself, made several very expensive mistakes. I wasn't very careful either so I guess I had it coming. I wouldn't say it was for naught though. 

This week was a déjà vu moment. During May 2010, I remember almost the same thing happened. I lost a lot of paper profits on EDC and RLC then. Why? Because I thought it can do better than it was performing then. Had I been able to wait a little longer, I would have been right but there was a conflict with my threshold for losses and my holding period. See, I can hold a stock for several months as long as it is going up or moving sideways at best. When the correction turns out to be deeper than anticipated, I only get to realize (or is it acknowledge?) it when it approaches my cost. Sometimes, I even turn a blind eye, thinking "I can wait forever" (Haha! Just a song we sing in the office. But seriously, I mean to say, "I can wait it out.")  I realized that I can't, so I sold at a loss. As it turns out, the market bottomed near my selling price. It may have dipped a bit but I certainly got the exhaustion levels. It was then that I decided to shorten my holding period. I did well. I was up and down for the year then, but I was able to turn a consistent positive return with my short-term trades. It was still a bit frustrating though when prices head higher after I've sold. Not immediately but had I held on longer, I could have been able to ride that wave. There goes the position trader in me talking. So, during mid-October, I decided to make my holding period longer again. It's as if the market is telling me not to because here we are again with the market correcting deeper than anticipated. In fact, I lost more this time around. I need to fix this...I'm fixing this! I can't allow it to happen for a third time. 

We all had a bad week. But as they say, we learn more in a bad market than in a good one. It's also in the attitude. Given a bad situation, what will you do: sink or swim?

I'll swim every time.

BTW, good luck on tomorrow's fight, Pacman! :) 

Megamind Saves the Bloodbath

[Titan hurls a skyscraper] 

Roxanne Ritchi: What's the plan? 

Megamind: It mostly involves *not dying*! 

Roxanne Ritchi: That's a good plan, I like that plan...!

Ollo, everyone!

A simple plan of not dying can be very effective in this market. I'm very thankful I had the discipline to sell when my stops were hit. I was up 4.41% end of last week for November. Then, MEG, MPI and DMC destroyed the party!! I got stopped and profits went poof! Anyway, I'm still proud that my November is still up 1.06%. :)

Since the trend is our friend, and the long term trend is up, I think we can now spot for bargains while waiting for a clear rebound!

On my watchlist is MBT.

MBT respecting EMA(50) at 72/73

If you survived the week, congrats! Good luck on our next trades. :)

Abandon All Hope All Ye Who Enter Here

Today, I felt the panic because I myself experienced it. I wasn’t in a panic mode the past three days but for some reason, I was today. That must be the effect of the broad based decline. I saw my profits turn into stone and even have that stone thrown at me...so to speak. And I wasn’t well prepared for it. After reflecting quite a bit though, I realized that if I’m panicking, so are others. It shows in the index, right, as the PHISIX fell  as much as 94 points! I seriously felt devastated that I even thought of the Dante’s supposed inscription at the entrance of Hell that reads “Abandon all hope all ye who enter here.”  Now that’s what I call an acceleration! Then I tried to be rational. Think! Accelerations are usually exhaustion levels. This made me surmise that the market is near the bottom. Having declined too steeply though, I doubt prices will be able to shoot up from here. I think we will range trade for now. 


Tsupita...ON! 

For your reference, here's the chart of the PHISIX.

Red Alert

I think I became too accustomed to prices going higher and higher that I'm very uncomfortable now that prices are declining. The short-term trader in me is scared of corrections (because the objective is to just make some money and run) while the position trader in me acknowledges that corrections are part of the overall uptrend. Just from there, you can tell  that both kinds of traders have a different levels of greed. Sometimes, this results in a conflict that I am still trying to resolve. When prices start to decline, the tsupitera in me becomes worried. And prices have been falling for three straight trading days. Oh gosh. It's very difficult watching paper profits shrink. I even have one that became a loss. I realized that loss in PNB because I decided to buy back AP. Haha! It wasn't big anyway and it was offset by a small (decreased) gain in MBT. 

Let's assess the situation. The index went down 29 points today. Yesterday, it was 53 points; last Friday, 45 points. MACD crossed down again after crossing up a few days ago. That's not good. Stochastic Oscillator, on the other hand, is still not turning but is approaching oversold levels. Based on the daily variances, the decline accelerated when the index fell 53 points. In the next couple of days, I expect prices to consolidate within a narrow range and dry up before reversing or continuing its trend. This is around 4250 to 4300. If a sharp price move should occur instead, take that as the confirmation or contradiction of your worst nightmare. >:) 

BTW, compare and contrast the index with AT. I think they look very similar. 

Waiting Game

I'm running out of things to do, these days. :P I've positioned in certain issues and there's really not much for me to do but wait. For my high fliers, I am looking at a short-term consolidation for the next few trading days before it resumes its uptrend. It's healthier that way, right? Anyway, there are those that have already rested. I'm rather interested in MEG and AGI. I sold some of AGI yesterday at 12.20. I wonder if I should have bought back at 12 already. I was expecting a break below 12 but it didn't. Anyway, I was already thinking of my possible buy back scenarios this morning (as I had nothing else to do :P). It's either I buy below 12 or higher than my selling price of 12.20 since I won't be able to confirm the bull flag until it breaks out. MEG also looks like AGI. It's consolidating at its highs and today, closed at its previous high and resistance of 2.79. Do I see 3 pesos coming? :P 

Ah, I found some extra cash (parang nasa floor lang eh no?). I bought AP and CMT. Both are consolidating at the highs. Come on, momentum! :P

Hmm... PX is showing signs of life. Isa pa un, I think a breakout is coming. You can find resistance around 14.66 to 15. I've had it with this stock though. Haha! I don't know why but for some reason, I can't bottom pick it. Maybe it's too volatile for my liking? So I always end up being whipsawed. So, I've decided I'll wait for this one to breakout. I'll buy on retracement. 

DJIA is up 170 points?! My sister just ym-ed me saying she doesn't like the Dow because when the Dow is up, we go up at first, then go down after. Hahahaha! The question we need to ask first is, Are we still negatively correlated? I can't be too precise about the math but I noticed the past few weeks, when the Dow is up, we are also up. I'm not feeling the negative relationship anymore so this 170 point gain may be good for us. Maybe trigger an acceleration to the upside? Please? Hahaha! Kidding aside, I think our market is the kind of market that thrives on good news. Let's see tomorrow! I want to know how the market will react. I am definitely bullish on stocks that are currently consolidating. Maybe the Dow can trigger their breakout. 

Ring My BEL

I think you'd all agree when I say, "What a great market!" Our index followed through on its gains from yesterday, rising 40 points to close the day at 4,381. Before we get too excited, notice that the momentum is slowing down. This, of course, is in a very short-term basis. Yesterday, we were up 70 points; today, 40 points. Intraday, we gained only 26 points as we gapped up 14 points. My point is, I see the index possibly resting a bit as it moves closer to 4,420. Next resistance may be found at 4,650. 

Individual issues are a bit mixed. There are some stocks that look toppish in the short-term, like MPI and AGI, while there are others that just broke out like VLL, RFM and BEL (with respect to 2.45 resistance). Some are still bottoming out, like EDC and PX. There are so many stocks right now that look yummy. So in case you are a bit frustrated or impatient since you weren't able to buy, know that there are actually stocks out there with a good upside but haven't begun to trend up yet. I'm referring to the likes of EDC and PX. Of course, you'd have to wait a little while with those kinds of stocks as they haven't found momentum yet. What they do offer is a low risk entry, assuming their respective support levels hold. :) 

I haven't posted anything in a few days. So, what have I been up to lately? Well, last week, I sold my JGS, as planned. Too bad it went up the next day! Haha! Anyway, fine by me. I think I mentioned the other day that I shifted to PX. As it turns out,  I got whipsawed there but along the way, I was also able to buy MBT. Too bad I wasn't able to complete my whole order. I hesitated yesterday as it broke out with low volume. Today, prices confirmed that that breakout was legit, afterall. It's too late for me to try and chase prices now, right? So, I'll sit this one out. I also sold my DMC yesterday at an average of 38.80. I shifted to BEL (bought at 2.41) and completed my line for VLL. Today, I bought more BEL at 2.52 and 2.54. 

I remember last month, I averaged up on BEL when it spiked last October 12. That was time it went to as high as 2.56 in reaction to some news. It retraced from that high to around 2.50. I bought at 2.52 thinking this was just a reaction before resuming its uptrend. Apparently, it failed to bounce from there. BEL closed at the lows at 2.36. What a calamity! I was generally bullish so I didn't sell but think about it, instant paper losses! So, this morning, when BEL retraced from its high of 2.60 to around 2.50, I said, "Shit, deja vu?!" Hahaha! So, I cut my buying. I first bid BEL up at 2.52 and observed if someone will follow. Somebody did! It still traded within a range though so I let it be. I noticed though that while other stocks were breaking below their intraday support, BEL didn't. I bought when it broke above 2.53. Looking at the daily chart now though, BEL is still trading within a range. Since it went up too fast fro its low of 2.30, I see a possible consolidation around 2.60 before the eventual breakout. Just my biased opinion. LOL