08-23-2013 Trading Journal

The market opened up, dipped a little but stayed within a narrow range most of the day, ugh, in low volume…

I had a “wake-up call” experience this morning that prompted me to liquidate most of my position to raise a heavy load of cash by the end of the trading day.

At first, with a positive morning openings, a lot of my favorite stocks were heading up.  I immediately added to $AUDC, $PACB, and $AMRN swing position,   I also bought starter position on $ONVO.

$RVLT meanwhile could not hold a positive opening and began to head underwater, I had a sudden flash in my mind that this one could head below $3 soon so I dumped my remaining starter size position for small losses.

This persistent fall of $RVLT, being a small cap stock, was a red flag that stuck on the forefront of my mind.

I saw $CREE was suffering from the same fate as $RVLT, it couldn’t hold the morning rally and soon fell apart.  Seeing a parallel effect, I chalked it up as an attack on the LED industry and decided to sell my position to avoid being in the middle of the battle-ground.

The next event was a trigger that set off my “inner alarm”  that something ominous was about to come.  In other words, the proverbial shit is about to hit the fan!

$AUDC had a high volume sell-off that took me from a nice gain to a loss inside 30 minutes.  Of course, it triggered my stop that I didn’t expect to be hit on an up day like this morning.  As my stops were hit, my sales exacerbated the downward momentum even more.  Although price recovered albeit in small volume, the message was received by me loud and clear.

From my years of trading, I’ve learned that, sometimes, the small cap stocks will sell off before the big cap stocks follow along.  Now, like any statistical event, the sell off of small caps do not always means anything; however if I put all the events I’ve listed below, it gives me a warning that I’ve to heed to protect myself.

  • Persistent sell-off in $RVLT could mean big money (funds) were unloading every day to raise cash and to get out of small cap
  • Large volume sell-off on $AUDC could mean big money was taking profit and run.
  • Large drop on $AMBA (yes, I was watching this one looking for an entry point) in the morning could also mean big money were unloading pronto before bargain hunting drove the stock back up.
  • Extremely low volume on $SPY today was my final straw that broke my psychological resistance to raise cash.

As I’ve stated in my previous post, the only time I can be wrong and still not lose money is when I stay in cash.  I’ve done this type of cash heavy event, at least, once a year.  And today I had all the red flags I needed to prompt me to do so.

The only good thing about my selling today was that not everyone was doing so; thus I was able to sell without giving back to much due to everyone trying to do the same.  I was more concerned with $CLIR since it was a low float stock and low liquidity; fortunately, there was a heavy bids around $8 that I was able to sell off my position without losing money.

$PACB was up today so I was able to capture more gain from my selling today.

$AMRN was also up today which also allowed me to capture gain on my swing trade position.  Nevertheless, today was the first time I went completely flat on $AMRN giving that this one was “supposed” to be my long-term hold.  I’ve held it all the way from above $10; so I was actually taking a large loss on this one. I’ve sold because I know $AMRN would fall like a rock on any big market correction- being that its market cap was quite high based on “potential”.

$LRAD was a hard one for me to sell since I was sitting on this for a long time and I still have conviction on this one for long-term.  To compromise, I sold only 50% of my holdings.

Like I’ve said, I can be totally wrong and premature in my selling today; but today is not about “trying to be right” about the correction coming next week.  Today is about the “cleansing” of my portfolio so I can “reset” my trading mind.  If I “feel” spooked by multiple events coming together, then it is my duty to take action to release my “spookiness” so I can regain a peaceful state.

You never know, what happen when next week come, I may either be buying back shares I’ve sold either at same price or higher price, or I could be sitting back to wait for the price to settle down before bargain hunting.

Either way, I know I’ll have a peaceful weekend.

Current holdings:

LRAD and 89% cash.

My 2 cents.

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Categories: Daily trading Journal

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