Thursday day thought on $DMRC, $AMRN, $AKAO, $ONCY, $BIOC, $ARTH

It was a nice save by the end of the day, market closed higher with a long-shadow doji.

SPY_Daily

Today doji has a long-shadow below, I consider it a “pause” rather than a possible topping formation.  Since September is over, it is fitting that we take a look at the monthly chart as well.

SPY_Monthly

September formed a spinning top bar.  A spinning top, to me, is the same as the doji bar.  However, the shadow above the body was longer and it was a red bar; so it’s still a 50/50 proposition.  But if October price can move higher than the body of the September bar, then the bull will gain back momentum.

Today, I’ve three positions bouncing ($AMRN, $AKAO, $ARTH) and three taking in water ($DMRC, $ONCY, $BIOC). I’ve also shifted some positions around in my port (selling some to add more on others). No, I won’t tell you which ones I shifted to and from ’cause it’s a personal preference more than fundamental.

There is nothing much for me to do but to wait out the storm.  Meanwhile, I’m going to read a good book, smell the roses (figure of speech), and take some pictures.  In other words, when the weather get rough, you stay home and relax. Don’t waste your time staring at the window waiting for the weather to get better. As long as you know your house can withstand the storm, then relax.  However, if you feel the house is on shaky ground, you need to pack up and move.

Remember, I’m holding my positions with the expectation that the fundamental will succeed at the end.  That means the technologies have to work and the managements have to do a good job.  If they don’t, I stand to lose a tidy sum.  There is no spectacular gain without taking outsized risk.  My ignoring the current market storm is also a form of risk.  However, I’ve to be mindful of the fundamental development as well.  Just because I’ve conviction doesn’t mean I close my eyes and cross my fingers.  Quarterly earnings update have to be analyzed and assessment reevaluated based on new information.

Buy and hold is not easy anymore; but it is a necessary evil for making a bet on uncharted territories. You will never know when new information will come in and spark a new rally that never looks back.  After years of trading, it is my experience that it is extremely difficult to time the market and still catch that unexpected catalyst that will kick the price to the next level. As I’ve repeated multiple times, I lost my biggest opportunity to win BIG with $LNG.  I loaded up big on the get go but got sidelined by my market timing. The problem with market timing is that once you are out of a position, it takes a LOT more effort to jump back in.  Suddenly you are in fear of giving back gain you’ve just made; this hesitation can cause you to miss what you’ve been looking for.  However, if you are in a position and never get out ’cause you believe there are more room for price to go based on future bright prospect, you stand to make a LOT more money than trying to time the market in-and-out.  Imagine all those investors who bought Microsoft, Google, Amazon, Priceline after IPO and never sold a shares.  WOW!

The volatility can be heart-wrenching when you’ve to watch gains disappear during the beginning ’cause you refused to play market-timing; but in the long-run, if you are corrected in your assessment of the future prospect of the new technology, the volatility you’re facing now may just become a small blip in the overall market gain.  Warren Buffet has done it and so do many others.  It’s all come down to picking the right stocks.  It just so happen that the ones I picked are highly speculative and volatile.  And that is that.

Due to the extreme volatility, I know better than to use margin.  Play with money I can lose and use 100% cash so that I won’t be kicked out due to margin call.  By not using margin, I only lose when the company file bankruptcy. Isn’t that what the short-sellers want to see happen?  The short-sellers are no difference than me except that they play the other side.  I’m betting the company will succeed and ignore market volatility.  The short-sellers are betting the company will fail and ignore being trapped..  But there is a BIG DIFFERENCE in term of risk.  If I lost, my investment will go to zero from my initial stake; but when the short-sellers lost, OMG!, the loss is literally “the sky’s the limit”.  Imagine holding a short position at $10 and price opened at $100 and kept going!  The odd of that happening is slim but the possibility is there!

Another downside of buy and hold is that you may end up “holding the bag” if the company fundamental goes nowhere.  Hey, if it’s not going anywhere, at least, it is not going to zero.  By then, I can still get out to cut the losses and put the remaining chips somewhere else to work.

In summary, the stock market is a virtual world replacing the heydays of breaking out to the new frontiers searching for new wealth.  Instead of venturing into the undiscovered new world and staking your land against all odd, you bought stock of a company with new technology and hold it against the short-sellers.   Our needs to hunt has not changed a bit despite thousand of years in evolution.  The best you can do for yourself is to learn how to hunt (aka speculate) well.

Current holdings:

Main port: DMRC, AMRN, AKAO, ONCY, BIOC   Trading port: ARTH

My 2 cents

From my camera: (click on the photo for an enlarged version if you want to download)

Wednesday Morning 020

Remember, the sun ALWAYS come up despite a dark night.



Categories: Daily trading Journal, Trading philosophies and thoughts

Tags: , , , , , ,

1 reply

  1. Great article re: challenges of whimsical market.

    Re: $DMRC, my view – while could be wrong – is that the weight of 1.15 million short shares has finally caused the cave in. Historically in 2014 and through April/May 2015, this was a 20k-30k per day volume stock. The shorts have ‘issued’ 500k new shares since August 1 and 1 million since jan 2014.

    Against a backdrop of a negative tape, that has ‘soaked’ up the buying interest.

    The company has made great progress in 2015. Far exceeding my expectations from ‘visibly’ moving the product forward per targeted market (retail/barcode) and alternate(shazam/others).

    CEO, Bruce called out accelerating their investment spend because of how well things were going.

    They have the Walmart showing interest and have specifically mentioned several other cpgs and retailers trying out the solution via POCs. Lots of visible and implied activity.

    When news hits, and i do believe its when, it will be very hard to find 1.15 million shares to purchase. Especially when competing for real buyers who were waiting for more material news to jump in.

    I think it plays out over next 15 months and quite possibly sooner.

    Great articles… thank you

    value

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