This was a typical slow and “undecided” week that ended with a doji bar.
Yeap, that’s right! A weekly doji bar next to major resistance (near the all-time-high) is a recipe for a turning point per my book. As such, coupled with a powerful blast to the face which I explain later, I was shaken from my dream of an ever climbing stock market.
Red Alert! Red Alert!
Needless to say, I kicked into action and started selling equities to raise cash. By end of day, I raised cash to about 80%.
This week I would like to start off with $DUST which was the source of the blast to my face. I started off with a low-level position which is a bit larger than starter position. Since it was not a large position, I could weather the stormy days without breaking a sweat. By then gold was on a downtrend waiting to break thru support. I was literally at break-even Thursday night before the draconian opening on Friday morning after the job report was announced.
I made a mistake waiting for a bounce from a supposedly over-reactive selling opening before cutting losses. Instead of bouncing after the gap-down, price continued to slide down the steep slope like a beginning skier who hadn’t learn how to stop a slide yet. Couldn’t bear to watch my losses piling up faster than I could calculate the percentage damage, I cut losses as soon as I realized the magnitude of the coil gold price was unwinding. This was what slapped me on the face hard on Friday. So hard that I woke up from my dream of a strong recovering economy where stock prices are going up and up.
From the daily chart above, $DUST cut thru the gains of the last three weeks in one fell swoop and created a brand new low to boost. Luckily, my position size was only low level; otherwise, my losses would be much larger.
Made no mistake, I took this powerful spike of gold price on Friday as a sign of fear regarding the current state of the economy. The talk of raising interest rate due to “stronger” economy is now confirmed as a bluff. With poor showing on new job creation, dollar crashed, gold spiked, and I took a hard slap on the face. Ouch!
$AMRN soared after FDA “finally” issued the company their long awaited NCE (new chemical entity) status for its main product- Vascepa. This essentially keeps the generic drug manufacturers out of competition until 2020. This definitely save the company a boat load of money in defending its patent against generic drug manufacturers.
Unfortunately, I already unloaded my $AMRN position a week before by 80% due to the weekly resistance of the 79 moving average. I sold the remaining 20% after the NCE news thinking that profit-taking would take it back down the next day. I was wrong, more buyers came in and price continued to head higher. Seeing that the NCE brought in positive effect, I bought back shares I sold and added more during Thursday. But then, after Friday wake-up call, I dumped the entire position of $AMRN to raise cash.
From the weekly chart above, this week price surge constituted a cup & handle breakout pattern. Probability speaking, this breakout could be the major turning point for the stock to start a long-term uptrend direction.
Then why did I sell Friday?
Have you ever wondered why I’ve always posted the SP500 chart at the start of my blog? This is because I see the “possible” directional change of the SP500 trumped most individual companies’ fundamental and technical.
As the old sayings go, all rising tides raise all boats while a falling tide lower all boats.
I may miss the continuing price rise or I may have the opportunity to buy back cheaper. Let’s see what next week bring.
$ARTH has a weekly correction bar since the dilution news.
While this week bar is red, the weekly chart is setting up a “potential” breakout of a cup & handle pattern. Remember, a cup & handle pattern means nothing if there is no breakout.
I’m still having a hard time reconciling to the fact that Arch diluted before the human trial result is released. My perspective of Arch has changed from a “this-can’t-go-wrong” to “better-be-safe-than-sorry” after the dilution news. If there were no dilution news, I would still be holding my super-size position. Since that wasn’t the case, I continued to reduce my position size from “swing-for-the-fences” to “large” to”mid-level” to “free shares.” In other words, I’ve recouped my original investment in Arch and is riding only on free shares.
Yes, I know. I’m taking the risk of leaving a lot of money on the table. Since I can’t reconcile to the early dilution in light of the massive potential of Arch’s AC5, I lost my “mojo” to swing for the fences on this one.
$IBIO continued to drip a little due to absent of news.
From the weekly chart above, the overall current trend is still up and the recent three small red bars are creating a bull flag pattern. You may even see a “bowl” and handle pattern which follows the principle of the cup and handle pattern. A breakout to the upside is what I’m betting my money on.
Since there have not been any new information to change my “this-can’t-go-wrong” perspective; I’m still holding strong and have not sold a share.
$MTCH seemed to be fighting a powerful resistance for some reason. Instead of bouncing from a doji bar next to support, price took the opposite direction to the downside.
Giving price did not bounce, the message of “non-conforming” to the expectation of a pattern is as important if price had bounced. There is a lot of selling pressure in Match Group.
I can only think of two reasons for the selling pressure:
- Big funds want in for cheap shares, so they’ve a program designed to shake the trees to get those cheap share
- The billion dollar debt on the book is quite an eye sore. Thus, we need another strong quarter to reflect continuing demand of Match smorgasbord of dating services before investors are convinced to buy the stock.
Friday action seemed to suggest #2 since price could not sustain an intra-day rally even with the positive news update on Tinder.
Giving my already bad feeling about the broad market, I decided to cut losses and liquidated my $MTCH position to look for an opportunity to buy cheaper shares if possible. As of now, I’ve no position.
In summary, this week market action against my portfolio sent the following loud messages to me:
- COOL DOWN!
- Directly from the job report, the economy is not in good health
- While the impetus to raise interest rate is gone, there is no impetus for the price to rally either. Remember, companies are not hiring so there is no growth.
- There is a time to be aggressive and there is a time to play safe; this is the time to play safe is my take of it.
I’ve done ok so far this year with a decent gain and have no intention to let the market takes it back. I’ve to take action to protect gain when I feel there is a correction on the broad market coming regardless if I’m right or wrong on my feeling. Several times I made the wrong calls and missed out profit opportunities; but I also know that it only takes one “miss” of not going into cash to give back all my gains and more. The sting of the losses in my $DUST trade is a painful reminder that I needed to go to cash NOW.
I know, I could be wrong once again and miss out profit opportunities. That’s ok too ’cause I know when I get my mojo back, I’ll take more bites out of the market.
Main port (no margin): IBIO, TZA and 77% cash. (up 28% YTD. I used about 3% cash to buy TZA to short the market)
Trading port (with margin): ARTH (free shares only)
My 2 cents
From my camera: