I don’t know about you, I’m not picking up any bullish sentiment this week at all. It was like no one wanted to commit to either direction.
The weekly chart ended with a negative red bar and the 5 ma crossed below the 15 ma.; it looks kind of bearish to me.
So what do you do when you feel an air of uneasiness flowing through the financial market?
In my case, I raise cash!
And so I started peeling off $DMRC piece by piece until the positions dwindled down to the size of a baseball. I initially sold down $SEED but bought back some before Friday close. $AKER I did not touch. In fact, I will not touch $AKER for a long time to come. I think of this one as my bona fide long-term buy and hold. One that I will ride through its growing phase and watch it becomes one of the big pharmaceutical companies.
I also did not touch $IBIO either. I actually added some more due to the cheap price. Didn’t Warren Buffett say something about buying stock when nobody wanted it? “Hey, let me take your cheap shares! Thank you very much!”
I think last week $SEED vanishing profit changed my mental process quite a bit in term of knowing when to take profit. My whole trading mindset shifted and a new underlining trading “core” thought was formed to provide an invisible guidance to my trading tactics.
How exciting! Tell me more!
I’m going to call it “grasping the tail” trading thought pattern
Imagining yourself as someone who has the flexibility, stamina, and strength of Tarzan. Instead of swinging from tree vine to tree vine which I’m sure is going to be quite cool if you can do it with preciseness to avoid missing the next vine, your job is to grasp the tail of any flying bird big enough to carry your weight. Once you’re air borne, you must start to look for a place for safe landing. Don’t just hold on to the tail and wait for the bird to drop you off. Unless the big bird is in the same category of the Toruk (remember that BIG RED BIRD in the movie – Avatar?), you must always be on the lookout for safe landing. Your goal is to land on a soft pile of greenbacks instead of landing like a first-time parachute jumper ready to break a knee.
If you hold on to a tail of the bird for too long, it may just as well fall from exhaustion and take you along for a gravity ride to the hard ground below. You’re talking about broken bones and some serious injuries. So, my primary objective once I grasped on to the tail of the flying bird is to start looking for safe-landing.
“Should I take profit here or there?” will be the over-riding mindset once I’m locked and loaded on a stock with momentum. Gone are the days of high price target. “Damn, price target is still a long way from here! Go bird go!” isn’t going to cut it. Always watch for opportunity to find a good landing spot. If I had this mental thought process last Wednesday with $SEED, I would have taken profit at the open without a second thought.
Talking about Toruk, I believe I’ve one in my port. I’ve got a pretty good feeling that Akers Biosciences is a Toruk in the making. Hence, I’m willing to hold on its tail and never let go.
What about $DMRC? Isn’t it in the same category as Toruk?
Digimarc is still missing an important element before it can be qualified to be a Toruk. Its Digimarc barcode needs to be adopted officially by the retail industry first. Once confirmation of adoption is achieved, Digimarc is going to be one fiery giant Toruk. Without confirmation, Digimarc is just another bird that I needed to learn to let go from time to time.
$DMRC was under bearish attack right at the start of the week.
This week bearish engulfment candlestick bar is not a pretty bar. Price needs to bounce next week to show support; otherwise, a drop below this week red bar only confirms the bearish momentum.
Seeing that price could not break out to the upside but had fallen after touching the resistance of the downtrend line, my safety alert began to flash in my mind. Since this was an extremely over-weighted position in my port, I knew I had to lighten up pronto if momentum is no longer on my side. I lighten up my position to raise cash. However, I’ll be looking to pick up $DMRC at lower price if possible.
After $CARA reached the high of $9.87 on Wednesday, I began to feel the lack of momentum on Thursday morning which was also Cara’s webcast on Pain Targeting Mechanisms. Remembering missing my $SEED profit last week, I set a stop loss trigger to protect profit in case price fell. And price did fall and my entire position was sold to lock in gain.
This week, $CARA formed a potential shooting star topping formation. If this week low is taken out next week to the downside, then there may be more correction coming. I’ll be looking to buy back shares as well.
From the beginning of the week, I kept adding to $SEED until I had 80% of my original size by Wednesday. Then on Thursday, my safety alert was flashing so I began to sell some back to raise cash. However, after reviewing the monthly chart (see below), Origin Agritech is no longer following the previous patterns. In fact, the first week of October already broke the previous patterns of falling price in subsequent month.
The three down arrows showed that this October so far shows a green bar instead of a red bar in the two previous patterns. Granted that the month is not over yet, but price did do something the previous patterns did not do by moving higher in the subsequent week. Thus, by Friday closing bell, I decided to add back enough $SEED to make 50% of my original size.
Although $AKER had a volatile week, it ended with a bullish engulfment bar.
That is one very good looking green bar. It looks like it is ready to bounce higher. As mentioned above, $AKER is my long-term hold and you will not see me trading this one.
$IBIO continued to find support at $0.55.
I’m patiently waiting on this one.
Because I’m feeling bearish about the general market, I also bought $SKF and $SPXU to short the financial and SP500 respectively. These are starter position size so I may add more if market does fall next week.
Due to my locking profit on $CARA and reducing position size on $DMRC before more falling prices, together with price increases from $AKER & $SEED, my port gains some more this week.
Main port (no margin): AKER IBIO SEED SPXU SKF DMRC and 45.7% cash. (up 51.5% YTD)
Trading port (with margin): IBIO down 16% & $MENXF up 6% on positions only and up YTD on port. I also added to $MENXF this week as well.
My 2 cents
From my camera: