Weekly thought on $AKER, $CORN, $IBIO, $SPXU

I’m sure I’m not the only one feeling this, the global financial market is in a deep state of flux.  After almost eight years of bull market (with two neutral years in between), are we due for a major correction?  Will the coming conclusion of the election between two completely polarized candidates trigger a major movement in the financial market?

Which way?

No one knows but I’m preparing for the possibility of a correction.  I don’t think it matter who becomes POTUS, the market may simply “let go” from exhaustion.  But a Trump win may create a significant market move that rivals the BREXIT vote.  I wouldn’t count out Trump yet.  After the lesson learned from BREXIT, one must be prepared for anything.

Except for the strong bellwether stocks, many have corrected recently and I couldn’t help shopping for bargain.  Thinking the market might bounce back up above the 89 xma support line, I gobbled up $MTCH, $PI, $AMRN, $SEED, $DMRC on Wednesday when market continued to rally after Tuesday up day. But when Thursday turned bearish, I found myself getting out of positions I just got in a day before.  This is how jumpy I am. Take a look at the daily SPX (SP500) chart below:

sp-500_daily

Wednesday pop placed the daily bar back above the 89 xma line (brown dashed line); but Thursday action took it back down below even though it closed above it.  The fact that price is teetering around the last 89 xma support may mean that the bull may be hanging by the thread.  Not to mention that this marginal 89 support also lines up with the uptrend line support.  A break below this trendline means also a break below the 89 support; it will not be pretty if the break is to occur.

Hence, seeing that the SP500 is in the defensive instead of offensive position on Thursday, I liquidated my new adds from the day before and raised cash to 60%.  Later on, I decided to buy some $SPXU to short the SP500.  My action so far is to protect my portfolio and minimize the damage in case of a coming correction.

Why so protective?

Take a look at the monthly chart below:

sp-500_monthly

I’ve attempted to outline the Elliott Wave’s five waves pattern onto the monthly chart.  Basically, according to the Elliott Wave theory, the fifth wave represents the top and final wave of an upmove.  While Wave Five is still in development right now and nothing is confirmed, I’ve to take into account of the possibility.  Giving the consistent repeatable five waves pattern formed in the past, it is conceivable to expect a fifth wave happening right now.  My take is that the odd of a fifth wave topping now is better than 50/50.

I don’t get your wave 5 mumbo jumbo, please elaborate!

Take a look at the five waves pattern below:

elliott-wave-chart

Source: http://stockcharts.com

In order for Wave 5 to be complete, there has to be a down move from the top of Wave 5.  See the dotted line with the down arrow?  That is my expectation of the next price movement from where we are now on the SP500 as of Friday.  Below is the SP500 monthly chart that included the same expectation of the down dotted down line from above.

sp-500_monthly2

Remember, the above is a monthly chart, that mean this “potential” downtrend may take place over a period of months. While the above fifth wave correction may or may not happen, I’m taking the precaution to protect my portfolio just in case.

Thus, I’m only holding $AKER, $IBIO, $CORN, and $SPXU and cash is at 52% in my main port.

Why holding only those above?

I like $AKER for its potential breakout earnings.  We will see about that in the next earning update.  Also, $AKER has a tiny float, so it is not easy to jump back in after you are out.  Don’t forget that Akers Biosciences is a microcap with a tiny $16.3 million market cap; thus, any strong earnings will move the price up regardless of the general market condition.  This is a stock that is still in baby mode that has the potential to grow much bigger as opposed to the big boys out there who has a lot of room to come down from its lofty market cap valuation.

aker_weekly

The above weekly chart reflected a neutral week despite a minor dip.  It’s all about the coming earning update.

$IBIO is strictly a fundamental play on fibrosis treatment from the recent discovery of Dr. Carol A. Feghali-Bostwick, Ph.D.  It is simply a bet based on trust. My trust that Dr. Carol A. Feghali-Bostwick, Ph.D will perform her magic.  Watch the video again…

This one requires patience.

I like $CORN for its non-connection to the general market.  It is an ETF based on supply and demand of agriculture product- commodity of corn.

corn_weekly

Despite a minor dip for the week, the breakout to the upside is still intact as far as I’m concerned.  Although I’ve lightened up my exposure to $CORN, I’ll add when price resumes its upward momentum.

$SPXU is more of a hedge against my $AKER and $IBIO position if there is a market correction coming.  I expect the hedge will be more for iBio if Akers Biosciences beats earnings.

spxu_weekly

From the weekly chart above, look like $SPXU is still within the channel of uptrend.  Price is now above the 5 and 15 MAs which are now lined up together to form a single line. From my observation, whenever two moving averages lined up to form a single line, the strength of the signal (whether a support or resistance) is much more powerful.  So, I expect to see a bounce from here.  In other words, that mean I expect the SP500 to correct soon.

Due to my jumping in and out of multiple stocks in mid-week, I gave back some percentage gain for the week.

Current positions:

Main port (no margin): AKER  IBIO  SPXU  CORN and 52% cash. (up 46% YTD. Side note: since I’m up 46%, there is no need for me to be super aggressive heading toward the election week. It is time for me to protect what I’ve gained instead of pushing for further gain at the risk of giving back even more)

Trading port (with margin): IBIO down 12% & MENXF down 3% on positions only and up YTD on port.

My 2 cents

From my camera:

gardenpict0927-007



Categories: Daily trading Journal, trading journal

Tags: , , , ,

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