Weekly thought on $CARA, $IBIO & trading strategy

Eureka! Again!

This week, I’ve another light bulb lighted up that gives me another insight into my evolved trading strategy.  I know I’ve discussed this many times in the past and some of you probably already figured out what I’ve been doing all along; but this week revelation is like, “I know exactly what I’m doing now 100%!”

Ok, you got me, what are you doing 100%?

It’s the power of guerrilla warfare engaged by the militia.  Its effectiveness had been demonstrated by the wars fought as far back as the American Revolution against the British armies and as recent as the allies’ resistance in WWII.

In essence, militia’s resources are limited as compared to larger and less-mobile traditional military.  But their effectiveness comes from the fact that they can muster a concentrated militia force to attack a single mission with preciseness and concentrated firepower such that the probability of winning is much higher.  The important point here is that the mission is simply to hurt the enemy by disrupting their flow of action so as to increase the odd of the larger traditional army to win the war.  Of course, in order to accomplish this high winning percentage of successful missions, an understanding of the enemies through and through is a must.  This include knowing their pattern of movements as well as their habitual behavior.  Thus, the militia always monitor their enemies closely and wait for opportunities that provide the best chance of success in the guerrilla attack.

In a similar sense, I watch my favorite stocks (you should know by now what I’m always watching) and try to understand their pattern of movement through the charts and their habitual behavior through their 10Q , 10K, and press releases.  And when I see opportunities reveal itself, I strike with my “swinging for the fences” purchase and retreat once the mission is deemed successful.

The successful first week of the year is a perfect example of my clear cut revelation today.

Do tell!

As discussed last week, I went into 2017 swinging for the fences in $IBIO, $CARA, $LEU, and $AMRN.  Giving that I’m quite familiar with these few stocks I’ve been monitoring for awhile, I felt the time was ripe for a bounce going into the new year.  Lo and behold, $LEU went off the chart and made close to 48% up move on the price action in the first two trading days of 2017.  Seeing such fabulous gain so quickly, the lessons I wrote about last week did not lost on me.  Remembering $SEED and $DMRC’s profit gave back, I started peeling off $LEU to protect profit.  Actually, it was quite a hard decision to make since my greedy mind was telling me to hold for even higher price action.  But there is a trick I learned that helps me to take action to protect profit.  I simply pick other stocks that I “really” wanted to buy but resources are tied up.  So, I forced myself to peel off $LEU to free up cash to buy $DUST, $XONE, and added more $AMRN.

Despite my selling down $LEU to standard size position and bought $DUST, $XONE, and $AMRN; I lost money on $DUST, made a little on $XONE, and was basically neutral on $AMRN. Nevertheless, I was able to capture a lion’s share of my gain in $LEU which was what really matter.  However, by Thursday, I got the feeling that the general market was about to roll-over. Once I felt it, I made no hesitation in liquidating the remaining shares of $LEU, sold out $AMRN and $CARA to protect whatever gains were still there.  I even bought some $TZA to short the general market.  But in the end, the general market did not roll-over like I predicted.  The stocks that I sold, on the other hands, did not bounce back much either which led me to believe that the SP500 rally may be a head fake.

When reviewing my action for the week, seeing how quickly I closed out my positions on Thursday based on a slight “gut feeling” of market collapse, it was then that I realized my trading tactic is no difference from the guerrilla way of warfare/trading.  It is the one that allows me to bank profit consistently. The profits I gave back on $DMRC and $SEED last year only go to prove that guerrilla trading tactic is the right way for me.

Now, just because I practice guerrilla trading tactics doesn’t mean I don’t see the long-term potential of the stocks I traded in.  Far from it, I will be constantly looking to jump back in to catch the long-term uptrend.  This is why you don’t see me scanning for new trading stocks to trade for the momentum.  I’m like the militia who only have one simple mission, to win the multiple battles against the same enemy.  So, the militia keeps making frequent but well-planned attacks on the same enemy.  And I’m doing the same by trading in-and-out with the purpose to obtain gains on the same basket of stocks that I believe still have strong catalysts to produce much higher price in the future.

And for the year of 2017, I’ll be embracing 100% guerrilla style of trading with no more confusion about the wisdom of using  buy & hold.  And as in all trading strategies, sometimes you win and sometimes you lose.  What work for me that allowed me to be consistent is all that matter.

One thing I like to mention is that swinging for the fences is not a trading tactics for everyone.  It took me years to build up tolerance to the size I’m working with now.  And it is this tolerance that opens the door for me to practice guerrilla trading tactic.  I just need to be very clear of my mission every times I jumped into a trade so that I’m ready to take profit when it is made available for me suddenly or surprisingly.  This is the only way I see that can help me snip the greedy bud from my mind.

Ok, but why are you feeling bearish on Thursday and Friday buying up $TZA when the SP500 kept going up?

My focus was mainly on the $TZA price action.  Somehow, the Direxion Daily Small Cap Bear 3X ETF ($TZA) was acting like it wanted to bounce higher. And I’d seen how the small cap stocks got a head start in the direction before the general market caught up to it.  Take a look at the daily $TZA chart below:


While the SP500 closed higher on Friday, $TZA actually closed a bit higher as opposed to closing lower.  Although I’m stopped out of the $TZA position at breakeven during Friday trading hours, I was surprised $TZA closed higher despite a strong rally propelling the SP500 to close higher.

Now, take a look at the SP500 daily chart below:


It is possible that there is a double-top formation being developed.  See the two down arrows on the chart that represent the possibility of a double-top?  Of course, next week price action will either confirm or negate the double-top formation.  A break out to the upside will be very bullish indeed.  But for now, I’m clueless about the true direction.  With an up $TZA and as well as an up SP500, I prefer to play safe until I know what the weather is really like- sunny or rainy day?

Thus, my main port only has $IBIO, a small starter position on $CARA (which I bought back on Friday when the intraday price action looked bouncy), and a whole lot of cash.

Regarding $IBIO, nothing has changed and I’m simply biding my time waiting for catalysts to reveal themselves during 2017.  Watch the video again:

Current positions:

Main port (no margin): IBIO   CARA  and 76% cash. (up 7.8% YTD- a very nice start to kick off the year!)

Trading port (with margin): IBIO down 25% & MENXF down 22% cumulatively on positions only. Holding GRWG to invest in the cannabis sector.

My 2 cents

From my camera:


Categories: trading journal, Trading philosophies and thoughts

Tags: , ,

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