This was the week of sitting tight while the broad market went through a hiccup. As long as the fundamental story of the stocks I’m in is still intact, I don’t pay much heed to the technical weaknesses because ALL stocks go through this phase ALL the time.
One important factor causing technical weakness is when impatient investors/traders left to hunt other stocks. There is absolutely nothing wrong with investors/traders being impatient since everyone has their own set of value they assigned to the stocks they bought in. And this value can shift easily when other stocks become more valuable in the eyes of the investors/traders. I do this all the time myself. My recent liquidation of $MCIG, $SEED and $HTGM positions are perfect example. I sold $MCIG, $SEED, and $HTGM because I wanted to shift my allocation to other stocks which I believe have better chance of bouncing even though my fundamental analysis of both $MCIG, $SEED, and $HTGM are still positive. By selling, I’m taking the risk of missing the rally when their catalysts appear out of nowhere. $MCIG bounced nicely this week without me on board due to news that they nailed a $5 million deal with a California cultivator. That is how the market works. We are constantly faced with choices and there is no right or wrong answer to the choices we made but only risk adjustment. We are always risking giving up something that will bounce while going after another that may or may not bounce.
Therefore, when I see price weaknesses in the stocks that I still own with no change in the fundamental story, I pay no heed to the technical weaknesses.
$AEMD, $IBIO, and $SIGO were down even though the catalysts ahead are extremely powerful from my perspective. Their only drawback is the waiting. Some will see this as dead money and decide to hunt somewhere. And in a low liquidity stock, this would cause technical weaknesses that have nothing to do with the fundamental. Therefore, to be affected by technical weaknesses in these stocks will be like allowing these impatient investors/traders to dictate your conviction of these stocks. Ha! No way. I trust my own analysis and I know that once these catalysts come into the surface, $AEMD, $IBIO, and $SIGO will explode so fast that those who sold earlier would be in shock.
The problem with low liquidity stock is that once you’re out, you may have a hard time buying it back without chasing it back up. This usually mean there is a good odd you have to pay a premium to buy the stock back IF you remember to do so before the catalyst hit. Of course, this doesn’t apply if you are trading small lot but if you owned large block, forget it. There is still the caveat though, while I’m waiting for the catalysts to show, I’m still at risk to any fundamental change to the companies I’m invested in. I’m fine with that ’cause that is what I’m basing my risk on, not some impatient investors/traders selling their shares to hunt somewhere else.
$LRAD continues to find strong support over $2 despite some selling for the last two weeks. As mentioned above, I pay no heed to these technical weaknesses. In fact, I see their superior Long Range Acoustic Device technologies (both directional and mass notification) are much needed in the future when our world continues to be affected by global warming. I know some of you out there don’t believe in it but, to me, it’s as real as the air I breath in. I’m investing in what I believe in (right or wrong); it’s that simple.
I’m so glad to be able to buy back $PI at the lower price last week after the crash from earnings update. Price bounced nicely this week and because I learned my lesson from the last time I held $PI, I’m going to let this one ride it out instead of trying to pick top to sell for short-term gain.
$TRXC earnings update last week is quite revealing and I already wrote my special thought on it yesterday. You can read it by clicking –> here.
Due to technical weaknesses in $IBIO, $AEMD, $SIGO, $LRAD, my port suffered a minor drawdown for the week.
Main port: TRXC LRAD IBIO PI AEMD SIGO & cash (up 22.8% YTD)
Trading port: MENXF IBIO
My 2 cents
From my camera: