Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here. Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.
Last week, I predicted that the SP500 had a better than 50/50 chance of a bounce; it did but not before a bearish Monday that threatened to take the market down further. The bull took over Tuesday, and struggled to maintain attitude Wednesday and Thursday; however, by Thursday, I turned utterly bearish because of the price action against the resistance on the daily chart as well as the hourly chart. Let me explain with the daily and hourly chart below:
Daily chart below: There are two significant resistances in play here. The first one is the Fibonacci popular 38.2% retracement resistance (see blue arrow on the left side of the chart), and the other one is the 15 days moving average resistance. The solid brown line is the daily 15 MA resistance, and it is in the same area of the Fib 38.2% retracement level. When there is more than one indicator showing resistance in the same area, I pay attention. Price banged its head against the resistances all day, and I got this creeping feeling that this week bounce (Tuesday to Wednesday) could be a dead-cat bounce.
Hourly chart below: The hourly chart showed the 79 & 89 moving average resistance. As I’ve stated before, these two moving averages are compelling indicators of either a support or a resistance. If they happened to be resistance, I’ve to respect the probability that the rally could be checked by this resistance. Although price traded slightly above the resistance most of the day, I did not feel the bullish strength behind this up-move. For me to feel that the 79 & 89 resistances have been punched through and no longer acts as resistance, the price needs to show strength and move a lot higher and away from the 79 & 89 moving average lines. Instead, price struggled to stay above this hourly resistance. As seen on the chart, price bounced higher on Friday morning but gave back most of the gain from Thursday and closed below the 89 XMA (brown dash line). Furthermore, the 79 SMA (blue dash line) moving below the 89 XMA did not provide me with confidence that the bull is in charge.
In light of my bearish stance, I decided to liquidate my tradeable positions which are $TRXC and $KNDI to raise cash in case next week turns into another bearish week. However, unless there is breaking news that Kandi EX3 is selling as a better than expected pace, I may still be able to jump back in if the bull can continue the rally next week.
Even though I dropped $KNDI and $TRXC from my port due to my fear of another wave of a bear tsunami hitting the stock market again, I’m always on the lookout for new trade idea. This week, I came upon $SOLO due to its breaking news, “Electra Meccanica Announces Vehicle Pre-Orders Now Exceed 64,000 Units.” I’ve written a separate blog post on $SOLO, and you can read it here if you’re interested.
$AEMD– There was a volume spike on Friday for AEMD; perhaps it was related to the news regarding earnings update, “Aethlon Medical To Release Quarterly Financial Results and Host Conference Call on November 6, 2018.” I look forward to hearing about the progress update regarding its hemopurifier.
$IBIO– Needless to say, I’m very optimistic about this one giving its plant-based tech and the coming Phase I trial of its therapeutic candidate, IBIO-CFB03, for the treatment of systemic scleroderma, idiopathic pulmonary fibrosis, and other fibrotic diseases.
$LRAD– This one is holding well during the volatility of the broad market. I’m holding this one waiting for more news on their mass notification system sales as well as military orders from the U.S. and abroad. In my opinion, the technology of this company is taking traction and will become a valuable tool to communicate to the mass to save life.
$SOLO – Click to read–> My 2 cents on $SOLO- Premium manufacturer of electric vehicles in the making
At this point, the above four stocks are my buy, hold, and forget stocks.
Current positions (in alphabet order):
AEMD IBIO LRAD SOLO & cash (up 18% YTD)
My 2 cents
From my camera: