STRATEGY OF THE DAY

18/03/2016 Strategy of the day: Track the trend (part 1 of 4) T3B taught us to track uptrending stocks and also advised us that 1 year high is the key criteria. However, how do we track if market overall has been down below 1 year? William O’Neil said: ·         If you buy during a market uptrend, you have 75% chance of being right ·         If you buy during a market downtrend, you have 75% chance of being wrong Let’s say you like to choose trades from mid cap, so you follow FBM70:- Example (1) say e.g from Jul 2014 to Jun 2015 (blue box). In this time frame of 1 year, the market is down (shown by brown line). Example (2) the whole of 2015 was side trend (orange box shows 1 year of 2015) shown by blue line sideways. But the year was volatile and had big up to down swings. Example (3) the current time frame, from Feb 2015 to today is technically a downtrend (gold line shows a downwards). So how do we trade if the market is not in an uptrend at all if under T3B rules? The first rule of T3B criteria for S1 is uptrend follow by break high.   No 1 year uptrend, no break high, how?

track the trend (part 2 of 4)

Here is the table from T3B black book that says a 1 year high is the criteria. 

However, when an uptrend is finished (begins downtrend) I shall assume a fresh start. So I shall take the first 3 month high as a birth of a new uptrend. Then, I can start to trade again.

Not to confuse with S3 (which is taking a new position when S1 pullback), start of a new S1 can be as following chart. 

The chart is the index of 70 mid cap stocks, So if the market of mid cap represented by this index chart is on uptrend again, then there will be many stocks we can trade.

The green circles show the signals of 3 month high and beyond. Notice that the blue line and also the gold line are uptrend patterns.

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15/03/2016 Strategy of the day: Engulfing reversal Look at this chart. There were heavy volumes at $87-$90 range during mid Feb. Notice the engulfing candlestick pattern a day after the high volume bar? Such reversal is usually very strong and follow up is important.  The first reversal (2nd black line) failed even with higher low. Then engulfing with high volume came in follow by gap up (green circle) This is a signal to buy.

14/03/2016 Strategy of the day: plan your trade Planning your trade is supposed to minimize risk in the event that your decision is incorrect. Ask yourself:- 1.    Did I buy by chart signal or someone or something told me? 2.    Did I check the profit:risk ratio? 3.    Is this stock still fundamentally strong? 4.    Was this stock at bullish reversal? 5.    Did I check the support, the cut loss stop price? Learning is a continual experience but worse of all is not to experience any loss. The hard truth a trader gets is to experience the first bitter lesson of heavy loss but you must stand up, face it and say to yourself never to be so foolish again. There is only one time loss, the day market is against your decision but if you can breakeven, don’t let it lose a single penny.

10/03/2016 Strategy of the day: to track formation of a cup pattern (part 3 of 3). As explained in part 2, the big volume push towards end Oct were smart money accumulating for more upside. The stock finally hit back 1 year high, and formed a big cup with handle at end of Dec. Volume increase during running up is big boys buying and if any short pull back is just shaking off weak holders (see the dotted box)

9/03/2016

Strategy of the day: to track formation of a cup pattern (part 2 of 3).

Usually after a long downtrend, a fundamentally good stock will bounce back.

In Padini chart below, the selling in June and July are over (panic selling, accumulated by big boys in August to September and now major push – see the huge volume drawn in blue lines). The stock break major resistance and now exponentially up. The size of the cup form is now extended from 6 months to 9 months.

The next phase could be either extending the cup or a pullback to form the handle.

8/03/2016 Strategy of the day: to track formation of a cup pattern (part 1 of 3). We all learned that cup is a powerful consolidation pattern with strong support. There are higher lows to show us that the chart has bottom out. In the example below, we see that the last support is now a broken resistance ($1.37). Tell tale signals:- 1.    Chart break high 2.    Higher volume on breakout 3.    Troughs are getting higher (line drawn joining the bottoms) The next test will be breaking the next higher resistance ($1.44) And form a round bottom, the cup.

7/03/2016 Strategy of the day: uptrend weaken, trend reversal signals Uptrend will never be up forever. Notice tell tale signs:- 1.    Making lower peaks, highs going downwards 2.    Falling down wedge pattern 3.     Multiple tops (like in sample chart below), hitting top resistance 4.    Possible formation of head and shoulders pattern 5.    Candlestick reversals like evening star, shooting star, bear engulfing, bear harami As such, once you can identify them , it is time to stop holding and plan exit strategy

4/03/2016 Strategy of the day: consistent strong uptrend. Not easy to find such uptrending stocks but if you can see one like that, there is virtually no trend reversal signal. Both peaks and troughs are straight up. For such good uptrending stocks, you can enter whenever it retraces and then wait for sell signals like reversal patterns, etc.

3/03/2016 Strategy of the day: exponential uptrend reversal The chart of DIS below shows an exponential uptrend with higher highs and much higher lows. Step (1) = draw a blue line joining all the tops, touching as many peaks as possible. You can draw another one at the higher part of the chart (the exponential trend area) Step (2) = draw another coloured (purple) line joining all troughs (lower portion of the price bars). Step (3) = if it is an exponential chart, you can draw another black line joining all the new lows at the higher portion (the exponential trend area) Can you notice when price suddenly dropped to below the extended purple lower line? Also notice the high volume. That’s buying at climax and end of uptrend. Such exponential uptrend may be due excessive speculation that cannot be sustained and subsequently followed by huge fall in prices.

29/02/2016 Strategy of the day: Buy on pullbacks After a correction, wait for break out of resistance and then buy (red circle). Just like T3B classic S3, wait for cross over DTL (down trend line) and buy on BP (break peak). The key problem with us is watching and patience. Those who think of winning and those lack of patience may fail.

26/02/2016 Strategy of the day: A 10-minute break In the evening, after market closed, do these steps:- 1)    Check the broader market – read the main index chart – determine trend, strong or weak up trend? Remember, NO UPTREND, NO BUY. 2)    Check your stocks in trade – look for trend reversal signs – adjust your sell stops if necessary. 3)    Hunting fresh stocks for your watchlist? Hei! You have done your 10-minute already and if you can, you may start hunting. REMEMBER, it may take >half hour to do hunting, so do this once or twice a week.

25/02/2016 Strategy of the day: When candlestick reversal pattern seen, when another sell signal also appear later, then to sell or to hold will be your final decision. Seriously, you need to read your trade in chart daily. Do as the chart says, no regret. Don't bother the news, the most respectable analyst's or even your mentor's stories. Charts cannot bluff.

24/02/2016 Strategy of the day: RESPECT THE LONG DOWN BAR! That this stock has good fundamental, that it is strong, consistent up trend, when it got to crash, it crashes. Nothing is permanent. Sell when the chart says so!  Look what happened weeks later...

23/02/2016 Strategy of the day: if the broader market uptrend ends, we stop buying and start selling. If nothing to sell, we have a drink. LL (lower lows) signal sideways, distribution on the way down

22/02/2016

Strategy for the day: ALWAYS HAVE EXIT STRATEGY BEFORE YOU BUY. Buying is like a commando going into a building to fight terrorists, must know when to escape and watch from outside otherwise you will be slaughtered inside.


Always set your exit rules before you click buy ......