Bailing out

I bailed out all my positions last Friday.  My acount was down more than 7k in just one day.

Fool me once shame on you.  Fool me twice shame on me.  Fool me thrice shame on ...

This is the third time.  I was fooled by market complacency to take a lot of so called setups.  And then forced to sell them all during a sell off.  I was not cognitively ignorant of the extreme risk and exposure I had.  But I believed in my stock picking capability.  I believed in my setups.  I believed I would be lucky enough to sell my positions before others marked down the market.

All elusive beliefs.

Areas for improvement:

1. Stock picking.  Obviously I am not a good stock picker.  I need to better focus on stocks (probably small cap ones) with superior accumulation characteristics.

2. Don't try to all in at support.  A support is a *real* support only if it is tested by the market.  Buy on strength after a support is tested.

3. Overconfidence.  Imagine that at least half of my positions would turn out to be a loss.

4. Mind your exposure.  Exposure means opportunity as well as risk.

Notes from reading Invest Like a Shark

The weakest part in my trading operations: selling

- Great investing results are a product of shrewed selling rather than smart buying.

- Selling is a form of insurance to protect your business.

- Selling is nothing more than a form of insurance that you buy when things look dangerous.  It might cost you something if your worries prove to be unfounded, but it can save you substantially should disaster hit.

My reflections on entering a position:

- It represents opportunity, as well as risk.

- Always be prepared that at least half of your entries will result in a loss.

Trade: MAS

I made the following trades yesterday.

Trade: 800 shares of MAS at $35.3

Setup: Breakout pullback.

Why I entered: Strong accumulation right before and after the July breakout.  It drove the stock to a multi year high at $37.38.  The stock has pullbacked on light volume to the lower bound of the breakout bar and appeared to have found support at $35.  Stochastics has been oversold and started to rise.

TM (Trade management): Stop loss placed just below 50 sma at $34.4, target at recent high $37.3, reward to risk around 2.2.

I was stopped out of RMBS at $13.54 for a loss of $1014.

Trade: EXAS

Trade: 600 shares EXAS at $19.24

Setup: Breakout pullback, retest of support ($17.5)

Why I entered: There has been strong accumulation since June.  Price has broken out from an 8-mth bottom and retaken the huge gap made last October.  OBV remains strong even amidst the pull back since mid-Aug.  Stochastics is now oversold along with a retest of the gap high and has just made a cross over.  I view this as a buy signal.  But I have made a mistake by not waiting until market close.  I entered in the morning as I believed it would surge quickly if I didn't action quickly.  Had I waited until the close I would not have entered it as it closed below 9 ema which was not as bullish as I have wished.  Hopefully this will not be a vital one given the strong accumulation.

TM (Trade management): Stop loss placed around support @ $17.5, target at recent high $22.8, reward to risk around 2.1 which is very nice indeed

Trade: RMBS

I am buying a slight pull back close to the breakout point.  I bought 1300 shares of RMBS at $14.32.  Stop loss just below the congestion region last week at around $13.7.  I target at the Jun 2015 high of $15.5.  This gives me reward to risk of 1.66.

Trade: RNG

I bought 650 shares RNG at $22.44 this morning.  The nice features about the chart includes:

- uptrend with nice accumulation pattern

- strong OBV

- pulled back closer to previous support level around $21 with light volume down days during past month

- successfully retested 50 sma

I view the cross in oversold stochastics and strong close above 9 ema on Friday as the buy signal.  I bought a slight pull back this morning.

Charts: Apparel stores

The weakness in the industry led me to drill down to several weak stocks within the industry:

GCO lost more than 20 pts in one day.  If you look at the weekly chart you will see that it has punched through the $50 support that extended back to 2011.

SCVL broke the $28 support leaving an island top formation behind.  In fact distribution started right at the island top.

There are also some strong stocks within the industry.  I believe strong stocks in a weak industry could be very bullish.  I will monitor for low volume pull back to support levels for entering.

TLYS broke out from its base at $6ish and its resistance around $8.7 all within August.  The accumulation in the couple of weeks before breakout and after breakout looks very appealing.  It's very bullish, yet overbought.

The appealing aspect about CTRN from a trading point of view includes:

1. Strong breakout from a 3 mths + base.
2. Breaking out price resistance at around $19.5 and 200 sma.
3. Low volume consolidation around support level.
4. Long tail hammer printed over price support and 200 sma.

I will probably enter a long position when Market opens.  Risk point is 200 sma ($18.3).