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Another slower day. Continued UAVS analysis and finished "Studies in tape reading". Then started "The battle for investment survival" by Gerald M. Loeb. It is said that this was one of the two books that Darvas considered important in his studies. Loeb was also a founding partner of E.F. Hutton & Co, so this should be well worth the read.
I'll watch ISIG closer. It doesn't look that very optimal, but it has a very low float and the UAVS campaign started also at this time before the christmas holidays. Maybe they'll try to attract holiday gamblers and squeeze some shorts.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished the UAVS analysis and read the SEC-article about the GameStop incident. https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf
The article is really well written in an recognizable effort to make it understandable for the interested layman.
They basically say that GME was to a lesser degree a shortsqueeze than assumed or portrayed and that the really heavy surge was essentially not shorts covering but buying, besides the more difficult stuff like how options and ETF's which held it, influenced the entire situation.
UAVS brought me back to old pennystock times and I realized one thing:
For about a year after I started out, I was convinced that shorting small-caps intraday was the only possible way for the "small man" to make money in the market. In a nutshell, I was being told that the rest of the market is dominated by algo funds and there's no way to beat them.
So I'm trying to use my experience that this narrative exists and that I was certainly not the only one who fell prey to it, for how I'm approaching these small-cap spikes.
It's actually pretty astounding how almost exact similar the dip/runup towards the b/o-level developed in SPCE and UAVS.
UAVS
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Thought about the "time element" and the saying that if the trade goes your way after buying, the stock confirms by that, that your judgement is right. Also that you basically want to buy something that's "hard to buy". I recall having read a trade of Livermore described that as he opened one of his large positions, different parts of his order got filled on higher prices.
It seems that in the type of trades I'm researching, it would be way smarter to wait until the Pivotal Point is broken, then wait for a small cup & handle handle and enter at this breakout. Some examples seem to get noticeable speed at this point with only very minor pullbacks back below, which would make a better r/r possible and would be a much more straightforward trade.
That's also the chart-situation William O'Neill uses for entrys with his CANSLIM method, altough his handles seem to be also valid below the Pivotal Point, which I can't confirm yet.
Possibly this could be a very ideal entry point.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished drawing charts for all sector-indices and thought about the best way on how to determine in which spot of the market to look for stocks that should have a good probability for the type of trade I'm looking for. I start to see this setup in one or the other form in quite some stocks, but it appears to be more sloppy in some cases and I have to somehow make a distinction on what to examine more carefully and what to pass without further ruminating. Otherwise I think I'll run the risk of kinda blurring it all together and get lost somewhere.
STX Exit
The very interesting thing about this exit is, that I think that I got stopped out by a "random fluctuation", since the sector itself showed to signs of weakness at all and strength of Hardware even increased in relation to the overall tech-sector.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Looked further into the cup & handle type of formation. An example that's happening right now is actually PFE.
Tried also to get a hold on the numerous sub-category indices, but came to no real revealing conclusion.
I think PG could be a candidate for forming a cup within the next two months and then become maybe a candidate.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Started to prepare for a possible operation in HPQ.
I'm trying to look onto the way the formation formed out a bit in a sense of "what type of emotion is involved". My idea is, the more in some people a state of high emotion, being it chasing or caught by surprise by a sudden decline, was involved, the more likely the breakout will succeed.
Relative Strength
Since it gained strength in the previous advance and after the correction now, gets strong again, I'd say this is a good sign.
Started to draw sub-category index charts for the Healthcare-sector.
It's a difficult decision, but for efficiency reasons I start to think, that it would be smarter to only update index charts every day and not every single stock.
The question is, if my breakouts I start to see are only a fad, and I should abandon the idea of trying to trade the exact P&F patterns, or not. The day I stop updating my charts, it becomes a huge effort to bring them back up to date again, if I should decide to re-activate them.
But as I see it, the real advantage of these charts is not so much the very exact patterns, but keeping me in the flow of the general market.
One astounding thing I've noticed is, that at this moment as the tremendous PFE breakout happens, there's constantly a short clip of the Pfizer CEO talking a few words on the television.
It's the same exact thing as in AMD. If I recongize this a third time, I'm going to start to implement this in my trading.
It reminds me of the "YVAN EHT NIOJ" episode of the Simpsons!
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Worked on an "Assessment Sheet", for a guideline of assessing the situation when a stock catches my eye.
It should help me to discover the "objective truth" about the particular stock and not get caught up in wishful thinking.
I also try to look on the parameters in the graphic more in a sense of in which type of state people having entered at different levels, are likely and not so much on the exact numbers.
AMX
Started to look into AMX a bit. On Friday it had a very strong day compared to the market, but one conflicting thing came up here
Rel. Strength
Looking on the relative strength of the sector, it is in a very weak position, actually the largest drop within 2 years.
So the question is, if or how much this will influence the stock itself.
Also the bottom is a bit in question, since it deviates quite a bit from a more round cup. But also not sure how big of a role this plays.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
8 Cons. Disc. Index-charts and 2 sector RS-charts.
AMX showed significant strength today, HPQ handle started to get a bit messy because of an unfavorably looking gap-down.
As I'm comparing stocks to sectors, to groups and to the market, one question arises: Do the stocks follow the market, or does the market follow the stocks? It appears to be a bit of an hen and egg case.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
I think that buying it right now is equal to putting the ass on the fire. I've got this position, but I bought it at a much lower price. I'm looking to sell it now, into strength.