Spike's Scientific Stock Analysis

[b_critical]

Spike,

Bought ZICA last week at 3.08 got stopped out after the little move up I moved my stop to 3.05 then it dropped though I did the right thing proably did but missed the boat should of bought this week at 3.08. Easy to second guess after the fact.

Bill

[Thomrich]

Greetings Spike,

concerning the triangle break on LEXR,it happened on only a few hundred shares,is that relavent?It has since busted up to 5.20.

cordially Tom

[spikefader]

I was referring to this, Spike:
Does the recovery invalidate the breakdown?
Footnote: didn't know it, but all this time all I needed to do was "print screen"

OK, my answer to that is as follows: I call that type of channel action an expanding channel long day. Do you see how it expands? I view expanding channels as only a warning to longs. It doesn't invalidate the break, it just warns that price could faulter further down. Yet at the same time, price could really rocket up from a successful test of the break down. View the channel at that point as a significant pivot point.

So if I trade one of them, and I happen to get the perfect entry at double bottom or inverted SHS or triangle break or whatever, and I'm immediately in profit what do I do? I move stop to break even as soon as possible because of the warning. I allow it to start to run bullish for me, then tighten the stop up, ya know. It doesn't officially become a channel 'break' until price closes beneath the original shape of the channel before it expands. Now, this begs the question, well if it's a warning to longs, why stay long? Simple: Because many expanding channels get bought.

The channel support line is tested, and for whatever reason, whether light volume stock and momentary spike down on low volume that doesn't get further sold, doesn't scare longs out of their positions, whatever, the test or momentary break of the channel gets bought. Can lead to very nice moves.

But importantly for expanding channel positions, one must/should target short - say at the next opposing channel day. But if price action gives another bullish confirmation like a channel turn up before that channel short I'm looking to exit at, then I give myself the green light to hold that 'cautious long', ya know? If price hits the channel, then I'm out to take quick profits and to retreat to ambush territory again. So where exactly to you exit to take the short target profit? Well, one might look for an intraday pattern to confirm their exit, and if one doesn't show up intraday, green light to hold it until you get one. Make sense? In fact, after an expanding channel long like that one, then followed by a channel short, there is actually a valid short setup right? Shorts will be looking for intraday patterns to confirm the actually trigger-pulling entry to go short, and that's the same point you'll be looking to exit. The aligned interpretation between your long and the shorts looking to enter can cause the fast drop you see at resistance or failed support. Everyone is running in the same direction, right? So don't underestimate this phenomenon. It's what leads to fast and tradeable moves, and it's what 'catches' inexperienced traders in positions; fast movements they may not be anticipating.

So to sum up, expanding channels are just a warning and not the actual reason to get out of an otherwise great entry. And if on the expanding channel day you try for entry and get stopped out, fine, walk away content that it was an expanding channel and you didn't get the perfect entry for it.

It's all about 'if price does THIS, I'll do THAT'. And by treating expanding channels the way I do it gives some logical action plan to a tricky situation. One can't be right all the time, so this covers both eventualities; being right or wrong about the trade.

And back to MTXX; you can see how it has been bought wonderfully

[spikefader]

Spike,

Bought ZICA last week at 3.08 got stopped out after the little move up I moved my stop to 3.05 then it dropped though I did the right thing proably did but missed the boat should of bought this week at 3.08. Easy to second guess after the fact.

Bill

Yeah, ZICA one of the frustrating ones. The channel long I highlighted failed for a day then got bought heavily. One of those setups where it just doesn't work out. You did the absolute right thing with that stop. I commend you! Don't kick yourself becuz you missed that move; reward yourself for staying focussed and sticking with the plan. It's those moments that tempt you to compromise your stop, and the fact that it has been bought so nicely makes you feel foolish. Bottom line, I would have done as you did. Better trades down the road dude.

[spikefader]

Greetings Spike,

concerning the triangle break on LEXR,it happened on only a few hundred shares,is that relavent?It has since busted up to 5.20.

cordially Tom

Well as far as the triangle goes it's relevant. It's not a triangle if it gets busted, ya know? Another frustrating one.

[B.J]

Thanks, Spike. Missed out on MTXX but did manage to bag .70/shr on DIOD. Take what you can get in this mkt

[B.J]

Spike,

LB, you like?

[yaoyao]

Dude; sorry to hear it. Reminds me of the previous post I made about MFLX with an apt picture I attached to the post lol http://www.mrmarketishuge.com/showpo...&postcount=154


Also goes to show that even if a company BEATS it's vulnerable. See the reality is that a stock can be bought on the rumor it's going to beat, then when the news comes out, it's sold to take the profits of the rumor. Thus the very common expression 'buy the rumor; sell the news'. Even though it FEELS senseless price action based on the news it isn't really senseless. It simply means that a long at the news release is poorly timed, since the news has been already 'factored' into the stock price and the news is no longer relevant to the question of bullish movement, but rather to profit-taking.

As far as the chart goes, the weekly channel is at 13.54, daily channel 14.08, so those are a valid targets for anyone short. Then you've got the gap fill area of 12.85 (remember the discussion about whether gaps fill in previous MFLX discussion). Maybe MFLX wants to fill the gap. Vol by price is thin down to 10.70 so it's certainly very vulnerable, and you may be wise to cut your losses now. Having said that, price support seems there at 15.00 so maybe give it one last chance?? I dunno; I'm attempting to help extricate yourself, but it difficult. This is why I prefer my usual method of tight stop; so I don't have to deal with these types of situations. Did you start with an exit plan for this one, or was this a floater? Also, to help next time, check out the daily channels. Your optimal time to exit was the expanding channel short day recently at 20.80 on 22 April. That was the whisper.

Best of luck dude!

Thanks, spike. I bought MFLX last year at $18.00 for an intermediate to long term hold. I expected it to go to $30 before $15. It is fundamentally sound and has lower PE compared to its industry group. I could've sold it for a decent profit several times within this time frame. I have exit plan to sell at its fair value, but didn't have a plan at low end which I should have. This buy and hold strategy I started using at the end of last year didn't work well so far especially in this choppy market. I may still stick to my original plan. It did hurt to see it drop like a rock.

[Thomrich]

Well as far as the triangle goes it's relevant. It's not a triangle if it gets busted, ya know? Another frustrating one.

Greetings,

I hope I didnt come off as sarcastic,I was just wondering if that should be factored into a trade.

As in LEXR today,and ZICA this week,both would have caused exits on someone else possible panic,or error.LEXR broke the triangle formation on only 150 shares,and ZICA went below last weeks low for a split second.

My question is ,should the volume of the break be an issue?

Seems to me that a skilled chart reader could manipulate such events.

ZICA strikes me as one that could have been scooped up cheap by dumping a few shares before the run.

cordially Tom

[spikefader]

Thanks, Spike. Missed out on MTXX but did manage to bag .70/shr on DIOD. Take what you can get in this mkt

Nice 1. Yup, ya got that right, but market is looking ready to rock now. Futures been a delight to trade the last 2 days.

Vector closed deliciously bullish again.

[spikefader]

Spike,

LB, you like?

Yep. Nice spotting. Also a channel turn up from that high (actually it started out up) Nice weekly upper channel target over 20.00.

[spikefader]

Greetings,

I hope I didnt come off as sarcastic,I was just wondering if that should be factored into a trade.

As in LEXR today,and ZICA this week,both would have caused exits on someone else possible panic,or error.LEXR broke the triangle formation on only 150 shares,and ZICA went below last weeks low for a split second.

My question is ,should the volume of the break be an issue?

Seems to me that a skilled chart reader could manipulate such events.

ZICA strikes me as one that could have been scooped up cheap by dumping a few shares before the run.

cordially Tom

Oh no, not at all. You didn't come off sarcastic. Hope my tone didn't sound curt!

As far as your question I guess I'm from the school of thought that any break of a pattern invalidates the pattern. But certainly there are momentary tick spikes or misprints that appear to be a break but are not really and thus cause confusion. But that same spike down on low vol may cause stop-running and disaster in the right circumstances. I prefer the cautious approach. If I'm buying on an ascending triangle and it fails I get out. I recall ZICA at the top as a classic example of why. A simple error in discipline and holding for better prices might not come for a looooong time. Better to expect perfection in a pattern and walk away if it isn't there than to kick yourself for months later.

Best to ya

[spikefader]

Daily P&F $VIX target of 11.00 is now bearish; good for bulls
(Weekly P&F $VIX target still 33.00)

[billyjoe]

Spike,

Lots of people on this forum seem to be down on GOOG. I've got a little profit. Should I go with the consensus and get out before it's too late? Maybe I know the answer already. I believe in this stock , heck it's still in it's infancy!

billyjoe

[dmk112]

Spike,

Is that a channel long on MFLX today, from the 14.11 low?


Thanks