Jiesen tries to take over the world

[jiesen]

sold GFCI

Just sold most of my GFCI at 0.22 (a 1% position- cost basis around 0.24) and I am keeping just a small piece (about 1/5) just in case it takes off, and I can get my small loss back. I was sort of feeling screwed by this company's lack of transparency. But I guess that's what you get when you buy into a pinky. At least I didn't panic and dump it at .13 yesterday.

I'm thinking about putting this $$ into MFLX.

[New-born baby]

patience

I'm thinking about putting this $$ into MFLX.

As a friend and an admirer, I would suggest waiting another day to invest. If you check the chart, MFLX never takes a huge hit like today and recover anything the next day. The next day is also red.

Even worse, Jiesen, is that today's action is forming a bearish engulfing candle on MFLX. bearish engulfing candle spells trouble

[jiesen]

bought MFLX (again) at 59.4

thanks for the input, NBB, but I went ahead and picked up an additional 1/3 of my position at 59.4 (surprisingly, it hit my limit). I might reassess this purchase over the weekend, but I think I just picked up a great bargain.

[New-born baby]

Jiesen

thanks for the input, NBB, but I went ahead and picked up an additional 1/3 of my position at 59.4 (surprisingly, it hit my limit). I might reassess this purchase over the weekend, but I think I just picked up a great bargain.

You are a good investor and you know what you are doing. I am looking at the computer generated PnF and it says "$53" or less before MFLX recovers. I know I have been wrong before--MRK come to mind--but I would rather have seen you sell those $55 puts ($1) and let somebody pay you to buy the stock at $55 than here with no assistance. You could sell the $60 calls (APR $2.45) and collect the premium as MFLX drops, and cover (or let them expire worthless, depending upon the time frame) when she bottoms.

I have no intention of upsetting anyone who owns MFLX. I am giving advice about how to protect yourself against loss. MFLX has a very nice option chain, and you can collect premiums as long as she is diving. Then you can cover and make 50% off of her if you wish. I'd suggest MM types ought to take the free money.

Very best to you, MM and all who are on board the MFLX train.

[Adam]

Mflx

Just hoping that train keeps a rollin in the right direction!!!

[jiesen]

You are a good investor and you know what you are doing. I am looking at the computer generated PnF and it says "$53" or less before MFLX recovers. I know I have been wrong before--MRK come to mind--but I would rather have seen you sell those $55 puts ($1) and let somebody pay you to buy the stock at $55 than here with no assistance. You could sell the $60 calls (APR $2.45) and collect the premium as MFLX drops, and cover (or let them expire worthless, depending upon the time frame) when she bottoms.

I have no intention of upsetting anyone who owns MFLX. I am giving advice about how to protect yourself against loss. MFLX has a very nice option chain, and you can collect premiums as long as she is diving. Then you can cover and make 50% off of her if you wish. I'd suggest MM types ought to take the free money.

Very best to you, MM and all who are on board the MFLX train.

Thanks for the helpful analysis, NBB. I probably won't be buying any options on MFLX, and I think I'll probably stay away from options in general for awhile, as I believe that's a bit out of my league still. (doing my taxes always puts things in perspective- like seeing 9/10 option trades end up in losses)

It's always nice to hear your take on a stock I'm considering/buying. It gives me some perspective on the rationale that the market can use to move stocks in ways that seem to defy value. I'm taking note of the $53 target and look forward to buying more under that, if such an opportunity presents itself without any major fundamental change in this company's earnings prospects.

[New-born baby]

Thanks for the helpful analysis, NBB. I probably won't be buying any options on MFLX, and I think I'll probably stay away from options in general for awhile, as I believe that's a bit out of my league still. (doing my taxes always puts things in perspective- like seeing 9/10 option trades end up in losses)

It's always nice to hear your take on a stock I'm considering/buying. It gives me some perspective on the rationale that the market can use to move stocks in ways that seem to defy value. I'm taking note of the $53 target and look forward to buying more under that, if such an opportunity presents itself without any major fundamental change in this company's earnings prospects.

Jiesen,
Anything you do is fine with me because it is your money, and you are a very good investor. May I kindly make this observation--as a friend? You already own the stock today at $59.40. You sell the APR $60 calls at $2.45 and you have profit if the stock is above $60 APR 21. If the stock is $59.99 on APR 21, you still have the stock and the $245. If the stock is $53, you have the stock and $245 extra. It guarantees you $62.45 for a $59.40 stock--that's 5% profit--if the stock is above $60 on expiration. The only thing you could possibly lose are: (1). excess profits above $62.45, and (2). the bragging rights to saying "I made more than 15% on this stock."

In short, you can't really lose on this trade, imo.

[jiesen]

Thanks for the kind suggestion, NBB. I think I'm still a few years away from selling covered calls, though. Your plan makes a couple of assumptions about my account size/type that unfortunately aren't true (my MFLX is in a cash only IRA account). Now, if you want to loan me $6000-12000 I'll gladly make just that trade in my margin account tomorrow, and split the profit with ya. But for now, I'm laying off the options, as well as margin.

[New-born baby]

Jiesen

Thanks for the kind suggestion, NBB. I think I'm still a few years away from selling covered calls, though. Your plan makes a couple of assumptions about my account size/type that unfortunately aren't true (my MFLX is in a cash only IRA account). Now, if you want to loan me $6000-12000 I'll gladly make just that trade in my margin account tomorrow, and split the profit with ya. But for now, I'm laying off the options, as well as margin.

Okay. I am not too well versed on IRA accounts, but my understanding is that covered calls are permitted in IRA accounts because they are so safe. If you own the stock, you need no margin--should the stock be in 100 share increments.

What do I know about IRAs? Nothing.

Best to you, ya Genius Jiesen!

[DSteckler]

<< my understanding is that covered calls are permitted in IRA accounts because they are so safe. >>

They're permitted not because they're safe but because there's no margin involved with a covered call.

[jiesen]

thanks for the input, NBB, but I went ahead and picked up an additional 1/3 of my position at 59.4 (surprisingly, it hit my limit). I might reassess this purchase over the weekend, but I think I just picked up a great bargain.

That $59 MFLX buy isn't looking so bad now, after all, is it? (nor is my BBD pick at 35.5)

Looks like I'd have been better off sticking with GFCI though... ah well, coulda shoulda woulda. But I am trying to avoid pinkies from here on out.

[New-born baby]

Not for now

That $59 MFLX buy isn't looking so bad now, after all, is it? (nor is my BBD pick at 35.5)

Looks like I'd have been better off sticking with GFCI though... ah well, coulda shoulda woulda. But I am trying to avoid pinkies from here on out.

Jiesen,
Yes, it looks pretty good today. Of course you understand that we are expecting a rebound today, and the formation of a right shoulder. For your sakes I hope we are wrong about the formation of a shoulder. If MFLX moves above the previous high of $68, we are wrong. That's what you need to void the pattern. For me I could have bought MFLX long today and ride it higher with a stop.

I don't have anything in MFLX at this time, although I came within a whisker of buying some the first time it tumbled. I hope you cash out with an excess of 15%!

[New-born baby]

Mflx

Jiesen,
Today is an excellent day to sell a covered call on this one if you plan to hold. Big volume dry up, and that PnF still says $47--I expect MFLX to round off right here and form that head and shoulder. It is acting textbook perfect . . . .

[New-born baby]

Mflx

Here's the dope on how a head and shouders forms. NOTE THE VOLUME>




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The head and shoulders pattern is generally regarded as a reversal pattern and it is most often seen in uptrends. It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow down and the forces of supply and demand are generally considered in balance. Sellers come in at the highs (left shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market and ultimately push through to new highs (head.) However, the new highs are quickly turned back and the downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high. (This last top is considered the right shoulder.) ******Buying dries up and the market tests the downside yet again.******* Your trendline for this pattern should be drawn from the beginning neckline to the continuing neckline. (Volume has a greater importance in the head and shoulders pattern in comparison to other patterns. Volume generally follows the price higher on the left shoulder. However, the head is formed on diminished volume indicating the buyers aren't as aggressive as they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted themselves.) New selling comes in and previous buyers get out. The pattern is complete when the market breaks the neckline. (Volume should increase on the breakout.) (Chart examples of head and shoulders patterns using commodity charts.) (Stock charts.)

[spikefader]

Newborn, allow me to cross-examine your analysis please....So now to my question. In this chart you point out on the price-by-volume overlay that there is very little volume at the neck line and reason that this indicates little support at that level. Now my own instinct is saying to me: The reason there is so little volume there is because the price shot right past it so fast there was hardly any time to accumulate a lot of volume there. But look at all the volume above that level! How can you discount all that buy interest?.....As Bill O'Reilly likes to say, "Am I wrong?"

Hey, Rob, excellent question dude....and it prompts some thoughts I'll share.

My humble observation on volume by price is that it's just another whisper from a chart, to be given the weight it is due. And that comes back to it is what it is until it isn't.

Vol by price, plus any other method of discerning where support or resistance volume might be, OR any other support/resistance idenfication method, no matter what the system, is all relative to majority market bias that leads to price discovery......the market can remain irrational for longer than we can remain liquid in stubborn opposition to it. With the bull, resistances will just keep getting smashed and supports will just keep holding with large support bids. Alternatively, with the bear, supports keep failing and high volume is selling at resistances that impressively hold.

Price discovery mechanics in the market is a hugely complex thing, hardly dependant on a single indicator or chart observation or even the most brilliant TA plan or bias that is saying X, because if the market wants Y, then the TA is simply going to fail. Thus is speculation. The combined action of the majority market participants is what decides whether TA is proven valid or not. It just boils down to whether "it" "they" "them" want to "listen" to a vol by price whisper from a chart, and even if it appears they are listening to it, it may all be just coincidental. There's no way to prove that any TA was the leading cause for price movement, in the same way that one can never really prove whether volume has led price (massive market orders) or whether price has led volume (massive limit orders that are more orderly driving price). The difference between those two what makes the difference between panic in the streets or bubbles in the air, or simply a good trend day up or down. The problem for us traders and investors is that no-one can ever really know for sure what is happening, because no one really knows who the lead dog is, and who’s got the biggest play on the table, or how deep their pockets are, the level of risk, and the dollar value of that risk, or whether an issue is even being traded in such a way. How can one know for sure if there are big pockets unloading into strength in a manipulated short play? Can one truly rely on time and sales to know such a thing? No. What about tape-reading? How reliable or easy is that to judge? It isn’t easy. Sure, watching that stuff helps, but deception is often very well hidden and not clear until after the fact. That’s just normal speculation to drive price discovery. Top dog is gonna usually win right? And then throw in unexpected newsworthy fundamentals and it becomes truly and amazingly difficult to ‘get it right’; this whole volume/support/resistance stuff. But it’s worth trying to get; for those 3 things are the be all and end all of speculation. Indicators schmindicators dudes. They are just another way to express those 3 things. They are just a graphical representation of oscillations and averages and smoke and daggers that will blind you if you let them. Bottom line is that volume on a chart, and where the support and resistances area, is all you need to know to be able to form a plan to trade well, and it’s by putting the r/r numbers on your side that you will do well in the long run.

So when you’re looking at a chart, try to look at what the volume is doing relative to the support and resistance. Which is it; the bull or bear volume leading price by with market orders, or a more orderly move with limit orders and flashing bids of size that is slowly moving to chase price? Does it even make a difference? I say it does. It goes to intent. It helps identify motive at a given price, and arguably where true support is going to leave or resistance is going to break.

To your observation of high volume that can't be discounted on the bullish side, I would suggest that if you have a top-heavy volume by price chart, and vital supports up there fails, then the potential for volatility multiplies exponentially. The massive volume up top is going to be more inclined to follow price initally, perhaps in an orderly fashion, trying to get the best price they can, to try to get a breakeven exit first. Then chasing asks at resistance exists after that, then panic selling when major support fails, where panic hits the Street, where there are massive market orders hitting the bid to just “get out”. When that happens, that’s clearly volume driving price. Panic sets in, and more and more supports fail, and all of a sudden, VOLUME is leading to a crash or massive discount in the price of an issue….and there is true blood in the streets. Blood in the streets isn’t gonna happen when you have orderly price decline in a trend day.

It's a fascinating subject and I love thinking about the concept. Because if you can drill down on direction and get volume following your price bias, that's where you're gonna make a fortune. This is why I look at vol by price, because I think it's VERY relevant to the question of support and resistance, and directional price bias.

Yes, ultimately a truly bullish stock will ignore thin volume by price below its current high and impressively north-bound price. But let me assure you; when the bull disappears and profit-taking commences and sellers step up to the plate, volume by price is very much relevant to the question of support failure reaction, for if an issue is "thin" underneath, and top heavy, and support leaves, then price tends to fall fast toward those "thin" areas. That's a quiet and measured observation I've happily come to accept from the years I've followed vol by price. It's not a perfect rule, just a whisper that one should consider. Watch it for several months and I'm sure you'll see what I'm talking about.

Best to ya.

Gee; that's a long post! lol I might have to make that a feature of my Psychology Blog hehe