2014年8月30日星期六

Three levels of thinking in trading

(1) Individual stock
The behavior of individual stock is random. Even 2 stocks look identical: chart, fundamental, float, market timing... and etc. Still one may b/o successful while the other one may not work.
    The effort in this level is: found a setup, thinking in probability and trade in discipline. Psychology issue will kick in at this level also, which need to be resolved.

(2) Setup behavior
When we think in setup, it is a group behavior. There is a distribution of stocks with same setup. For example, for short term swing setups. Your win/loss tradings is like 1:1 ratio; average rewards/loss in $ is like 2:1; 20-30% of chance you will catch idea move; 30-40% of chance it goes to reverse direction of your expectation and may hit stop loss...
    This distribution is affected by generally market and keep changing. For example, at early bull market, b/o success rate will be high. During market top, it is very vulnerable. Years ago, best quality stock move first in a rally, then 2nd quality and then others when everything moved up, it is about to turn; now this is change, all stocks move when bear market end and most beaten down stocks b/o strong at early rally.
    The effort in this level, market timing tool is very important. Also effort need to keep monitor the setups. If something changed, is it due to market condition or setup behavior is really change?

(3) Long time endure edge.
Long time endure edge: most trad-able edge is momentum and PEAD (Post Earning Announcement Drift). The setup need to be built on endure edge in order to profit. Momentum and PEAD has been there since market beginning and likely to persist in our life time.
    Setup keep changing, but what really changed is the tactics. Buy b/o changed to buy pull-back or buy end of day changed to buy during the day or use 3 months to gauge momentum instead of 6 months ... something like this. But momentum or PEAD itself is really not change.
    The effort in this level, belief system really need to be in line with these endure edge. Extensively studing them will convince yourself. There are tons of research work in public domain since 1980s, we are very lucky we do not need to do everything from the beginning again. The thing is you still need effort to study them to get convinced. Or you will believe something else (market is manipulate, market is efficient and no edge, low PE works, great traders has some secrets, if everyone know it, then edge will disappear ...)

08/30/2014 weekend routine - swing

[Anticipation List Event- from last Wen to this Tues]
08/20/2014 - 08/26/2014 does not really favor b/o trading. SSYS and TWTR are the one likely to get reward/risk>1; but 11 stocks will get reward/risk<-0.5. Detail as below (Chart is static, Not dynamic URL to finviz).

Some stock b/o and move as momentum burst - the big winner (20%-30% in normal market condition)
(1) SSYS, b/o at 110 and move higher
(2) TWTR, b/0 at 45

Some stocks b/o then side way move - wash trade or scratch trade (30%-40% of the trading)
(1) COO
(2) AMX

Some stocks b/o then fade - may hit or half hit the stop loss (30%-40% of the trading, loss need to be well controlled)
(1) CMG
(2)OTEX
(3)HIMX
(4)CSTE, 1st b/o fade, 2nd b/o go sideway
(5) DECK
(6) VPRT
(7) QLIK
(8)FB
(9)ZLTQ
(10) ISRG
(11)PII

Some stocks break down - you will not be affected if trade b/o, but will be stop out if real anticipation
(1) MTRX



2014年8月29日星期五

08/29/2014 Daily Trading Routine

[General Market]
For big picture, market rally for a long time and get extreme bullish on early March this year. Since then RUT stuck in the range while other index makes marginal new high. Divergence happens on small caps and big caps. Looks we are in a top forming. A 20% kind of correction will likely to happen some time in future and welcome. If that happen I can re-invest in 401K.    
    For short term, we saw a V shape recovery with low breath. All 2nd indicator turn green and not over-bullish yet. For this V rally, no follow through is big issue and we keep seeing index rise in the morning and fade which is not good sign. Today it looks this V rally is out of gas.

[Anticipation List]
MFRM CSTE AMED LEAF CMG RDNT DHX BLT SLXP LPNT EGOV TASR LPSN XPO GEO IMS HMSY CXW MWA RCL MAS EMC WX BIDU 

[Good swing setups in last 5 days]
(1)AAOI
(2) ANV, low price setup, gold player
(3) BIOF
(4)INVE
(5)RIBT




2014年8月28日星期四

08/28/2014 Daily Trading Routine

[General Market]
For big picture, market rally for a long time and get extreme bullish on early March this year. Since then RUT stuck in the range while other index makes marginal new high. Divergence happens on small caps and big caps. Looks we are in a top forming. A 20% kind of correction will likely to happen some time in future and welcome. If that happen I can re-invest in 401K.    
    For short term, we saw a V shape recovery with low breath. All 2nd indicator turn green and not over-bullish yet. For this V rally, no follow through is big issue and we keep seeing index rise in the morning and fade which is not good sign. Today it looks this V rally is out of gas.

[Anticipation List]
MFRM AMED LEAF MELI ENOC RDNT DHX BLT TREX SLXP LPNT EGOV TSRA LPSN XPO OVTI GEO THC CXW UA MWA RCL DG HCA EMC WX BIDU

[Good Swing setups in last 5 days]
(1) AAOI
(2) BIOF, b/o today
(3) EMES, b/o 5 days ago
(4) ENTA, similar to AAOI, beaten down then join this V rally party
(5) RIBT, low price setup




2014年8月27日星期三

08/27/2014 Daily Trading Routine

[General Market]
For big picture, market rally for a long time and get extreme bullish on early March this year. Since then market stuck in the range. Divergence happens on small caps and big caps. Looks we are in a top forming. A 10-20% kind of correction will likely to happen some time in future and welcome. If that happen I can re-invest in 401K.    
    For short term, we saw a V shape recovery with low breath. SP500 rise to new high. It may still drift higher as not see over bullish on 2nd indicators. But it is not convince me that market will go bullish in big pic. No follow through is big issue and we keep seeing index rise in the morning and fade which is not good sign.


[Anticipation List]
MFRM AMED LEAF RDNT DHX TREX LPNT EGOV XPO POO GEO THC HLS RCL DG EMC BIDU WX

[Good Setups in last 5 days]
(1) ACHN
(2) AMBR, bottom fish is something that works in current condition
(3) AXDX
(4) EMES, continuous b/o
(5) ENTA

(6) RAIL, grade A setup
(7) VMEM, low price setup





2014年8月26日星期二

08/26/2014 Daily Trading Routine

[General Market]
For big picture, market rally for a long time and get extreme bullish on early March this year. Since then market stuck in the range. Divergence happens on small caps and big caps. Looks we are in a top forming. A 20% kind of correction will likely to happen some time in future and welcome. If that happen I can re-invest in 401K.
    For short term, we saw a V shape recovery with low breath. SP500 rise to new high. It may still drift higher as not see over bullish on 2nd indicators. No follow through is big issue and we keep seeing index rise in the morning and fade which is not good sign.


[Anticipation List]

CHE MFRM MTRX AMED LEAF RDNT TREX LPNT EGOV PII GEO TMH THC EMC BIDU

[Good setups in last 5 days]
Go though the list in TC2000: c/c4>1.08 and v>100000
Or go through the list in finviz: Weekly 10%+ move with voloume>100K

(1) ACHN
(2)AMPH
(3)AXDX
(4) KERX, start from pull-back
(5)MNDO, low price, start from pull back
(6) VHI






2014年8月25日星期一

08/25/2014 Daily Trading Routine

[General Market]
For big picture, market rally for a long time and get extreme bullish on early March this year. Since then market stuck in the range. Divergence happens on small caps and big caps. Looks we are in a top forming. A 20% kind of correction will likely to happen some time in future and welcome. If that happen I can re-invest in 401K.
    For short term, we saw a V shape recovery with low breath. SP500 rise to new high. It may still drift higher as not see over bullish on 2nd indicators. No follow through is big issue trading Momentum Burst.

[Anticipation list]
MFRM VPRT MTRX MKTO AMED LEAF CMG RDNT CBK TREX ISRG SCTY XPO MIDD AOL PII GEO TMH HLS QLIK RCL FB EMC

[Good swing setups in past 5 days]

(1)ADEP, bottom fish setup
(2)AMPH, b/o today, may have catalyst. But should be sold same day for swing as rise 10% plus
(3) CODE, 5 days old b/o, has previous trouble
(4) MNDO, low price setup
(5) VHI, very good setup and burst for 3 days
(6) VJET



2014年8月24日星期日

08/24/2014 Weekend Routine - EP

[Notable Earning or Good EP in past week from EP scan]
(1) AMCF
    Low price Chinese stock with 5M float. By looking at this earning history. Rev is really surprise, EPS is due to past year too low and come back. If it is really EP, it will have +200% potential to a target of $4.8. 
    The issue is 1st day does not really give a good entry. The price action is not good, and tells it might be a fake game changer. I took a position on earning day but stop out.
(earning surprise)
- Total sales in Q2 2014 increased by 131.67% to $175.5 million from $75.8 million in Q2 2013
Gross profit in Q2 2014 increased by 131.73% to $9.15 million from $3.95 million in Q2 2013
- Net income increased by 3767.40% to $2.9 million, from net loss of $79,414 for Q2 2013
Quarterly diluted earnings per share (EPS) jumped to $0.28 from a loss of $0.01 in the same period last year

(2) HGSH
The earning b/o actually happens the week before. Low price Chinese stock with 13M float. Rev and EPS is not real surprise. Number looks good YoY, but both Rev and EPS decease from last Q (which has a Rev of 50M and EPS $0.3 while can not move price anywhere).
(08/08/2014: earning suprise)
Total revenues for the third quarter of fiscal 2014 were approximately $28.9 million, an increase of 302% from approximately $7.2 million in the same quarter of fiscal 2013.
Net income for the third quarter of fiscal 2014 totaled approximately $8.2 million, an increase of approximately $5.9 million from the net income of approximately $2.3 million in the same period of last year
Basic and diluted net earnings per share ("EPS") attributable to shareholders for the third quarter of fiscal 2014 were $0.18, increased by 260% from $0.05 for the same quarter last year.
(08/19/2014: New contract catalyst -  this move price higher)
Under the agreement the company will develop the shanty areas around Liang Zhou Road in the Hantai District. The local government will work with China HGS to implement the reform plan for the area. About $580 million will be invested in the project.

(3) LRAD
It is 31M float stock with 300/300 kind of earning catalyst that can move price to $5-6. But one issue is 9 months ago, it also achieve the $8.0 million Rev and $0.08 EPS, but did not move price too much.
(Earning surprise)
Fiscal third quarter 2014 revenues grew by $5.8 million or 271% to $8.0 million, compared to $2.2 million of revenues in the fiscal third quarter of 2013
- Net Income of $1.9 million, or $0.06 per diluted share, increased by $3.0 million from a loss of $1.1 million, or $0.03 per share, reported during the fiscal third quarter of 2013

(4) JRJC
Before this catalyst, it is priced at $4 (drop from $8), consider previous record Rev/EPS, it is at a discount price.
  This catalyst is beyond my understanding, but price/volume tell you it is very strong. First see it at $5 as a good swing setup. Maybe the brand new platform will continue boost its Rev and earning. 
- the company announced it debuted China's first independent web-based securities trading platform called "Zhengquantong" (证劵通) or "Securities Master."