Mike's active trading journal

I got stopped out of the DJ trade. The DJ trade was dumb. Turning away from the SOLF chart was also dumb. When a stock pulls back, you dont turn away. You dont give up. You go back and figure out what happened.

Most guys would probably walk away from SOLF after a day like today and try to find some new stocks. I dont believe this is the answer. As well, I just cant find anything very obvious to me that spells out a good trade. Usually stocks that pullback hard make excellent trades because we can make judgements about the bottoms, use FIBONACCI lines to predict a retrace and disect the structures.

What we do know about SOLF is that its gained a lot of attention and momentum. I looked at the chart today to dissect what happened-

1. The price moved over the top Bollinger Band. I have learned a few times before that when the price goes above the top band then its time to take some profits. I didnt follow that rule this time. However, we all learn the hard way at times. Next time will be different. On a side note, the Bollinger Bands are much wider then before

2. A large cup-like structure has formed in the middle of the chart. The height of that structure is about 5.14 give or take. When a stock comes off of a structure like this, usually we get a 50% pullback of the height. That is what happened here. Actually, the mid-point would be right around 14.64 so it has some way to go. Judging by the volume, the downtrend might continue from here.

3. The other likelihood is that the present formation could turn into a triangle which could spin the price either way. I dont like to gamble with these triangles and would rather move in if this is the case. If this is the case, then what will happen is that the price will make higher lows and lower highs until it gets to the volatility point where the price could go much lower or much higher.

4. If the triangle prophecy does not come true, then that means we have 5 dollars in upside from the inflection point.

5. The price will most likely go down a little further. However, Cramer came on tv tonight announcing FSLR and WFR as his green picks. The price and bids instantly jumped in afterhours for SOLF. This tells me that someone out there is sensitive to the issue that solar might be in play tommorrow.

6. I noticed the price did a triple bottom on the intraday.

7. Pre-February correction, the chart was setting itself to go up into the 17-18 area and would have if it had not been for the volatility event.

8. The analyst does not like SOLF

Conclusion-

The chart is either setting itself up for a bearish triangle or what we are seeing now is simply the handle. I feel the price will retrace more into the 14s and right to the 50% FIBONACCI line.

If this is setting up for a bearish triangle, then the price will bounce in the 14s. This bounce will mark the bottom of the triangle. Then the top of the triangle will be in the high 16s. The top of the triangle is already defined. If the price does not make it through the top of that triangle, then SOLF should be cast away as trading through a triangle is an unpredictable daunting task.

If we see a bounce in the 14s, then sell in the 16s and wait for confirmation if the triangle prophecy has begun.

All this analysis can go into the garbage with a volatility event. The price would have gone higher today if it were not for the analyst downgrade.

Patience has to be exercised with this chart. Inflection points should be confirmed and solid before going long. You should always use stop-losses. Trade at your own risk.
 

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Looking at JBLU, JSDA, SOLF, COMV, TOA this morning.

The one that is catching my eye is JBLU. Now with airlines, there is always a lot of risk and we are in earnings season. JBLU's call isnt too far away right now. The chart does appear to be bottoming for JBLU. A few months ago this was trading as high as 17 dollars. The key here is oil. Low oil=higher airline price per share.

COMV is a recent IPO that has shown considerable strength.

TOA does appear to be retracing. TOA is also a very high risk play, its a homebuilder and it appears its credit rating might be slashed further into the junk.

Cramer mentioned JSDA last night and any mention by him seems to push this stock.

Other things I have noticed during earnings season is that certain big drops in price represent good trading opportunities. We can reasonably predict when an equity has bottomed and then play the bounce with Fib retracements. The key is to finding the bottom which is not so obvious all the time.
 
What I will be doing in the next few days is developing a "pilot's checklist". Basically, a list of different items that I must check when I start my morning such as earnings calls, futures, charts, economic calendar, fed speakers, etc. I'll upload it here when I am done. I am pretty good at checking different items each day, but sometimes there is that one key event that I skip over for some reason.
 
Not sure if I mentioned SIRF. Thats another one to look at.

There are still stocks out there that have not rallied from the February correction and they will have bottoming patterns on the chart like a triple bottom or reverse head/shoulders. The main stocks I am seeing that have not rallied are regional air carriers like JBLU. The reason is because oil has been rising. Now if we have a pullback in oil then these will go back up.

SOLF is going as planned. We put in a double bottom at 15. Now if this is the cup/handle thesis then we could see 20. Go to a daily chart and trace 4/16 to 4/17 and look, you have the top of the day for 4/18. Well, the day isnt over yet.

The other idea I had is that SOLF could be forming a bearish triangle.

Im betting on the cup/handle thesis and will have to say this is going to 20. Solar is going to remain hot for a while.
 
I am back into SOLF. I was either going with JBLU or SOLF. JBLU makes me nervous. Its an airline.

SOLF is my play. The stock went down on an analyst downgrade. Thats the only reason why. The solar play is still there. Analyst downgrades create buying opportunities in a bull market. The bull market is in solar.

We shall see if I am right and I am putting my money where my mouth is. SOLF is going to 20.
 

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Here is a good learning experience for both you and me. I want to learn from all experiences.

We saw a big selloff yesterday. There was a double bottom in yesterdays selloff telling us that the selloff was over. Unfortunately, I was too busy yesterday to get in at 15 dollars which was a big mistake for myself. Thats ok though.

So what happened today was that there was a retracement to the 50% line. This is why I love selloffs. Its because you know the selloff will not continue forever especially when the reason is because someone was talking it down (CIBC analyst). Talk only lasts for so long.

Today was the bounce. We saw a retracement to the 50% line and then a bounce off of that line. When the price bounced, it went into a head and shoulders pattern. When you see the second peak, you can pretty much bet its going to be a head and shoulders. The neckline broke and hit the target of 15.8. The price then rallied up.

This next part is most important to our thesis and if we should hold our position into tommorrow. If the price closes below 16, then that is a bearish sign. A close above 16 is more bullish and especially a close above 16.2 or 16.34.

On my chart is the FIBONACCI lines which is important to the thesis. There is also a random white diangle. That random white line is the most important line on this chart. Any break above that line will spell a break-out. The price isnt guaranteed to break above that line, but I believe it will...in time. It might take a day or so, maybe more. Its 5 points up after the breakout.

Our entry point today was bad. I should have followed my rules and entered yesterday when I saw a double bottom. I let my emotions get in the way yesterday and did not see the double bottom running into the foolish DJ trade. It was a high volume selloff and that selloff was not able to break through the resistance. Those emotions of mine cost me about $11000 and my foolishness the day before and not taking profits after a big run cost me even more.

I feel its important to admit these mistakes to yourself. Oftentimes you see guys on these message boards unwilling to admit to mistakes or they simply walk away from the journal feeling embarassed. Then you have these bashers who invade a journal which hasnt happened here, yet, to insult me to my face after I have realized financial hurt.

Women and children are not willing to admit their mistakes out loud. Women and children are the ones who insult people after injury. Since I am neither a woman nor a child, therefore my actions and explanation are indeed different.
 

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I have made a detailed record of the nonfill. I have a feeling that someone from IB will be calling me to tell me it filled and that I am long. I made a screenshot of the view account screen and made detailed notes. My post here will also help document this non-event shall IB come back upon me to tell me the bad news.
 
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