Long VSTM Day 2

I categorized today’s Game Plan as a good call. Based on what I had seen, I had the confidence to hold my position through a nasty shake out the next the morning and end that day in the green above $2, which is what I was calling for.

MICRO ANALYSIS

Here is the 15 minute of today’s action. Just ugly! It was down and the volume came on the down moves. Those last two candles make ugly even uglier with upper wicks. Nothing but weakness today.

MACRO ANALYSIS

Here is today’s candle in context to the previous 5. Still ugly. The only positive thing I see is that today made a higher low than yesterday, but even then, even longer term its ugly.

GLOBAL ANALYSIS

Here is the weekly going back to March. If today was ugly and the last 5 days were ugly, then why did I buy it? Well, first off I was expecting a move back to 2. Unfortunately, I should have bought today and not 2 day ago. I was impatient.

Anyway, here is why I bought. I’m using the volume and price analysis method. Though what I’m doing isn’t pure Wyckoff method, it is very much based on it. Someone who is more a purest than me mentioned I should watch this one because it may be in phase C of the Wyckoff method. I looked at it, and thought I could map it out pretty well on the weekly chart. My conclusion was that it was in phase D instead of C. Either way, the time to buy a stock using this method is in phase C or D.

The first three candles and volume bars, to me, was the first show of strength (SOS). That first show of strength is what moves it out of phase C and into D. D is defined by series of SOS’s followed by low volume declines back to the last point of support (LPS). See the two sets of three arrows? Those are the SOS moves followed by low volume LPS moves. When in phase D, you want to buy at the LPS because after D is phase E, which is the up trend to distribution.

My worry is that this last LPS is a little drawn out. Nothing has been nullified in the pattern, but it’s not as clean as it was. As I said, this drop wasn’t unexpected, but I should have waited a bit longer to buy. We should get another SOS that gets it back to and over that resistance around 2.50, then go into phase E and ride the up trend.

GAME PLAN

Tomorrow doesn’t have to be a blow out up day, but it needs to end the week holding above 2. If so then next week should start it’s final SOS move. Then, get back to 2.50 two or three weeks after. If we get back to 2.50, I will probably sell 1/2 my position and let the rest ride the trend.

On the other hand, If it losses 2 tomorrow on a closing basis I might bail because something isn’t right.

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