This is meant to be a ‘post trade’ analysis. The real educational value here is the fact the ‘trade’ was not taken as the suggested method to enter the trade was a stop buy order. The stop buy order simply never triggered. The advantage of using such a method is pretty obvious. It protects you against yourself. You have heard me say quite often that I do have strong opinions but that I do not trade them. I base my buy and sell decisions on price action alone, not my opinion. The KGC – Kinross Gold example is perfect in order to exemplify the benefits of such an approach. A stop buy order takes care of one of the emotional components traders struggle with. It only executes if the market cooperates and agrees with one’s assumptions. In KGC’s case, jumping the gun or simply doing the buy and hold thing, thinking that the supposedly great fundamentals would bail you out, eventually ended very badly. Those still holding are now simply hoping. Assuming the stock doesn’t go lower from here, I wouldn’t bet on it, I still have very bad news for you:

You need to almost increase your capital 4-fold in order to break even. This is not a career ending move but if you do not learn from such a mistake and repeat it one more time you are out of business. The only way to avoid this is a disciplined approach, proper risk control and a willingness to add Technical Analysis to your tool box.

Click on KGC chart to enlarge:

Here is the original post on KGC – Kinross Gold suggesting a stop buy order above 10.52. Don’t get me wrong, I’ve had my fair share of bad calls over the years. The key is to stay humble at all times and to correct mistakes as fast as possible. Love small losses, hate large losses.

Remember: Price is the ultimate truth and your ego is your worst enemy.

Don’t pick tops. Don’t pick bottoms. – Edward Allen Toppel

Twitter: https://twitter.com/Tischendorf
Stocktwits: http://stocktwits.com/Tischendorf

Charts:  http://stockcharts.com/public/1109839/tenpp

{ Comments on this entry are closed }

Here’s an educational follow up post on NVGS – Navigator Holdings a bullish all time high set-up I highlighted a while back. The stock ended up trapping longs as the break to the upside ended up to be a false move. Hence the saying:

‘From false moves come fast moves.’

Click on NVGS chart to enlarge:

The chart is a great example why being disciplined is so important and why protecting one’s capital is key. The only way to successfully protect one’s capital is to heed warning signs and to act promptly as soon as the technical picture changes. NVGS was looking great. A bullish triangle breakout to the upside and new all time highs. What else could one wish for? Actually not much else. Even the volume pattern was looking extremely constructive at the time.

The lesson to be learned with NVGS is to keep an open mind at all times. Objective price analysis told traders to sell almost immediately after the entry. The red arrows I drew into the chart show the red flags NVGS raised:

  • Small gap down. With strong stocks you want tight bullish consolidations.
  • Long black candle falling back into the pattern. The pattern itself didn’t act as support.
  • No respect of major moving averages (20, 50, 200). No bounce whatsoever.

Waterfall decline charts like NVGS exemplify why I keep posting select quotes from veteran traders like:

Martin ‘Marty’ Zweig: It’s ok to be wrong: It’s unforgivable to stay wrong.

Linda Bradford Raschke: When the ship starts to sink, don’t pray – jump!

From false moves come fast moves.

Twitter: https://twitter.com/Tischendorf
Stocktwits: http://stocktwits.com/Tischendorf

Charts:  http://stockcharts.com/public/1109839/tenpp

{ Comments on this entry are closed }

Another follow up post on KNDI – Kandi Technologies with my updated chart thoughts on the ‘Air Pocket’ concept that is starting to become more evident. In simple terms, an air pocket is a price area where a stock didn’t spend much time to travel through. Most of the time stocks tend to display the same behaviour when they encounter identical price areas. In plain English: On the way up it took KNDI two days to move from 8$ to 12$. On the way down odds are it will take roughly the same amount of time. We most likely are witnessing a long-term topping pattern with KNDI. Recently KNDI hit resistance and the path of least resistance now looks to be down. The real risk for longs in KNDI is for the stock to hit that air pocket. If KNDI mimicks the behaviour on the way up it would mean a quick move to the downside is in the cards.

As I always remind my readers: In downtrends ‘surprise moves’ tend to be to the downside. With KNDI odds for bad things to happen are increasing by the day. For now I see no reason whatsoever to cover my short position. The stock is weak and I remain short.

Click on KNDI chart to enlarge:

The aggressive price target of the double top pattern would be around the 5.70$ area. This looks like an unrealistic target and it is way too early to tell. But if the stock puts in a quick down move around the air pocket area, the aggressive bearish downside target will become more likely. Let’s see how KNDI deals with the black trendline I drew into the chart. KNDI will most likely show its hand very soon as it is trading at a critical juncture.

Losers average losers. – Paul Tudor Jones

Twitter: https://twitter.com/tischendorf
Stocktwits: http://stocktwits.com/Tischendorf

Charts:  http://stockcharts.com/public/1109839/tenpp

{ Comments on this entry are closed }

Over the past few weeks SIMO – Silicon Motion Technologies managed to repeatedly grab my attention. Here are a few reasons why:

  • SIMO is trading close to its all time high
  • Bullish ascending triangle chart pattern
  • Impressive display of resilience during recent market weakness
  • Bottoming tails and bottoming tails cluster the past two days

It is really that simple. The stocks holding up best will most likely take off once the weight of the market is lifted. Technically speaking SIMO has everything you could ask for if you are looking for stocks having the potential to be new leaders. Act accordingly.

Click on SIMO chart to enlarge:

SIMO – Silicon Motion Technologies company description from Yahoo Finance:

Silicon Motion Technology Corporation, a fabless semiconductor company, designs, develops, and markets semiconductor solutions for mobile storage and mobile communications markets. It provides mobile storage products, including microcontrollers used in solid state storage devices, such as solid state drives, eMMCs, and other embedded flash applications, as well as removable storage products, such as flash memory card controllers and USB flash drive controllers; and mobile communications products, such as mobile TV SoCs and handset transceivers. Its products are used in smartphones, tablets, digital cameras, notebooks, desktop PCs, and industrial and commercial applications. The company’s mobile storage products are marketed under the SMI brand and mobile communications products under the FCI brand. It markets and sells products through direct sales personnel and independent electronics distributors to original equipment manufacturers and module makers worldwide. Silicon Motion Technology Corporation was founded in 1995 and is headquartered in Zhubei City, Taiwan.

Don’t close your trades without a good reason. – William D. Gann

Twitter: https://twitter.com/tischendorf
Stocktwits: http://stocktwits.com/Tischendorf

Charts:  http://stockcharts.com/public/1109839/tenpp

{ Comments on this entry are closed }

Quick follow up post to my recent take on KNDI – Kandi Technologies sometimes referred to as the ‘Chinese Tesla’.

http://www.tischendorf.com/2014/10/06/kndi-kandi-technologies-potential-long-term-topping-chart-pattern/

The long-term topping pattern remains in place. Price got rejected by triple resistance:

  • Former gap area resistance
  • Topping tails cluster
  • MA 200 resistance

As long as the stock stays below that resistance area there is no reason to cover my short. This goes along the lines of:

As long as a stock doesn’t give you a reason to exit, stay with the trade.

Click on KNDI chart to enlarge:

Public opinion is a weak tyrant compared with our own private opinion. What a man thinks of himself, that is which determines, or rather indicates, his fate.
- Henry David Thoreau

Twitter: https://twitter.com/tischendorf
Stocktwits: http://stocktwits.com/Tischendorf

Charts:  http://stockcharts.com/public/1109839/tenpp

{ Comments on this entry are closed }

Martin Zweig’s Timeless Trading Quote – It’s okay to be wrong; it’s unforgivable to stay wrong

October 7, 2014

A quick post for all of you out there who do appreciate timeless wisdom from veteran traders. Here is one of Martin ‘Marty’ Zweig’s famous trading quotes: It’s okay to be wrong; it’s unforgivable to stay wrong. https://twitter.com/tischendorf/status/519581327792697345 To me, the “tape” is the final arbiter of any investment decision. I have a cardinal rule: [...]

Read the full article →

DDD 3D Systems – Former Market Darling Threatening To Accelerate Downtrend

October 7, 2014

A former market darling, 3D printing stock DDD – 3D Systems, has formed a bearish descending triangle that is threatening to break to the downside. So far the stock hasn’t experienced any kind of notable volume increase. That could be indicative of market participants being in denial during a strong downtrend. A long-term top is now [...]

Read the full article →

KNDI Kandi Technologies – Potential Long-Term Topping Chart Pattern

October 6, 2014

The chart of KNDI – Kandi Technologies the ‘Chinese TSLA – Tesla Motors’ is displaying several red flags indicating that the stock might have put in a long-term topping pattern. This looks like a clearly defined double top that is part of a bigger bearish head and shoulders pattern. The stock has broken the weekly [...]

Read the full article →

How Technical Analysis Can Help You Avoid Getting Wiped Out – GTAT Bankruptcy Case Study

October 6, 2014

Today’s announcement of GTAT – GT Advanced Technologies going bankrupt and seeking Chapter 11 protection is a good time to review the benefits of learning Technical Analysis in order to avoid getting wiped out. These type of situations are the ones that prompted me to write ‘Fatal Trading Flaws’ a few years back. You can [...]

Read the full article →

IWM Russell 2000 ETF – Bearish Head And Shoulders Chart Pattern Price Target

October 2, 2014

Technically speaking signs of deterioration are increasing. Sellers are starting to gain control. The IWM – Russell 2000 ETF is displaying weakness and increasing signs of distribution. The recent break of the bearish head and shoulders neckline was accompanied by increasing volume. A bearish sign and cause for concern. Granted, the markets are oversold and [...]

Read the full article →