"In virtual trading, no emotion is involved though your 13M gain in the morning turned into a 14M loss by 11:30AM. In real trade, the 135% run appears not normal and a strong pull back is possible anytime, which just happened. If you're getting restless, locking in your gain will calm you down. But don't fret when you see this stock soaring to 300 and even 500%. That's a reality every trader must embrace."
The above quote is my summary reflection after today's trade. After more or less 6 years of trading in the Philippine stock market, I thought I already have a strong stomach. Today, I realized that I am more resilient in accepting losses than in handling gain. After suffering a 33% setback last months of February and March, I lost my stamina to trade. I decided early September to just focus in one stock and sit back until next year. But I was wrong. Seeing my stock running 135.13% in a month, I feel restless. I see such run as not normal. I am even thinking that perhaps since this stock is somehow related to Chinese government and I see a lot of foreign money entering it, big Chinese money is at work. I cannot get out of my mind that a possible strong pull back is at hand. Emotionally and mentally, this is no longer healthy. So to maintain my composure, I decided to get out around 10:30 AM. To my surprise, my fear came true. The stock pulled back down to 5.20 one hour after I left.
The hardest part in this game is to accept the fact that nothing is certain. In early September, I was speculating that this stock at minimum will reach 20.00 per share. I thought I was emotionally prepared. What I was imagining in my mind was a smooth run of simultaneous rally and slump. But seeing the stock running for six consecutive days with a brief pause last 30 September, I got suspicious. To me, this is not normal. And every time a stock is flocked by an emotional crowd, something bad is destined to happen.
Now, I am standing in the sideline as an outside observer. The strength of the horse thrown me out. But to me, a strong selling @ 11:30 is a signal of distribution. I would rather sit and wait. Let us see if this stock will hit 61.8% fibo @ 4.60. If not, I will just wait for my emotion to cool down . . .
18 comments:
For $DITO to reach 4.63, you need to wait 5 weeks. That will be last week of November.
Note: My turning point as a trader is last 27 July 2020. Because of my 16.69% gain in MM, I got careless with my trades. My succeeding trades both with VITA and FRUIT resulted into loss. Three times I entered into VITA and all of those trades ended in loss. My 6.21% loss with VITA made me exhausted. That's the time I decided to take a rest and just pick one stock and originally my plan was to hold that stock until next year. The stock I selected was DITO, but due to its strong rally, I could not follow my original plan. I entered the stock last 03 September and I decided to exit after more than a month last 06 October with 135.72% gain, my very first remarkable gain after 6 years of trading.
I now doubt if $DITO will still reach 4.63. Its candlestick pattern formation is interesting. I now see it either as a potential VCP or a forming a bullish pennant. Such pattern usually appears in a strong uptrend.
Reviewing Minervini's VCP concept and applying it to $DITO, the stock last Friday had a total of four contractions already in just nine trading days. The first drop last 06 October was 35.42% followed by a 25.20% from 07 to 08 October, then by 11.81% from 12 to 13 October and the fourth contraction was 5.67% last 15 to 16 October. So far there are four contractions already. Will there be more to complete the base? Observe also that the volume decreased from 07 to 16 October. These are all healthy signs of a classic VCP progression. If this analysis is correct, then I think the stock will not go down anymore below 5.00 to meet my entry price @ 4.63. 6.01 to 6.10 is already a good window for new entry.
With a volume 11.53 M higher than last Friday's trade, the stock price has already broken out today the pennant pattern. Also, applying Minervini's VCP concept, the stock had a total of 4 contractions already in just 10 trading days. The first drop last 6 Oct was 35.42% followed by a 25.20% from 7 to 8 Oct, then by 11.81% from 12 to 13 Oct and the 4th contraction was 6.67% beginning last Thursday until today's trade. Will there be more contraction to complete the base? Observe also that the volume decreased from 07 to 16 October. These are all healthy signs of a classic VCP progression. If this analysis is correct, then I think the stock will not go down anymore below 5.00 and that those who entered from 6.01 to 6.10 are anticipating another run.
So many $DITO fans.
Wait for tomorrow's candlestick. If the stock will make a lower low and lower high and will break 5.94, short-term traders will be rushing to the exit door.
From 6.34 to 6.08, a 4.06% contraction. Is this the final contraction? Wait for tomorrow's candlestick. If the stock will make a lower low and lower high and will break 5.94, short-term traders will surely be rushing to the exit door. The good thing though is you cannot see the stock today among the most active. Volume is 24.31 million lower and net foreign is 11.67 million.
The stock made a higher low but refuses to make a higher high. For bears to take control, the critical thing is breaking down the 5.94 support. For the bulls, the 4.06% decline from 6.34 to 6.08 is the final contraction prior to the continue of the uptrend.
The stock has done what it refused to do yesterday, that is, making both a higher low and a higher high. It appears clearer at this point that the 4.06% decline from 6.34 to 6.08 is indeed the final contraction. Unlike yesterday, today, the stock closed near the high with a volume 23.37 million higher. By replacing PXP as the only speculative play included in the most active index stocks, it seems that DITO is now preparing to continue its run.
From breaking out of the bullish pennant last 19 October, today the stock broke out from its Darvas Box. Responding to such breakout, traders' attention was caught and I think that explain why we now see once again a typical picture of high volume bid, 1.3 million @ 6.61 during closing. Perhaps, in the mind of those who just entered the stock, they are anticipating that the stock will break that 52-week high. However, there are those who remain hesitant fearing the impact of Converge's IPO to DITO's price action.
Contrary to the fear of many, it appears that DITO is not bothered by Converge's IPO. After the stock opened with a gap up, it continues to make higher low and higher high for the 3rd time. As noted earlier, it seems that the goal this time is to break that 8.05.
After making a higher high, the stock also made a lower low. Sign of distribution? Volume is 6 million higher than yesterday's. Two more candlesticks and we will know the direction of this stock. To break that 8.05? Or to drop to 5.00 and below as the doomsayers predicted?
Today's low is 6.50, 0.01 closer to the stock's 50% Fibonacci retracement of the run from 6.08 to 6.90. If the stock will break 6.50, thus making a both a lower low and a lower high, some holders of this will have second thought regardless of the speculation concerning positive press release next week. For these traders, price action is the only signal they trust.
A very wild horse indeed. If your trading system relies on Fibonacci retracement and a series of candlesticks, after seeing the stock broke 6.49 and making two consecutive lower lows and lower highs, most probably you are now out of this stock. A trading system that completely relies on price and technical indicators is almost useless when it comes to an extremely volatile stock. This is why non-price related data in which the psychology of the trader himself is most important.
Volume is 74.95 million higher.
Last 30 October, the statement of DITO Chief Technology Officer Rodolfo D. Santiago saying that the company has no intention to remain as the 3rd telco, but aiming to be number one was so popular in trading fora. As expected, the stock opened with a gap up @ 7.00 only to closed near the low @ 6.82. It was then followed by a two day decline. Today, sentiment around DITO is not so good. Perhaps, this is a better signal to re-enter the stock.
Last week of November, see $DITO @ 4.63.
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