Will You Wait for the 78.6% Fibo?

I made a wrong call last 22 June. I mistakenly thought that the index would return to its price prior to March 2020 fall due to COVID-19 panic. I was thinking of holding ALI, DNL, and DMC until December. But when I saw the index price action last 13 July, I changed my mind. I immediately disposed all the index stocks that I was holding except for two stocks.

  

Now that I think fear has already tempered much of the bullish sentiment for the past 7 to 8 trading days, I am now waiting for the index to find its low. Once it establishes its low and starts to resume its 25 May rally, I think I will just focus on $DNL. Though this stock is not an index member, its price action usually moves with it. I will just wait if the index will respect its 61.8% Fibonacci @ 6,455 or will it drop deeper to 78.6% @ 6,288?  

Time to Explore the Crypto Market

The first time I saw bitcoin was in 2009. I thought it was token for video games. Following a gold bug like Gary North, though I saw it soar few years after, I never bother to dig into the crypto market except just having a superficial information about it. However, two weeks ago when I went home to Quezon City, my eldest son asked me 7,000.00 for his Axie Infinity account. I told him that I don't have the amount and besides I don't want to risk money into something I do not understand. And then he talked about SLP (Smooth Love Potion). I didn't know that time how the two connect. 

Being a stock trader, my instinct was to search for both Axie Infinity and Smooth Love Potion in crypto market. Observing their charts, I told my son that if ever he was considering to enter either of the two, I would suggest SLP instead for at that time, 03 July, the price of Axie Infinity was already high and as for SLP, it was just starting to rise after a two month consolidation. I only realized later that what I was telling my son about trading Axie and SLP didn't make sense to him, for he was talking about a different way to earn from these names, and that is by playing the game. 

And so I started searching the web only to find our later that the two names were actually joined in one game. And what surprises me is that this game is connected to crypto market. And so we have two trending things here combined into one, gaming and crypto currency. 

In the following days, many of my friends were asking me question about Axie Infinity. I just shared with them my initial understanding, but I also told them that I still didn't know many things about this phenomenon. 

And so as I researched on the subject, these are the things I found out:

1. It went viral first in the Philippines in Cabanatuan due to COVID-19 and the lockdown. People were desperate looking for alternative source of income. It so happened that one guy stumbled with this game and shared it to his relatives and friends. 

2. Among 300,000 players all over the world, half of it are Filipinos. It was even reported that gamers are raking 2B just in one month. That is equivalent to average total remittances of all OFWs living in Hong Kong.

As I dig deeper into crypto currency, the name Ethereum came out. I was reminded early in 2012 when a master trader in one FB group was promoting it, but I dismissed it. And then came DeFi, Polkadot, Caradano, Solana, CryptoPunk, Sorare, Hashmasks, and among them Axie Inifnity. And so I decided to study these names and post my findings on this blog. From this time on, my trading focus will no longer be just on the Philippine stock market, but the crypto market.    

Selected Uptrending Stocks and Watch List

 Stock                                          Value                Entry Price

$ABA                                        14.66M

$ACEN                                     87.99M

$ALI                                         69.35M

$ALLHC                                  22.12M

$APO                                          9.09M 

$BHI                                        96.31M

$CHP                                         7.76M

$CPG                                       24.07M

$DFNN                                      8.28M

$DMC                                      97.73M

$DNL                                       19.16M

$EVER                                     92.38M            0.4550 to 0.4650

$GREEN                                  72.63M

$HLCM                                    13.13M

$HOME                                    51.98M

$NIKL                                      36.09M 

$PHES                                      18.53M

$PX                                           14.04M

$RLT                                           2.97M

$TBGI                                        4.64M            0.45

$ZHI                                           8.15M            0.23

WATCH LIST

$APL                                        21.02M

$BSC                                        24.68M

$DITO                                     61.47M

$FLI                                          2.59M

$FNI                                          3.64M

$FRUIT                                     6.87M

$MAC                                      13.39M

$MEG                                      53.62M

$MM                                        26.37M

$NOW                                      43.40M

$PCOR                                     22.78M

$PHA                                        10.01M            1.57

$SSP                                          36.45M

$DNL Consolidating for 24 to 26 Weeks

Sometimes it's really interesting to observe similarities in preceding price action of a particular stock. Take $DNL for instance. You will observe that it took the stock around 26 weeks to consolidate starting from 27 April up to 19 October 2020 before exiting its Darvas box. In its current breakout from its box, the stock took 24 weeks to exit after consolidation from 11 January to 14 June. 

Observe also the length of the rally after the breakout. The stock was in an uptrend for 8 to 11 weeks gaining around 42.13%. If similar movement will follow the recent breakout, expect that the stock will have a more or less 8 weeks or 2 months run. A price target of 11.29 will give you similar 42% gain as the previous breakout. However, in order to achieve that, the immediate resistance @ 9.72 must first be broken. For long-term holders, watch out for the resistance @ 12.02.