Change in Par Value

The PSE Edge announced this morning a follow-up regarding $ALT's disclosure about the change in par value of its shares from Php 0.05 to Php 0.25. The stated reason for the change is said to be the improvement of the "liquidity of the shares of the company for the benefit of shareholders."

This is not something new to me. I already read a lot of articles about this. To check if my memory is still working, I asked the help of Mr. Google.

According to Share Investor Educational Series, the change in par value whether it is stock split (also known as share subdivision) or reverse stock split (share consolidation) "has no effect on the value of the individual shareholder's overall shareholdings relative to the total market valuation of the company".

As for the claimed improvement of the liquidity of the shares of the company, it is actually the opposite. Share split achieves such improvement in liquidity not the share consolidation, which the company just did. However, SIES doesn't completely dismiss that reverse share split has no benefits. By increasing the par value of its shares, $ALT actually may attract institutional buyers. Finally, if SIES is correct, $ALT increased the par value of its shares "to meet the minimum trading bid size to ensure its listing status on the stock exchange".

Source:  https://blog.shareinvestor.com/share-consolidations-and-share-splits/

$LR

Someone is giving up on $LR.

And he is looking for another stock where he can park his money.

This prompted me to look into the stock's chart.

And here's what I found.

Based on its Weekly Time Frame, the stock has already completed the downtrend impulse series of waves. In fact, it has also completed the uptrend corrective waves and thereby the entire market cycle of the stock is now complete. This is exactly the time every trader is waiting for to employ their precious capital. I suspect that its current movement instead of viewing it as a resumption of downtrend is actually finding a floor in preparation for the uptrend rally. It is just unfortunate that not a few traders leave a stock in the time that they should be adding more shares.

I just wonder now about the wisdom of that popular trading advice "buy low, sell high!" Many traders today do the exact opposite.

See $LR's chart from the Weekly Time Frame:

And here's $LR's chart from Daily Time Frame:

Wave 2 is now looking for its low...

I will be including this stock in my watch list.

Once I see the low has been placed and the reversal price bar appears, that's the time to deploy my capital.

Stocks I Hate

After today's move, I am beginning to hate $ALT. Not that it runs contrary to my expectation. In fact, it is still moving within my channel's range.

I just find it difficult to identify the source of my disgust. Perhaps, it has something to do with the players of this stock.

Early this morning, just less than an hour after the opening of the PSE, most orders in the sell side are so small. Any trader can easily sweep them all. Imagine a sell order of just 1,000 shares from 2.69 to 2.74. This kind of line of orders shows that the number of shares sellers want to dispose is so small. And so those who buy into this trap would just take those available shares only to see later that those shares get bigger and never run out. And so during the closing time of the market, traders realize that the absence of sellers during the early hour of trading is just a disguise. In fact, there are more sellers than buyers even at a lower price. Such realization would cause doubts about the stock and would breed more selling. As a result, $ALT ended the day with bears gaining the upperhand.

The above story is just a product of my imagination. It is simply reading too much into the price action of the stock. It is an example of emotion interfering into trading. Overcoming such emotion is a must if a trader wants to succeed in this field. The tendency if you fail to overcome such emotion is that you will hate the stock and you will never look back regardless of the performance of the stock. It happened to me in the case of both $PPC and $TUGS. I was an early holder of these stocks for several months and gave up later and never looked back. Only to see later that they started doubling in price but I no longer mind for I had had enough with those stocks.

Will such disgust happen again in $ALT?

The Gold Sector

This coming Monday, 19 December will be the safest day to decide whether to take a long or short position in the gold sector. After the announcement of rate hike this December 14, we will see the market's response whether it is true that rate hike is bad for gold or not.

Not a few contrarian analysts claim that rate hike in an environment of depressed price for gold is good for the sector. They cite the last time the Fed increased rate in December 2015, which they claim became the mother of the gold bull that ran from January to July 2016. However, I could not avoid to think that with the increased rate, the Bank of Japan (BOJ) turned to negative rate, which probably is the real source of the change in the trend of the gold market. If BOJ will repeat such action, my doubt that this coming rate hike will be followed by a renewed run in the gold market will be removed.

As for technicals, yesterday XAUUSD registered a low of $1151.24 per ounce of gold. I see this as the end of the final corrective wave. However, as far as technical analysis is concern, we don't know yet either gold will resume its downtrend or will reverse its direction. If the downtrend is resumed, I have no doubts in mind that the $1000 support will be broken. On the other hand, if the trend reverses, it is better to simply sit down and wait as your "seed" grows until the end of the series of uptrend waves. I am more inclined to believe this latter direction considering that a Shariah law that will certainly affect the gold market will be publicly announced this 29th of December. However, since the manipulation of  western central banks is very strong in the gold market, we really don't know for sure what direction gold will take.

XAUUSD/DXY

Wave C-4 is complete. XAUUSD is now forming Wave C-5. Will the low today @ 1151.24 USD per ounce the final bottom? Or will the rate hike two to three days from now push gold further down?

As for $DXY, there are two more waves to go. Currently, if the 101.78 high will no longer be broken, then we already saw the end of Wave 5-3 of the USD index. After this, $DXY has one more rally left before the rate hike. Once Wave 5 is completed, normally it is followed by a 3-wave retracement. We expect that such retracement will be good both for gold and the $PSE. However, we just don't know the extent how price manipulation can distort this kind of price action.

The Current Status of My Journey

I started as a "funnymentalist". I encountered this term from traders who are dissapointed with the conventional way of trading stocks. I bought and sold shares of company stocks based on news, company disclosures, and brokers' analyses. Result? After a year of trading, my 200k capital became 102k, a 49% loss. They say it's part of learning and that's the tuition fee you have to pay. Being a scholar in most part of my student's life, I find such payment very expensive. And if that is really a tuition fee, how about those traders who have been in the stock market for decades and yet seems to have learned nothing and still paying such expensive fee?

I refuse to accept my loss as tuition fee. It was simply a loss for believing what the "experts" say. And so I decided to stop listening to the experts' "noise" and started my own journey in studying technical analysis. After almost a year of trading using simple indicators such as moving averages and fibonacci retracement matched with the channels I made, I regained my loss. Year to date, my port is now up 61.76%.

Now that I am still testing my recent learning about Elliott Wave Theory (EWT) - A big thanks to that mythical fanatic of EWT I stumbled in investagrams.com! - I am expecting to have more profitable trades in the next six months. I am now integrating my previous knowledge about technical analysis with the EWT.

June 2017 will be the submission of my next report card...

$ALT/$CAL

It seems to me that instead of 2.50, 2.35 is the end of Wave C. $ALT now has completed Wave 1 @ 2.89. Ideally, $ALT should move higher than the 2.90 high of Wave 1-3. However, if 2.89 is what the price movement tells us, we will accept it as such. What follows is a 3-wave retracement forming Wave 2. I expect it to be flat. I will be exiting @ Wave 3 high for I anticipate that the retracement will be stiff. Those who have strong stomach can simply sit down until the end of Wave 5.

As for $CAL, it appears to me that no clear low has been established yet and the 8 coming waves will show traders what decision to take.

$CAL now is in the last stage of Wave A @ 2.75. A 3-wave pull back will follow to establish that final bottom in preparation for the rally. I see at least 3 prices as candidates for final low: 2.60, 2.30 and 1.50 is the worst case scenario.

After the bottom has been established, I am expecting a bounce towards Wave C formation. Once Wave C is complete, that is the time to observe closely the movement of the stock. If it will resume its downtrend, that's the time to say "goodbye". But if $CAL will reverse its trend, that's the time to take a long position.

Note:

I just kept this analysis to myself for the past 2 days for I am still testing my knowledge of EWT. However, it is encouraging to see the relative accuracy of EWT analysis with what happened to $DD and also with what's happening to both $ALT and $CAL. This analysis is in no way a recommendation to buy these two stocks.