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Pascal,
In this institutional driven surge, for however long the climate is sustained:
If you are long investor, wait for a -3 to -4% pullback, buy AMZN, FB, NFLX, GOOGL, NVDA, ADBE. Sit still for the runup and be ready to sell before the 10 to 20% pullback.
If you are a trader, trade around in those long stocks with taking a small position on a -1.5 to -2% pullback (like FB today, STZ last week), in 3 to 5 days sell at the 5 to 6% rise (typically breaking to the new high) previous to pullback. I'm looking for the 4 to 8% delta. NFLX can be banked on, cautiously. NVDA is like Pecos Bill riding a tornado. Repeat as necessary until day before 10 to 20% pullback. I guess maybe, March? EV analysis can give the clues. Ride through the earnings reporting period.
Steve
Hi Steve.
Thank you for posting your trend following trading method. It sure will work in the current environment. The equities markets look more and more like crypto-currencies where underlying valuations do not matter as far as we can find greater fools to buy.
Now, who could post an alert message just the day before the 10%-20% drop? Any reader living living in Hawaii? They seem to get real news rather early...
Pascal
[QUOTE=stharp;32658]Pascal,
In this institutional driven surge, for however long the climate is sustained:
If you are long investor, wait for a -3 to -4% pullback, buy AMZN, FB, NFLX, GOOGL, NVDA, ADBE. Sit still for the runup and be ready to sell before the 10 to 20% pullback.
If you are a trader, trade around in those long stocks with taking a small position on a -1.5 to -2% pullback (like FB today, STZ last week), in 3 to 5 days sell at the 5 to 6% rise (typically breaking to the new high) previous to pullback. I'm looking for the 4 to 8% delta. NFLX can be banked on, cautiously. NVDA is like Pecos Bill riding a tornado. Repeat as necessary until day before 10 to 20% pullback. I guess maybe, March? EV analysis can give the clues. Ride through the earnings reporting period.
Steve[/QUOTE]
[QUOTE=stharp;32658]Pascal,
In this institutional driven surge, for however long the climate is sustained:
If you are long investor, wait for a -3 to -4% pullback, buy AMZN, FB, NFLX, GOOGL, NVDA, ADBE. Sit still for the runup and be ready to sell before the 10 to 20% pullback.
If you are a trader, trade around in those long stocks with taking a small position on a -1.5 to -2% pullback (like FB today, STZ last week), in 3 to 5 days sell at the 5 to 6% rise (typically breaking to the new high) previous to pullback. I'm looking for the 4 to 8% delta. NFLX can be banked on, cautiously. NVDA is like Pecos Bill riding a tornado. Repeat as necessary until day before 10 to 20% pullback. I guess maybe, March? EV analysis can give the clues. Ride through the earnings reporting period.
Steve[/QUOTE]
Steve,
I calculated the Risk/Reward ration for two types of trades on FB: buying Oversold levels and Shorting a bounce after a breakdown on volume.
We can see below that FB had a breakdown on volume on Friday. The most recent BDV patterns have been buying oversold opportunities.
[ATTACH=CONFIG]43416[/ATTACH]
Buying at this level has been a good idea in the past 300 days:
[ATTACH=CONFIG]43413[/ATTACH]
The sensitivity analysis shows that we can buy between 177.78 and 184.3
[ATTACH=CONFIG]43412[/ATTACH]
On the other hand, shorting a bounce on Tuesday to 186.13 should also work well.
[ATTACH=CONFIG]43415[/ATTACH]
Hence, the strategy could be to buy low and sell on Tuesday if FB bounces back to 186.13, or keep the long trade otherwise.