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  • Testing Summary Statistics On Stocks 29 comments
    Sep 5, 2012 11:29 PM

    When I am charting a stock, I am often left asking questions that typical charting tools don't answer. So I decided to work on a different way of looking at stock performance data.

    Stock Selection:
    I picked Axion for my first analysis because it's a classic start up company, and I am very interested in start up companies. I will be adding an analysis for Lynas (OTCQX:LYSDY) and several other types of companies as yet to be determined.

    Cumulative Distribution:
    The cumulative distribution of daily stock changes provides a way of putting stock movements into a statistical framework that lets you determine how unusual a DAILY stock change is in terms of typical variation for that stock over time. In other words, the focus of this type of analysis is not on price levels, but changes in price levels on a daily basis.

    Crossing Point:
    The crossing point of the cumulative distribution tells you what proportion of the time daily stock changes are positive or negative. The analysis also tells me what proportion of the time there are no stock changes.

    Daily Stock Volume and Changes in Daily Stock Prices:
    The second set of analyses will be looking at the association between daily stock volume and daily changes in stock price changes. I ran an initial analysis on Axion, but the results were not in line with my expectations. I believe I know the reason why, and will be conducting a more in-depth analysis on this issue.

    Outliers:
    Outliers are comparatively rare large changes. Outliers are removed from the generation of the general statistics. However, I will be adding a table that looks specifically at each outlier event, and the frequencies of those kinds of events. For Axion, several of the outlier events were stock offerings. I am very interested to see how these events effect trend data.

    Looking at Axion Power:
    Axion Power cumulative percent average daily price changes over four years 1/2/2009 through 8/23/2012. Data is from Yahoo financial.

    Seven Outliers were removed.

    The mean price change is -.004.
    The Standard deviation is .0473.
    Two standard deviations is .0946.

    The price distribution is mostly symmetric. That means statements of the following kind may be made. Movements of plus or minus 1 standard deviation occur 68.2% of the time. Movements in excess of plus or minus 2 standard deviations occur less than 5 % of the time.

    So a change of plus 4.7 cents would be expected to occur less than 34% of the time (68.2 divided by 2).

    (click to enlarge)

    Note that the cumulative distribution does not cross the vertical axis at 50%. This means it's more likely for negative price movements than positive movements. In fact, negative price changes occur about 67.5% of the time. This means the trend over time is negative, which is no surprise.

    With this data, there are statistical associations of delta share price with share volume. However, this needs to be looked at further because share volume back in the early days was very much smaller than recent share volumes. So the analysis will have to be performed within year.

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Comments (29)
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  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    Interesting study, FPA. I'm still holding a little more dry powder until two things are figured out:

     

    1) The coming capital raise

     

    2) Any news that will force AXPW to increase production of their PbCs

     

    On another topic, where do I park this Japan potential catastrophe? Mt. Fuji swelling up? Yikes.

     

    http://on-msn.com/RHMLR5
    7 Sep 2012, 02:51 AM Reply Like
  • Stilldazed
    , contributor
    Comments (2151) | Send Message
     
    Maya,
    Doesn't RBF have family in Tokyo? Maybe he has better info.
    7 Sep 2012, 04:13 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » Thanks Maya... there is something happening with increased volume on AXPW, I hope to understand that before I move on to LYSDY. I went to school on the recent LYSDY pop, and what I learned will likely generalize to AXPW as well.
    7 Sep 2012, 04:43 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    FPA, are you saying you see some relation in the set-up or pattern between LYSDY and AXPW? How so? Volume & deviation patterns?
    7 Sep 2012, 05:04 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » Hi Jon
    Right now I think I see more of a qualitative similarity than a statistical association. Here is what I am thinking...

     

    There are apparently two kinds of price pops - permanent, and transitory. Permanent pops are related to almost immediate increases in earnings. Transitory pops are more related to positive news about future potential for earnings, but with no clear timetable for those increases. I think LYSDY and AXPW are similar in that both companies are likely to see a transitory pop at this time. Previous to this I did not distinguish between types of price pops. So my conceptualization has expanded.

     

    Looking at LYSDY, its been on a downward trend because the stock holders had no clue when an outside event (approval of the TOL) would take place. So there was selling pressure (downward price trend).

     

    However, the stock did not plunge, it slowly went down on decent volume. Before HTLs findings I mostly thought price trending down was related to mostly selling. However, after looking at HTLs findings, it was clear that even though a price is trending down, a lot of people are actually buying. For LYSDY, that means those people ended up owing a bunch of relatively cheap shares. Particular the ones buying below .75.

     

    They were smart. Suddenly, the TOL was granted. The stock popped from around .59 to around .89, about a 50% pop. But now it's dropping again on good volume. Tonight it closed at .82 in Oz.

     

    Why is it dropping? I think it's dropping because those that bought low, .75 and below are taking profits. Shares bought at .75 were up nearly 19% when it hit .89. Not bad. Those that bought below .75 were up even more.

     

    The people that bought cheap know earnings are not going to suddenly appear and they know an offering is likely in the wings.

     

    So they are probably taking profits with the idea of repurchasing on a slow bleed down and than repurchasing before the late October first feed of ore. An event that will likely cause a less Transitory pop. So they are taking profits off the table now, waiting for it to hit .75 again and repeat the cycle. In theory, it gives them a cycle of profits they would not have if they just held the stock. Those profits could be used to purchase even more stock than they originally held.

     

    The strategy is not really timing the market since it's a purely reactive play. Buy cheap, wait for a transitory pop, take profits, wait for the slide, repurchase. Repeat as often as possible.

     

    Where I went to school was the speed of the upside for the transitory pop. That pop took place while the markets were closed. If you were not in the stock when the pop took place, you were mostly shut out of any chance to buy and turn the stock on that pop.

     

    I see a lot of similarities with AXPW. Its been on a slow trend down for months and months. Its actually bottomed at .30. The volume recently went up because of John's article on TheStreet. That likely attracted hot money. Those people are looking for a pop. We have seen the effects of a transitory pop on AXPW in the past. We also know some kind of offering is coming in the near future. If AXPW gets a strategic partner, it should pop.

     

    We also know start stop is not going to happen for some time. So I expect a slow bleed off on the pop because it should not effect immediate earnings. However, if you are not in the stock, the velocity of the up-side of the pop is so fast that its really too late to try to pull off a quick buy followed by a sell. I have not been buying at .30, but as a result of this, I will very likely purchase some trading blocks of AXPW at .30. I won't buy a ton of them because if they just do an offering, I expect the stock to dip to around .25.
    ---

     

    On the statistical side, I ran into a strange result when I was relating volume with share price changes on AXPW. The sign of the association was inverse from my expectations.

     

    I believe its what's know as a grouping effect where the grouping factor is related to different levels of share volume. In other words, the association between volume and share price might change with volume. I have to run some further analyses to check this out. I was hoping to do this over the weekend, but some paying projects have showed up, so I will not get to it until next week. I started this in an effort to produce a useful investment tool. But the more I dig into it, the more interesting it gets.

     

    Sorry for the long winded reply...
    7 Sep 2012, 06:42 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    No apologies. That was a fantastic reply.

     

    I like the transitory pop concept. It helps with my education of trying to be the smarter money, one step ahead of the majority of investors that are chasing performance.

     

    ***

     

    Regarding Axion, I have been trying to think about the additional factor of time decay. When is the tipping point between investors hope for a transitory pop (from positive news or sellers drying up or whatever) and worry about a transitory burst (from the financing)? How soon do we need a transitory pop to mitigate a transitory burst in anticipation of the financing?

     

    On the outside, maybe we have until mid-December, or mid-January?

     

    But, then we look back at the last round of financing and see a stock that more than doubled in price leading up to the last round of financing. It seems wholly irrational that the stock price skyrocketed right before an acknowledged dilutionary event.
    7 Sep 2012, 12:33 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » I seem to remember the last pop was the NS 999 news... that took the stock up into the .60s.... The slow bleed (or reflection) had just started when they had an offereing which took the stock back down in a hurry. Those who were following the stock closely knew an offering was likely before the end of the year to avoid a 'going concern' statement or something like that. Maya mentions the going concern issue below, so I suspect they would want the next offering to occur in the 4th quarter of this year as well. If its just an offering with no offsetting news, I would expect the .30 bottom to be broken. Its because of the latter possibility that I am holding some capital back in the chance that I can pick some up on-sale.
    7 Sep 2012, 03:19 PM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    I thought it was Axion selling to the Navy a minicube, which took the stock from around 30 cents to 60 cents, after which BlackRock joined Quercus in the selling foray.
    7 Sep 2012, 03:29 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » Hell, you know more about Axion than me Maya... but I do recall an offering about that time.... Looking at a chart, it looks like we doubled in early January but at the end of January we want from around .64 to below .40 in one day. I doubt it was BR and Q that caused that one day plunge.

     

    From the chart, it looks like the slow bleed started in earnest in May... I suspect that started after the first quarter report .
    7 Sep 2012, 04:15 PM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    FPA: Ah! It's all about the timing. I was a little earlier than you. January was the release of news about the Naval yard, which doubled share price. Then, along came the dilution/cap raise in February, causing the stock flop.

     

    I only wonder if TG can again produce a pop before he lands a strategic investor, the only thing is, though, that I bet he already knows who this will be, either East Penn or Exide, but Viridity is a dark horse nobody talks about. Only need $8 or $10M?

     

    -- hehehehe, see #5 below, of which I believe most of the "dozens of proposals out" are about, and a few of these forthcoming could alter my scenario significantly. Why is Axion accumulating electrodes?
    7 Sep 2012, 05:09 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    I'm not sure I agree about the catalyst for Axion share price going up.
    ***

     

    *What about this:

     

    - massive selling going into year-end, some of it tax-loss selling, some of it various pressured funds that had to sell their shares (which we all know about it)

     

    - selling pressure alleviates in January and we have a relief rally

     

    - relief rally gets the attention of mo-mo players who join the ride up the elevator, then mo-mo players and value players who bought low start getting off the elevator on January 12, and rejoin on January 18, playing a trading channel

     

    - relief rally gets crushed by direct shelf offering announced on February 1st

     

    - dilution plus flippers plus the re-entry of big sellers plus the exhaustion of buy and hold buyers' dry powder all conspire to drive the price back down to about 10% above its previous 52 week low

     

    * I don't think that much news has played that much of a role in any of this because:

     

    - there is constantly a cavalcade of news and supposition on the Axion Concentrator... the amount of news regularly available that could be reason to go positive and long on Axion makes me feel like Sigourney Weaver in AlienS... if each news items were an Alien...

     

    - what has predominantly waxed and waned for the last year is the selling pressure on the stock

     

    - the fundamental value remains and the opportunity of achieving the company's potential gets closer daily

     

    so... I'm left to agree with JP that at some point the pressure will abate and the company value will have another rapid rise to some sort of "fair value" which it will probably exceed in price before pausing

     

    however, the next financing may add a new layer to the selling pressure, and that's potentially a problem... and potentially not... since this *might* be the last financing ever... which could result in its own relief rally if true

     

    ***

     

    Looking back through some concentrator history...

     

    Back on January 11, I suggested that it might just be a dead cat bounce http://bit.ly/P2wPoh

     

    Looking at the action between August 12 & September 12, 2011... a shallower bounce... I wonder...

     

    Backtracking to the March 25, 2011 high for the year, is a bounce back to about half that value after losing 75% of the company's value unreasonable?

     

    Important to remember JP's comment on January 13, 2012 http://bit.ly/TxQfWH "I've known Tom Granville for over eight years and have never seen him make a decision based on its likely market impact" though he added two comments later "No CEO of a public company ever ignores the market, but a smart one knows that he can't let the market tail wag the business dog. A really smart one keeps one eye on evolving business developments and financing requirements and times his actions to optimize both."

     

    Looking back, I apparently wondered if we would have a bought deal on January 18 http://bit.ly/P2wQbN which JP affirmed was likely in the next comment (later, I was ticked off when the bought deal was announced... apparently, I'm mildly schizophrenic)

     

    January 18 & 19, 2012. Mercy notes that she has trouble getting orders filled and that supply is limited http://bit.ly/TxQgcV and http://bit.ly/P2wPon

     

    I seem to have missed it in my skimming of the comments in January's concentrators, but I seem to recall Mercy also mentioning a cohort of day traders got involved in the Axion run-up and were commenting about it in the StockTalks

     

    f-kru announced the private placement to the blog on February 1st http://bit.ly/TxQil8

     

    The previous day, on January 31, the close was .62 and the concentrator was rife still with unbridled optimism despite full knowledge that a financing was in the offing. February 1 it was .47 and we were down the rabbit hole from there.

     

    (I'm on my 3rd diaper change since I began typing this, so apologies for any errors, but there's been some disruptions along the way :-P)
    7 Sep 2012, 06:56 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    Ah-ha!

     

    I wasn't dreaming, but it was back on January 5th that Mercy noted the day-traders were already in on AXPW

     

    "1980XLS-2.0 just posted a signal for AXPW on SA StockTalks. Activity will likely grow with day traders since he tends to have a strong following."
    http://bit.ly/Oubtkn
    7 Sep 2012, 07:11 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » That electrode accumulation brings up an issue I have been thinking a lot about. Is the electrode accumulation an inference based on carbon material orders, or is it a direct observation of large quantities of electrodes on the shelf? With some kind of quantification of what 'large' is.

     

    I believe they are still working on their proprietary carbon sheeting process. I wonder how much carbon material they are going through as they refine that process? Of course that question itself contains an inference that they are still refining their carbon sheeting process.

     

    Assumptions Vs. Hard Evidence:
    This raises the question about how much of our information is based on assumptions and how much is based on hard evidence? I suspect one of the sources for Axion disappointments concerns setting expectations based on assumptions.

     

    For example, we know some big holders are selling. However, the notion that after those big owners have sold out, the stock will bleed up is based on the assumption of a limited size selling pool. If an investor accepts that inference, and it's wrong, it seems likely to lead to investor disappointments and potential selling on that perceived disappointment. In the absence of the limited selling pool inference, the stock holders would not have expectations of anything happening until some kind of needle moving event. My point being that a limited size selling pool assumption could be detrimental to the stock price.

     

    Partnership?
    I think East Penn is a North American supplier while Exide is global with a direct relationship with BMW... Wasn't that original Exide and Axion deal signed in 2009 for 3 years? If so, and it's still active, it's due to expire at the end of this year.

     

    If that arrangement got renewed with some cash backing, I believe the stock would pop. Back in 2009 when that deal went through, Axion was over $2 per share. I suspect one of the reasons for that was the Exide deal. Won't that be lovely. But once again, this is all guess work. Is the arrangement between Exide and Axion still active, and do the two companies get along.

     

    John's Better OEM Deal:
    What I would prefer to see is John's OEM deal. If Axion could make a direct deal with one of the big OEMs, all I can say is the sky would be the limit. That would remove the squeeze play with a company like Exide. Exide and other battery makers would effectively be forced into making a favorable deal with Axion or they would risk being cut off from the OEM with another large battery maker picking up the business. Of course, this whole line of reasoning is once again highly speculative, but it does make excellent business sense.
    7 Sep 2012, 07:36 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    SD: Doubleguns has a son in the Marines over there.

     

    HardToLove
    8 Sep 2012, 07:30 AM Reply Like
  • Stilldazed
    , contributor
    Comments (2151) | Send Message
     
    Thanks HTL,
    I'm so confused ;-) when I run off memory.
    8 Sep 2012, 01:41 PM Reply Like
  • Mathieu Malecot
    , contributor
    Comments (1243) | Send Message
     
    FPA it was paying attention to those buyers during a consistent downward price move that lead me to pay attention to the number shares purchased while a stock traded under a 30 day moving average minus the average volume.

     

    i think that paints a picture about a stock accumulation and can be applied to finding an inflection point in terms of price moves outside of a single deviation.
    12 Sep 2012, 04:42 PM Reply Like
  • Mathieu Malecot
    , contributor
    Comments (1243) | Send Message
     
    in terms of time decay as relates to my comment above, that is the reason behind subtracting out average volume #s. i think that does a good job of accounting for attrition among "long term" holders.
    12 Sep 2012, 04:43 PM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    Great discussion and insights, FPA.

     

    I'm resolved to seeing three, maybe four, and possibly even five events of importance coming for Axion during the next five or six months.

     

    1) The "booking" of the $400,000 + $75,000 from Norfolk; meaning that Norfolk has gone ahead with retrofitting the yard switcher. I know wtblanchard has his Altoona contact, but...doesn't NSC have a similar yard for retrofitting in Roanoke? As far as I know, these batteries have yet to be shipped. Why?

     

    2) The selling of PbC to NS for their over-the-road locomotive. In conjunction with the above comment, isn't NSC laying new track on their Crescent line, to improve not only fuel savings, but also to allow the trains to travel more quickly and efficiently?

     

    3) A capital raise -- likely to occur 4Q, or 1Q next year. It was stated that this next round of capital will be (paraphasing) "project oriented." I'm not so sure. It would be a nifty move to attract a "strategic partner" while addressing going concern cash available issues. The longer Axion waits to nab a strategic partner, or partners, offers less leverage for Axion to get a higher price per share. I also believe Axion will want this cash posted on the books before this year ends, for accounting reasons. However, there's a poker slant, because if Axion waits until next year, just maybe some more attractive news will be forthcoming, raising share price.

     

    4) The announcement of BMW commencing fleet testing. I'm not sure how the market will react to this coming news, most likely during next February. It's going to only be about 200 batteries sold, however, once fleet testing begins, it's pretty much THEN assumed that BMW will use the PbC in production models. But even then, 200 batteries does diddly squat for both the top and bottom lines.

     

    4a) Hyundia or Toyota announcing that they are fast tracking the PbC for stop/start models, maybe even Ford. I don't expect GM to announce anything.

     

    5) When FERC is finally figured out, we may get a pop from some "shovel ready" projects, all pigeon-holed until the bean counters can actually come up with some kind of increased performance/ROI calculations.

     

    Thanks for creating this thread, FPA, as it in a way forced me to look at the "what's next" crystal ball catalysts or concerns of when to commit more dry powder toward Axion.

     

    I do think you're on to something. Because during these times of the markets being at decade-long tops, people, especially the porfessional traders, are likely more willing to book 20-30% gains than hang in for the long run.

     

    Bottom line? I see nothing during the next 5 months/half year, other than maybe from Viridity/Ferc, that will potentially pop Axion's share price permanently. I do expect the price to get whacked once again for the cap-raise, and after that, to slowly climb next summer when I believe we'll get several major announcements that will be defining catalyst-type events.

     

    I think there's a pretty good chance that by 4Q next year, Axion will be a profitable concern.

     

    Lastly, and on a derivative note, I would encourage TG to buy a LOT of activated carbon from Japan...RIGHT NOW.
    7 Sep 2012, 02:27 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » Thanks Maya and thanks for lising out those potential events.
    7 Sep 2012, 03:07 PM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    Jon and FPA: This a really fine, fine discussion.

     

    One thing I'd like to point out is the idea of an OEM pairing up with Axion. This would truly be landmark, epic, nearly unprecedented, as I am unaware of any OEMs save Kandi and Tesla that put their own batteries into their own cars.

     

    Not to say it couldn't happen. Back in the olden days, car companies would make their cars bumper to bumper...all parts, except for tires and batteries. Nowadays, car companies pair up on all kinds of parts, as in Jeep using Mercedes braking systems, another car company uses another's chassis, so it's not in anyway unfeasible that Axion could pair up with both BMW and Ford, maybe Toyota or Hyundai, too.

     

    FPA: I think the carbon sheeting process is good to go, as in, TG has stated that both NSC and BMW are done with early phases of testing...yet, there will always be refinements in assemblage and design. As for the electrodes, I'm taking a SWAG, but I doubt the new patent has been incorporated into ongoing production.

     

    Maybe so, we just don't know. But we do know that electrodes are being stockpiled. But I don't believe this is a full shift, 8 hours/day, a full week, and then weeks after weeks and months after months of stockpiling going on. I pulled nothing out of this past Q-statement that told me huge stockpiling was occurring.

     

    Both of you guys are onto the threshold of an idea of creating an event driven "history rhymes" chart of the past, with the idea of projecting share price based upon past history and future or forthcoming events. Timing-wise, the cap raise *could* happen during the same month next year as this year. A significant announcement in early January, like last years Naval announcement (which if you recall, I kind of guessed the very night before), as well as potential for end of the year tax loss selling, if the share price remains around where it is now.

     

    Lots of similar stuff that could be projected toward more similar stuff occurring.

     

    As for the big sellers, we do have a big buyer back in buying; Special Situations. However, I can only wonder if either this outfit is flighty as a teenage prom queen, or is merely a mo-mo player. I haven't studied up on SS's holdings for some time, and I mean all of their holdings, not just Axion.

     

    I also am not buying the idea that by this equinox that all the selling shares heading for the pay window will have gone through the window; still have millions of shares out there in the shadowy control of market makers, which makes me think, I need a sip or three of Maker's Mark!

     

    Because all three of us are awaiting a million bucks and more coming our way.

     

    Jon: Thanks for assembling a timeline. Reminds me of what I did with the ancient Maya years ago, which one scholar said was a "scholarly work." Since I did that, many books have come out with the same premise, and done far better than I could have ever done. But the idea is what counted.

     

    This is really bad, but someday...

     

    These reflections
    of inflections
    will bring forth our affections

     

    History ryhmes? eeeee!
    7 Sep 2012, 08:45 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    "I pulled nothing out of this past Q-statement that told me huge stockpiling was occurring."

     

    IIRC, finished goods and/or WIP on the balance sheet suggested such?

     

    HardToLove
    8 Sep 2012, 07:52 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    "still have millions of shares out there in the shadowy control of market makers"

     

    If JP is right, MMs won't hold any shares.

     

    HardToLove
    8 Sep 2012, 07:54 AM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    HTL: Between Manatuk Hill, Quercus and BlackRock, there's still a heap of shares that we don't know what's being done with them. I just don't have a feel if JP is correct...in that two weeks from now the weak-handed shares will all be sold. Sure do hope JP is has nailed it, but I just don't see it that way. Volume may be an indicator, as in very weak volume, caveats aside as always.

     

    Can't rule out Special Sitz from once again doing an about face come the end of this year, either.

     

    I'm not sure what a finished electrode costs, but I didn't notice a large increase in inventory this past statement. Might have to roll back in and take another gander, though.
    8 Sep 2012, 02:07 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    Maya: when you used the MM term, I took it literally. The folks that own or have ready access to MMs could, of course, be in sell mode. Over in the QC DRich commented about all the altenergy stuff being absolutely dead for now. That could support the view that the holders you mention are rolling out of their positions.

     

    The trouble is I don't see the trade sizes or extreme volumes that we'd seen in the past when biggies sold. They could be masking their actions by dribbling out smaller trades - I know they're smart enough to figure that out *if* they care about price at all.

     

    As you know, I've been concerned, based on what JP reported about Special Situations, that they might have become swing traders. So they are a likely possibility to be letting go.

     

    Right now I'm (purely) guessing that retail traders that bought some at >=$0.29 started selling around $0.32-$0.33 (approaching 10% profit in-hand), based on size and behavior and the short sales and volumes.

     

    But that is just a guess.

     

    MHO,
    HardToLove
    8 Sep 2012, 02:47 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » I agree with that notion that the selling pool is larger than just a few large institutions. I also don't think the selling pool is necessarily limited to those that can make a profit. Sometimes an investor might consider taking a strategic loss if they see an event in the near future that they suspect could result in a significant price drop.
    8 Sep 2012, 04:15 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    FPA: "consider taking a strategic loss if they see an event in the near future that they suspect could result in a significant price drop".

     

    True, too true. I hope there's not too many of those as we make enough information available that a *reasonable* conclusion *could* include a limited downside risk. If they are doing risk management, that assessment should be included in their deliberations. Of course, they might see a greater downside than I perceive or might have less risk tolerance.

     

    Either way, if my experimental charts are really providing anything useful that I'm judging correctly (a big *if* there), it does *appear* that the sellers are smaller traders right now, barring biggies masking their moves of course.

     

    My spreadsheets are current but I've not updated my insta yet (2 days now), but buy:sell did come back to 35.8%, rebounding as in the past, and short sales were only 5K (19.3%). Dly Sht % of 'sells' 3.01% (utility also unknown as yet).

     

    With $0.30 holding Friday, I'm figuring this was just the normal end of some consolidation that was predominately from retail traders right now.

     

    But, as I've pointed out and we all know, the utility of the data and my assessment of it are both still questionable.

     

    On the traditional TA side, the (potentially) trend-ending triangle was penetrated down and we *are* in a falling channel with resistance at the top of 5/29 and touching last at top of 8/27. It's support begins at the bottom of 6/14 at last touch at bottom 8/17. It seems to have a regular period of 4-5 weeks, but only two cycles thus far.

     

    I think the exit from the consolidation triangle now needs to confirm if the move towards the descending support line is likely or not. The range right now is ~$0.2725 - ~$0.335.

     

    If we are ending this descending channel trading we should see price refuse to fall all the way to support and stay around $0.30 and then, after a very short period (day or two maximum?) try to move towards resistance again. If it does this, it's a potentially bullish sign as it suggests the trading range wants to establish at a higher range (maybe the top half of the channel and/or extending above).

     

    Since volume, as we moved down from 9/4's $0.3151-$0.324 range to the close Friday went higher and then lower and my experimental stuff suggests bottoming, $0.30 may very well hold.

     

    With the stuff from my experimental chart where its at, I'm hopeful this is what we'll see.

     

    MHO,
    HardToLove
    8 Sep 2012, 06:44 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6208) | Send Message
     
    Author’s reply » Sorry for the delay on your comment HT... I am under the weather...

     

    This is more of the kind of strategic loss play I was thinking about.

     

    Suppose someone owned 10,000 shares bought at .90 ($9,000) and the share value trended down so that today they were worth .30 per share. So they would be down $6,000 or 66.7% - two-thirds down.

     

    Now further suppose that the investor owning those shares knew there was an offering that was going to occur in the near future. If that offering occurred at that .30 price, the stock price would be expected to drop. Based on past stock performance after an offering, they figure the offering price would probably be at .24 per share. This means the stock price would likely drop to that figure.

     

    If that happened and an investor choose to hold, they would still hold 10,000 shares, but they would now be down 73.3% ($6,600) on their shares which were now valued at $2,400.

     

    A common mistake:
    No problem right, so long as they did not sell, no loses. But wait a second. Their portfolio valuation is now down 73.3%. A lot of people assume if they are down 73.3% all they need is a 73.3% increase to get back to even. However, they would actually need a 375% increase to get back to their original valuation (3.75 * 2400 = $9,000).

     

    If they were planning to hold the stock until they got a quadruple pop that would mean if the stock had not dropped, their sell target valuation would have been $36,000 (4*$9,000). However, if they rode the stock down to .24 per share, it would take a pop of 15 times to hit that stock valuation.

     

    Double down strategy:
    The results can be improved by buying on the dip. Lets suppose the investor still had their original 10,000 shares at .90, a $9,000 dollar investment, and they decided to double down at .30. So they bought an additional 30,000 shares at .30 bringing their total number of shares to 40,000. Their average share price would now be .45 per share.

     

    The stock price drops to .24 after the offering. So at that point in time, the valuation would be worth $9,600. They would be down 46.7% or $8,400. Notice that while the percent down is lower than with the original 10,000 share investment, they are actually in the hole for a larger amount of money. $8,400 vs. $6,600 down. So there is a trade off here. They own 300% more shares but are down 31.25% more capital.

     

    How much of a pop would they need to reach the breakeven point of .45 per share? Their breakeven is $18,000. Their 40,000 shares would be worth $9600, so they would need nearly a double 1.875 to break even. So if you had the capital to double down on the number of shares, you would half the value of the pop needed to break even.

     

    Sell on the dip and rebuy:
    Suppose you had a limit loss sell rule where you dumped shares after a 30% loss on an investment. So in our example, you owned 10,000 shares at .90 and when the stock dropped to .63 you sold to limit loses. That means you lost $2,700 on the sale. But you came away with $6,300 in capital. You now watch the stock drop to .30. You could buy a small amount of stock at that point to insure against an unforeseen pop, but you also know about that offering. So you wait until the offering. The price drops to .24 and now you buy. Notice that this is not a timing play. The buy occurs after a specific event.

     

    You now own 26,250 shares at .24. That's 2.625 times more stock, but you are still $2,700 in the hole. To reach your new breakeven point, the valuation would have to increase back to $9,000. So the price per share to breakeven would be .3428. This represents a 30% increase in the stock price. So to breakeven, the stock needs to increase .1028 cents to breakeven and the investor owns 2.6 times more stock.

     

    Remember my total out of pocket is still $9,000. I am back to $9,000 at .3428. In order to hit the original quadruple profit, we still need the holding to be worth $36,000. But we now own 26,250 shares. So to hit the quadruple, the stock needs to go from the breakeven at .3428 to $1.37 per share, or a pop of 4. With the hold strategy we needed a pop of 15 to hit the profit target. So the sell and rebuy strategy reduced the needed pop size by a factor of 3.75.

     

    In addition, the sell on the dip and rebuy strategy also gives the investor the opportunity to purchase something like PSEC, with a monthly double digit dividend. So while waiting for the offering, the investor picks up dividend payments. This increases the amount of investable capital for the repurchase. Yes, PSEC's stock price could have dropped, so a limit loss safety would need to be in place to insure you don't loose too much. As it turns out, PSECs stock price has substantially increased in the past several months.

     

    Executing a sell / repurchase requires a great deal of information:
    What if some big positive event occurred while you were out of the stock? That's the beauty of the Axion concentrator. It has the most timely information you can get on an investment.

     

    What is the most likely event to happen first? We know they need cash, and we have a pretty good idea when that has to happen. So we have a pretty good time horizon on that event. We don't have nearly that good of an idea on when a product / deal induced event will occur. NS is moving very slowly. Automotive is not going to occur before the offering. Rosewater is interesting, but its not likely it’s going to cause a 15 times pop. Powercube is a possibility, but we have no information.

     

    What's the best play?
    I think the best play is dependent on how far in the hole you are. If you are 60 percent or more in the hole, I think it gets more and more difficult to get to breakeven, never the less your profit target. The double down play is a variant of the hold play. It reduces the size of the pop needed to break even, but it also required the investor to double the capital investment. Some of us don't have that amount of capital, and it also increases the size of the bet on the investment. The sell/ rebuy play requires a lot of good information. The fundamental risk of that play is that the stock might pop while you were out. However, as pointed out, if you rode the stock down, its going to take a huge pop to get back to breakeven. What you would do in the event of a huge pop would be to reenter as soon as possible since if that kind of a pop occurred, its likely the stock would be on its way to meeting its potential.
    16 Sep 2012, 10:27 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18452) | Send Message
     
    FPA: Kick that bug so you can enjoy life. Glad you are getting better.

     

    Great discussion. I see where you're coming from now. In *many* ways its a more thorough explanation of what I normally just lump into "compounding" and "opportunity cost".

     

    Over the last years I have been completely out and in AXPW several times and always at a profit. That has allowed me to get what is, for me a substantially larger portion of shares than otherwise.

     

    This last time in I've not sold any trading blocks yet due to my belief that a one-year time frame would likely produce a relatively substantial move. I've often wondered about the wisdom of that and your discussion doesn't help that! :-))

     

    Came close a few times, but decided it was worth holding. Since my average cost is so low on this batch I'm unsure if the risk of missing something big justifies the effort (to me, of course) it would take me to bulk up some more using sales and re-buys of (AXPW) as the vehicle.

     

    The options profits have been doing pretty good, but if I had less in AXPW ATM and more to deploy in the options, I might be way ahead.

     

    My thinking ATM is that I can accomplish similar, to a lesser degree of course, by becoming more active when the prices start behaving like normal stocks in a higher price range.

     

    Maybe I'll change my gains points though, since I know volatility will come in below my double points on the trading blocks, to 50% gain or similar. It makes sense to use my trading blocks then as a good way to both reduce downside risk (at some increase in upside risk, of course) and increase my share count further over time.

     

    Thanks for talking about it a putting so numbers to it!

     

    HardToLove
    16 Sep 2012, 01:35 PM Reply Like
  • Mayascribe
    , contributor
    Comments (10542) | Send Message
     
    FPA: If you saw my buying pattern, you'd have to write a comment that would assimilate War And Peace, both in size and characters.

     

    I've averaged up. I've chased. I've averaged down. I averaged sideways. I have shares that came from another dimension. From 60 cents to $1.20 to 28 cents, and prices all in between.

     

    Get better buddy!
    16 Sep 2012, 03:01 PM Reply Like
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