SungpillHan's  Instablog

I played FSLR for bounce, then ANR, then AONE. If you looked my previous articles in Instablogs, you'll know what type of stocks I play. It's short term bounce play. It works very well when market is hanging around pivot points with uncertainty.

Now, my next play is VIX. The only thing I know what VIX is, it's volatility index, usually going backward of what market goes to. I tried to read in detail of how VIX moves with several different articles of famous analysts, but it doesn't make me to believe completely what they say. Maybe it's because money game. I'm not saying they're wrong. Information they provide is strictly known to all public and it's how it works.

However, I'm a strong believer who thinks any stock moves with already priced in almost real-time fashion. So, if then, I concluded that I don't have to know the complicate analysis which I don't even know what the heck I'm looking at. It's simple and clear for me to play stocks. All known facts, emotion, numbers, fundamentals, etc. are already priced in. Follow chart.

Going back to VIX, take a look at VXX. It's ETF tracing VIX index. Before jumping into ETF like this, remember, ETF may requires very high patience if you want to make money. It's because ETF has decay factor, which means, eventually in long run it will go down anyway. The other important point, since its decay factor, even though market comes back up over the pivot, it will not come back up to the same point. It's evil index stock going down in long run which will make you tired and spit all kinds of bad words. So, you only trade short term with patience and if you make money, you get out, set alert on your target price, never look back until it hits your alert. My alert was triggered on TVIX when it dropped under 1.80. So, I played from 1.72 to 1.91, then bought back on 1.82 today again. Now, I may do this till it stops out with gain or may hold for bigger gain. At this stage, I'm not sure what I would do. But, anyway, it's good time to play for upside no matter it's day or swing trade because it's bottom on my channel.

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As you see it's a nice down trend channel, of course(Remember decay factor?). Resistances are;

Fibonacci 11.30 -161.8%

MA 8 10.63

MA 20 11.30

MA 50 12.50

I would ignore MA 200 because it's too far away and it's curving down. This is another point, we may not see the global market crash in any near term. Timing seems further away than anyone thinks. But, looking at MA 8,20, 50 and the downtrend channel with Fibonacci pullback lines. I'm comfortable to play any quick bounce. Also, note that MA 20, 50 changes daily, so I need to pay attention to it.

Before I jumped in VIX, I also looked at current market indices. I like S&P500 and e-mini S&P500 future. The below chart is S&P500.

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I have the big downtrend channel here. Don't laugh. I'm a believer the 2009 market crash making lower low means something. If the long term downtrend channel is valid, I doubt current market run, rather it will have more chance to pull back dramtically before it even tries to test the previous high, 1500. I really don't think it will go there. Maybe I have to say I believe so. :)

However, here is a situation. 1433 as of 9/11/2012 is actually above the channel with a big spike caused by news from Europe(buying bonds UNLIMITED. I laughed when I read news). But, then, it's also right under the uptrend channel I have from 2010 to today. So, the market is sitting currently where it just passed the pivot, but in the very tight price range of two long-term channels. What this means to me is, if I want to bet for casino play with either direction, this is the time. I bet for breakout or breakdown. Then, I looked at VIX, I decided to play shorting market with some small fund for fun. I don't usually play TVIX and haven't had chance to play in any big position because my trading history is only 4 years after market started rebound(Maybe someday I lose all and disappear just like other famous wall street traders who retired losing all money in 2008). Anyway, at this time, I'm shorting market with VIX 2X, TVIX.

When I posted articles about ANR, ACI, and AONE, I was sure they would bounce, so I shared with others here, but this time with VIX, I don't have such same degree of confidence.

GLTA

Disclosure: I am long TVIX.

When I started trading 4 years ago, I had no idea of how equity market moves. All I knew was, you put some extra money there, then the market gives you the result. One day, one of my colleagues asked me, 'Where do you put your savings? Banks? there are lots of places to make more than bank interest. '

I was a hard worker, thought putting savings from my salary to banks is the only way to build up wealth and honest way to become rich. I was ashamed when she asked me the question because it's true that I didn't know anything about equity market or economy. So, I studied online and opened my stock trading account, then started making money. My initial fund $5000 became $50000 fast when the market bounced in year 2009. My strategy was ALL IN. I buy stocks at one shot, then pray. It worked very well till I bought a biotech company which was waiting for FDA result which gave me a nice haircut. Then, I read books and listened to others of my friends who trade stocks, it seemed very reasonable to believe the equity market is nothing but a play ground of rich people.

So, here is how to play with them. In order for them to play with high probability of win, there should be rules to follow. Rich people are not bacara players. The reason they're rich is because they have their own strategy of making money constantly. I agreed on it. Then, my next ego arrived with a question 'What rules do they follow?' stock price is number, so to change the number, there should be pattern and format: mathematics. Stock trading is math. Sometimes, the stock moves according to news, but when there's no news, it moves as it's supposed to in swing trading period. Sometimes, but in many cases, the news is also used to move the stock to its destined point. So, here, so in this case, news is used as a tool for the rich people. It sounds as a conspiracy much like 911, but that's what I found for the last 4 years. One very important point is, those professional traders playing with money from rich people are people who read the same books sold in Barnes $ Noble. So, it's logically true to think, these people share the same technical indicators to follow.

There are lots of books for technical trading. You read any of these books, then be familiar with how the number moves. the future of where the number supposed to be is on the book. Reading these books are not only for day traders, but for long term investors as well. day traders pay more attention on 15m, 30m, 60m chart, swing traders read indicators of days and weeks, and long term investors read indicators of week, month, and even year.

Getting to AONE. Today it closed under 0.20. I didn't sell my shares, but actually added more. The reason is the chart looks to me, it's perfect downtrend channel. When this stock hits the bottom line, then I buy. If it drops from that, buy more. Let's take a look at the chart.

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Notice the 3rd wave just right on the channel bottom. This channel can break down further. But I believe the channel will remain fairly well. The reason I believe it is because, along with the channel, the Fibonacci shows, it's already very well under -161.8%. And further more, the last pivot for bounce was at .43 area. Unless the stock is waiting for chapter 11, I would say it's safe to buy between -161.8% and the last line -261.8%. For this stock with such extreme, I usually start buying at the middle of the two Fibonacci line, then start averaging down until it shows strength. One more good reason giving me the confirmation is the channel bottom is located in the middle.

If the movers of this stock are such professionals who read 10 or 20 books of technical trading, then they should have already been looking at these indicators I found. I believe they do. They're rolling their eyes following the indicators, and when majority of traders who run wealth of rich people agree at some point where they think others may be looking at the same indicators, then it's the time to move to the common direction the majority agreed on quietly. There's no talk, no phone call, no chat. It's the beauty of equity market. Everyone agrees at the specific number for different direction. It's possible because they're trained and share the same assets of intelligence on the basis of study.

This stock will move up. When it starts moving up, I'll look at the first + Fibonacci line , which is currently on 0.29. Then under the resistance of the channel we have two indicators, SMA 8 and 20. I would ignore SMA 8 because when it's too low to become a target for such beaten stock. SMA 20 is falling every day slowly, so check everyday.

There's one last thing you have to keep in mind when you play bounce. Do research to have your own feeling if the stock is really heading to chapter 11. Mostly, the big company which is on top 3 of its sector will not result to be in such situation. For example, when I play FSLR, many people said it's going to be bankrupted. It didn't because it's the number one solar panel maker in US. And for coal sector, they said the same thing, ANR will file chapter 11. They didn't until I played and stepped out because it's number 2 coal producer in US. AONE is the battery maker which won millions of US government award and the number one in its sector. So, I'm pretty sure it will not be in any of complete failure.

Through the chart and logical reason, AONE seems very good bounce play you can try. Me? I'm on the train.

Disclosure: I am long AONE.

ANR

the long term channel seems to be a good bet to play bounce. It may turn to very profitable if this makes turn-over at this. The falling MA 200 seems to be a good target for bounce, the chart looks very much similar to FSLR before it bounces, when it did, it touched MA 200. As a counter-trend trader, this is the stock I would buy.

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ACI

Much like ANR, it just seems to be on the same long term down channel. Notice the ACI formed inverse head & shoulder under 6.20 and still in down channel. 5.45 is the price on shoulder on 6/26/2012. It closed on 5.79 and low on 5.61 on 9/4/2012.

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CNX

Besides these two coal stocks, there's one interesting coal stock, CNX. It broke down the support 30.53, but it came back up over it, now forming a new uptrend, closed right on the support of the trend line. This tells me, if you want to bet on bounce with ANR and ACI, You may have to balance how both will move along with CNX. So, at this price range of both stocks, I think shorting the two stocks has more risk than going long.

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Many analysts predict the rest of next year will be tougher for coal stocks. Many of them also say they will take their positions depending on how Presidential election result come out; Romney wins, coal wins.

In my personal opinion, coal stocks may move heading to Presidential election if such event is the catalyst everyone waited. More talks on the event, earlier the stock moves. It's pretty simple.

AONE

To me, it's a perfect channel, now the stock price is right on 0.25 area. Since it dropped sharply with all red candle sticks, it may make a quick drop for a few days of final rounds. So, here I drew Fibonacci line. -161.8% falls on 0.21. Watch this price range 0.21~0.25.

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