As of 10AM the markets are down over 1.2%~ across the board. It seems like wall street wants to reduce exposure going into the weekend.
My PWRD position getting dumped hand over fist. Stock is down another 5%. I am adding another 20% into my position right now @ $23.70 The stock is taking a huge hit today no doubt. But note that the stock has been liquidated from its high of 33.52 all the way to now @ 23.7 = $10 dollars. It is getting toward that point where the dumping should start to ease up. And looking at the chart -
we can see it is really nearing oversold status (note what happened the last 3 times when the stock's RSI neared 30 and the massive rebound that ensued). There's also an uptrend (indicated by the line I drew) that shows it should be bottoming out soon. If you are still short the position, many congrats for making a KILLING off this baby. But I strongly suggest to consider start locking in gains. Note the diminishing sell volume along with the oversold technicals. Also note the similar sell pattern we are seeing from previous massive dumps.
It's not going to rebound overnight. But I'm going to hold on to this one for a while rather than day trading it. I think this will at least rebound back to near $30 in the days to come. Not saying it won't have volatility. But we've seen where it has gone before not so long ago. And last quarter, PWRD reported great earnings. Yes, it is very unfortunate that the Earthquake in China could have an impact towards Chinese stocks. But I don't think it will be their Achilles heel.
I haven't been looking into too many other names lately. That's because to make money it doesn't require that many. If you can study the trends of a few stocks and nail the entry points. It is all you'll need.
Oil was up in the morning but it is getting sold off. We will see what happens
SOLF getting a bounce today. Once again I have been day trading that stock. The volatility in SOLF is just too good to pass up. 75% of my gains from the week had been from actively trading my positions in and out. This past Sunday when I was sitting down to study SOLF I vowed to myself I will stick with the plan and execute everytime with conviction when opportunities presented themselves. I am glad I did.
Let's see what happens at the end of the day.
-DL
Disclosure
Long GOOG, 75%V, 70% PWRD
Short USO
UPDATE 1:
Markets ended at the lows of the day, concluding the first week of major losses across all indices. What can we expect next week?
S&P 500.
Even though this market will most likely continue to have a downtrend direction, as we know by now nothing ever goes in one direction in a straight line. After a week of heavy selling the S&P 500 is now about 4 points away from the 50DMA which should for the time being provide strong support for an oversold bounce. So keep that in mind. Or who knows, maybe the big money will just continue to slaughter the markets silly. But recall when the markets were going up big, there would also be pullback and slightly down days to regain momentum before the next leg up.
The same works for a downtrending market. After multi day selloffs it is very likely we will see a bounce. Don't trust it for too long. But at the same time, don't go piling in hand over fists on the short side in the beginning of next week just because the selloff that ensued this week. You could get whipsawed out, and that's never fun. Always think it through.
I am going camping this memorial day weekend. Monday there is no trading so I will talk to you all on Tuesday. Have a good weekend and enjoy yourself.
-DL
Disclosure
Long GOOG, 75%V, 70%PWRD
Short USO
13 comments:
Great post. Do you feel it's still a good time to short MXC and PDO?
xman, do you have any sort of stop loss target (just in case) for PWRD ? My amateurish opinion would be $21.
Yo Xman, what makes you say that PWRD will rise up?
Looking at my chart I see this thing falling lower to support line at $21. Same line that it created back in mid-march.
Whats your opinion?
xxyy,
MXC and PDO are still way overbought. But I have made my gains there already. I am going to just watch for now. But I would not buy it long with a 10 foot pole that's for sure.
I will probably stop loss at 20. But by then it will be so overkilled what's the point anyway? This is still a profitable company and it is true the gyration of the stock is massive but I believe at this point my entry point is already at the lower end of the spectrum
marketm,
PWRD could go to 21 I don't doubt it. But this is why I don't have a 100% position yet. I am going to keep building it if the stock continues to go lower.
I have traded PWRD since its IPO inception. (I've swing traded it 4 times back and forth already) it is probably one of my biggest gainers the past 2 years. This is not a hoax company, I have seen the games before my self, I have played it also. I know that MMORPG's in China is more than a game, it is a culture. And I have no doubt there will continue to be an inflow of money the company will make. check out their site at www.pwrd.com
The reason I don't think it will go that low is because look at where the stock was before the previous selloff it was at $18.81 the next time it sold off it bottomed at $21. This time around if the line I drew in is correct it will confirm the uptrend of the stock. I'm not saying it can't go below it. If it does cross below 21 then I will re-evaluate my options. But understand if the stock tanks to 21 every single technical indicator will point to an imminent reversal and at which point it would not be much of a point to cut losses. It does look very scary to think a stock could tank this fast. But from my experience trading PWRD. The moment when everything feels hopeless and pitch black is exactly the point where it will bottom.
xman,
You've sold me on PWRD...kind of a hit/miss play from a business aspect (gaming), but considering the estimated growth and no debt i'm going to try to get on board if my stop limits are met by tuesday (i've set to buy if it pops up to $24...hoping to jump in with upward momentum)...if it falls then the order wont be filled anyway which is good because it'll break below trend lines/support...yikes.
Now given the fact that the company did in essence lowered their outlook could mean PWRD will not rebound to 30+ very easily. But even so, I believe it is capable of at least retracing back to its 20DMA of $29 before meeting heavy resistance (of course the line could continue to slope in the days ahead). But even at $28, it would be significantly higher than where it is now.
Review PWRD's history and its gyration since it's IPO day last August and see how the stock have gyrated. This is why I say this stock is a swing trader's wet dream (you can search my original post on PWRD in the April Archives). I had no problem bashing the stock when it was way high at 30+. But I also recognize opportunities when they present themselves. I have no emotional attachments to this stock. I just play it the way it is because it has worked for me the past 4 times.
Good luck!
Just remember the bottom line to trading PWRD. It is not in my opinion a long term hold investment (because if that was so, the stock hasn't done anything at all the past 9 months!) It is however, a short term trading vehicle when played correctly will give us superior returns.
Study it carefully, and set your game plan accordingly. We've seen how hard this stock can bounce just mere weeks ago along with 3 other times in the past. Note that the move usually completes itself within a 1 month period (from trough to peak and then the cycle repeats.
xman...I enjoy reading your blog as well..good job. I remember you were interested in grmn before what do you make of it now? It did bounce like we expected it just took a little bit of time. I'm interested in lulu if it sells off more before earnings run up as usual. Do you play earnings run ups? or only if the charts support it? I've also being collecting some profits from the crazy solar swings...a lot of fun there!!! jaso, ldk ect
keep up the good work and hopefully USO turns in your favor here...but I would be cautious on how far you let it run...its in a huge uptrend.
pwrd is interesting...will buy into upward momentum when it happens
XMAN /
What are your stops on USO and PWRD?
Bassman
bassman,
If you are looking into just trading the stock very short term, I would put a stop at $22.
nolan,
thanks for reading. I think GRMN is interesting right now because the current price level is trapped within the 20 and 50DMA (from 44-48) so it may not provide too much action to trade on.
LULU has been killed no doubt. From the looks of it right now though I think it is going to be tough to have an earnings move up because price level is now trapped below the 20 and 50DMA. Potentially lulu may not even do anything. If they post good earnings then perhaps we get a breakout. If that is so, then I'll definitely look into putting on a trade. If it disappoints again this one is going to be taken out in the bushes and destroyed.
I personally do not trade into earnings. It's not because the charts can't provide a picture on how to trade it, but it's because I have been burned before doing it and it is my own preference to not go down that path again.
good luck!
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