No additions or deletions today for the Trade Anatomy portfolio. Also no new watchlist trades were issued today.
OSIR, CYBR, FLY and GTN were on the plus side while SUPN, RTEC, MSLI, and FLML were to the downside. SUPN continued to slide back and closed near 16 for the day. We initiated our position around 13.30 and our current trailing stop is resting at 15.17. Our plan will be to hold the position until 15.17 is breached on a closing basis. When you position size correctly, it's much easier to hold on to your stocks when they decide to consolidate recent gains. It's also the only way to catch large "fat tail" trades. Maybe SUPN acts constructively over the next few weeks or maybe it doesn't. That isn't our concern. Our concern is to make sure we follow our process, and that process requires us to let the SUPN trade run it's course.
RTEC and MSLI have pushed back to the lower end of their most recent trading ranges. We will observe their trading activity tomorrow and make a decision to leave them alone, sell half, or remove them completely.
On the upside today was OSIR, and it cleared to a new closing mark. Tonight I've included a MarketSmith chart instead of the standard TradingView chart. MarketSmith is what I use as my main screening tool to find solid weekly patterns. I grew up on DailyGraph books and the DailyGraph website before it was changed to MarketSmith so it's a natural fit for me.
As you look at the OSIR weekly chart you'll notice that the chart has a constructive pattern. You'll also notice that the $21 price area has been an area of resistance since 2008. For the last several weeks OSIR has been building a small handle on the weekly chart. This pattern is the first step in the process. I then do a minor fundamental check. The fundamental check is based on data that I've found to be important and generally existed in past big winning trades. 1. Earnings will be the most ever recorded while the price has not moved to new all time highs. 2. Acceleration in sales % as well as $'s. 3. # of funds increasing, but not an overwhelming %(means there is room for more institutional buyers). 4. U/D Vol Ratio should be 1 or above ( most big winners will typically have a number of 1.4 or higher before they make their move. When the technical pattern and fundamental data come together, big moves can happen.
Once a setup is found, our position size must be determined. This is when the use of daily charts with our initial stop loss and trailing stop loss lines become important. Although OSIR had already been initiated as a trade back in May, it was still a viable new trade today. To determine our position size we would first determine what % of our portfolio we are willing to lose. Generally trades will range between .25% and .75% of our account value. In the case of OSIR, 17.71 (yellow line) could be used as the initial stop loss. You can determine the number of shares to purchase by taking the dollar amount you are willing lose based on your %risk amount divided by the point difference of your entry and stop loss value.
We had no additions or deletions to our watchlist today. One standout from the list today was MBLY. It's been trending for the last several days, and we will look for a potential entry during it's next consolidation area.