Catching a Falling Knife

[UMike]

I picked up alot right at the bottom of that knife. Unfortunately I sold most at the first peak.
Starting to accumulate them now in the "averaging down" phase.

For some reason I am not good with the reversal waiting. As with ANZ I bought the knife (~03/2020) but sold into this reversal. Missed out on a big profit.

 

[rederob]

Orbital's 40 cent fall since June may have come to an end:

Today's results release was not glowing, but this is a company that has spent recent years consolidating its product offering so is not a market dog. OEC believes it will deliver a net profit in F22, and increase revenues markedly in 2023.
The huge plus with OEC is its 88M total issued shares, which leads to strong spikes on good news.
I don't think OEC has good bounce potential ATM, but it looks to me like a blunt knife that's reasonably safe to pick up with a longer term profit in view.

 

[divs4ever]

The thing about catching falling knives is gambling on the possibility that the knife has stopped falling. I'm considering buying copper and OZL and SFR have been falling in sync with the correction in copper prices. Has copper got further to fall? I've no doubt that copper will rally again soon.

that is why i prefer buying in smaller parcels and taking the extra hit in brokerage

not always the best choice , but a big bet on a stock that free-falls can be worse

 

[rederob]

The thing about catching falling knives is gambling on the possibility that the knife has stopped falling.

Moreover, you want a decent bounce from the bottom rather than blood on your hands:
AGL was last at this low price 25 years ago. It's asset base has taken a pounding, and all of its bad news is written into its August annual report. Although the power industry is transformational and AGL might never get back to $28/share, it will make a reasonable profit in 2022 based on what we know, so a plus $9,30 (first level of resistance) should not be too hard to return to.
Below is the same chart for AGL except this one shows the past 2 year's price action:
,

 

[tech/a]

Wouldn't these cases be the very best Falling knives to catch?

Buy and hold vs. active portfolio management

Your missing the ability to react in equities almost instantly your under valuing that uniqueness. I’m not missing the “unique” liquidity of shares, I am just recognising it’s a double edged sword, where as I showed the “do nothing” approach to CBA netted you $1.3 Million over the period, the...

www.aussiestockforums.com

 

[rederob]

Wouldn't these cases be the very best Falling knives to catch?

Buy and hold vs. active portfolio management

Your missing the ability to react in equities almost instantly your under valuing that uniqueness. I’m not missing the “unique” liquidity of shares, I am just recognising it’s a double edged sword, where as I showed the “do nothing” approach to CBA netted you $1.3 Million over the period, the...

www.aussiestockforums.com

Yes - once the bottom is in (but how do you know).
There is also a big difference between nimble traders and long term investors.
And there's also the difference between companies whose fundamentals can be relatively easily worked out, and those who have yet to turn a profit, and remain a real gamble.
My preference has always been to marry technical indicators with fundamentals, and that's a reason why I have used AGL as an example above.

 

[tech/a]

You don’t have to pick the bottom

In very swift collapses like Covid for instance it’s pretty clear pretty early that the sell off is swift and panicky. Selling at any move of -20% in a day or so and holding your cash until the stock trades 20% above a low. I posted an example on the thread .

Everyone sees a panick sell off.

 

[peter2]

SFR: Bought this falling knife.

..... Reasons in the SFR thread.

 

[peter2]

I shudder to mention this one.
At the first signs of the invasion I wanted to short the beejezus out of this but my broker had difficulty borrowing supply. No shorting allowed. Damn.



With MOEX closed I don't know how they're valuing this ETF now. They're possibly using prices from other exchanges. It's also likely that this asset is closed for trading and thus becomes "stranded" until the international sanctions are lifted.

 

[rederob]

Blood dripping as it breaks below medium term trend channel:

Needs to pick up another UAV engine contract to get a bounce.

 

[rederob]

Now safe to handle: