So I have done my scans today since it is a long weekend and I wanted to enjoy my Saturday and Sunday celebrating with my friends and family on my new job
This week, as our portfolio has no available cash, we can do the following:
1) Sell weak stocks (IRI I'm watching you closely) to make cash available for new opportunities
2) Scan the market as per usual but just create a fake portfolio and "pretend" to buy opportunities to continue to improve my skills, reading charts and entry signals.
I will personally be watching IRI over the coming week to see how it goes, should continue going nowhere, I will be pulling the trigger on IRI as it has been in the portfolio for 4 weeks with little to no performance. Opportunity cost of a stagnant stock = other possible winners OR losers.
The chart above is SSM - Service Stream, which we bought in on the B/O of $1.25 and sold out at $1.34 for a small 7% profit. When SSM peaked at $1.45, we saw a LOT of supply coming into the market and not just small orders spread across different price points... We saw big supply blockade on the stock's order flow. I have had assistance of another fellow investor who pointed that out to me and I started to investigate it further.. I have crafted my theory that the majority shareholder, Thorney Opportunities Ltd, who owns 25%+ of SSM's listed securities, have been selling down their holding of SSM after holding it since the $0.20 era for profit taking. They have made a KILLING on the stock and I would imagine that they are now trying to release capital to seek other opportunities. From the 23/05 onwards, I was watching SSM's Order flow that it started with one big sell order at $1.45, and then another one at $1.40 and it kept going down. I decided to pull the plug on the trade and wait for the SP to overcome Thorney's profit taking before considering entering the stock again. What happened on the 09/06 at 1.36pm was a sudden plunge of supply which took out all the buy orders and sent the SP down to a low point of $1.16. I'd imagine after 2 weeks since putting the supply block at $1.45, Thorney Opps Ltd got impatient(for whatever reasons they may have) and decided to release capital regardless of price. This occurrence coincides with the coming end of financial year I would imagine, I would further ascertain that this supply block will go away again when we enter into the new FY. We shall see how it pans out..
** Let me know what you guys think about my theory!!
Onto some new opportunities that I have been watching but unable to participate in:
First off, we have RWC which made a B/O on the 08/06 above the $3.45 resistance level and zoom up again on the 09/06 to a closing price of $3.55. On the chart, the green line is where I would be placing my Stop Loss and base my position size on that. RWC is a relative new company to the exchange and they specialise in high quality water flow products used within the plumbing industry and is a market leader. 70% of their sales in generated in the US market (which supports my macro view of a lower AUD/USD in the short-med term). Watching the building approval in the US is a good indicator of how well this stock will perform
Another risk is that they have large customers but only a few of them, should one of them pull out or change supplier, it would adversely affect RWC's earnings.
Another Stock that I have had an interest is in SAR, another gold miner which displayed an entry signal recently. It supports my view that geopolitical risk around the world is increasing and that gold is still the safe haven that people go to in times of crisis. A lower AUD/USD also helps miners/producers keep their margins high. It has been on a downtrend as marked by that big red arrow before consolidating and creating a Horizontal breakout @ $1.10 on the 07/06/2017. If I had capital to take part in this position, I would be doing a half position on the B/O above $1.10 and the other half on the breakout of $1.30.
Between the two new opportunities, I would be going with RWC over SAR - HOWEVER... if by the time I received funds from the sale of weak stock RWC has already run off on high demand, I would then lean towards the one that offers the best R/R. RWC is my bread and butter trade and even if I miss the B/O (which I have already) I will be waiting on the small pull back to enter.
Hope you have a great week ahead of yourselves!!
Regards,
Ryan