Game Plan on $FSLY: Tomorrow and Friday are obviously important days. I want to see how the stock acts around long-term support. The story fundamentally has changed as the company has guided rev. downward due to TikTok loss of income.
WON says in his book and talks about watching for changes to stories. I have a pretty concentrated position in this at 27.6% in my account and an 11% position in the managed accounts. So does this suck? Yes, but thankfully great cost basis helped with the cushioning the blow.
As a result, it was basically engrained in me to never sell a stock because it seems too high-priced but to never argue with the market/tape. So, tomorrow, if the position goes against my support levels, I will reduce or blow it out all together.
At the peak, I had a 58% gain on this stock which is now down to 6% given this drop. But this is an important lesson about why fighting for the best cost possible is CRITICAL if position trading along with proper position sizing.
So, there it all is. No emotion on this. Purely rules. I think this is probably my 20th gap down I have had to go through since I started trading. Yes they suck but remember over time you just become so dead inside and immune to these type of moves and the impact to the P&L.
One last thing on this, another lesson I learned awhile back is that your risk is always to the 50sma. So if you track my trades, you know that I like to initiate there or even below that in the slower moving averages. Thankfully I did, and it saved my ass.
I did the math incorrectly on this weighting of my total accounts. This is a 27.6% weighting of my primary account (most capitalized) but of all my accounts, this is an 18.43% position. Just wanted to clarify this. Managed accounts are still 11%.
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Let’s talk psychology and mental toughness. This game is designed to beat you up. For the most part, this year has been extremely bountiful and it has programmed most into thinking that #stonks only go up. But at some point, they will ring the bell. They always do.
The veterans on this platform can all agree that this year really is an anomaly. These years just don’t happen that often. That’s why it’s up to you have rules and the mental toughness to follow your rules. Rules are easy to design and develop but HARD AS HELL TO FOLLOW.
And then sometimes you get hit with a situation which everyone knows on here that I was in a healthy gain at one point. To me, this is like striking out. @thelagunapadre and I played college baseball together and we probably had more outs than hits.
Lots of folks are saying we need more bases to increase our chances of a successful FTD (which I agree with partially) but that is so not 2020. Anyone remember how many bases there were in April as well as breakouts? I can think of VRTX. (1 of...)
Maybe a few others but there wasn’t much. Point is, the more years and corrections I log doing this, the more I realize that you don’t need a fully formed base to buy a stock on or even before a FTD (when that day comes). (2 of...)
We saw atypical bases structures in April 2020 and were seeing them again now. In both instances, there was significant doubt just before the FTD because there were little to no solid bases and everyone was infatuated with retesting lows (myself included). (3 of...)
When I scroll through the weekly charts of TMLs and leaders, stuff just doesn’t look all that bad. It doesn’t really feel like a top was made. The weekly’s look normal, natural, concerted, and stabilized in their pullbacks. It almost looks controlled in nature.
Here’s what I see: If you compare the selling on the left side of these bases to the TMLs during any Bear Market, it’s like fitting a square peg through a round hole. BUT if you compare these pullbacks to any normal intermediate term correction, it fits really well. See below.
We’ve had excesses meaning, fresh new young money that found it wayyy too easy to make money and caused the markets to blow off. Did retail do that? No, the institutions did. Classic sucker them action and rip it. Remember my tweet on how the indices were no longer pulling back?
Another solid day in leaders but it is clear that the big liquids (AMZN, MSFT, AAPL, GOOGL) are struggling a bit. This in it of itself is causing the to look a little flaccid (couldn't figure out a better word).
This indicates to me that another PB is coming but the key will be how the leaders respond to it. Plus you have that mini gap remaining on the Qs. I have no idea how hard they will hit them but I will be keying in tomorrow for breakdown and support or breakdown & more breakdown.
You play this game one level at a time and one day at a time. As the market shifts, so should your opinion and expectations.
Something to watch for on the weekly charts within TMLs is this 2 weeks down 1 or 2 weeks up action. That sort of action can be indicative of topping or a faulty base in progress.
Good recoveries in these yes but I missed that detail last night in my review.
The saving grace possibly is that these haven't met the usual timeframes of how long it takes for TMLs to top out. (usually 18-22 months). Sometimes, a 2nd or 3rd stage base is built from here.
BUT, I do have some models of TMLs that topped in 18-26 weeks but they are in the minority.
Market Thoughts: We’ve had an unbelievable run since the FTD but I can’t ever ignore or get complacent with how well things have been. This is a pretty classic lockout rally IMO. Constant shake outs to the 21ema on the has frustrated many. (1/...)
But when I see the indices not shaking much anymore, it tells me there might be a big boy pullback coming. Over the years I’ve noticed this phenomena. That very tight tight action on the daily. (2/...)
Couple this with leaders still working on Stage 2 bases as well as EXTREMELY euphoric sentiment readings, the case for it is very possible. Also, now the has a mini cluster of D-Days (4), albeit low. (3/...)