5/11/2018 Markets close slightly higher, and volatility drops again. Weibo (WB) looks like a screaming buy, much like MU was near 47 last week.

Fun Fact #47

Apparently, it only costs 9.5 million dollars to live in a space hotel.  This space hotel should be completed by 2022!  

Source


 

Market Stocks 5_11_2018.PNG

Markets are looking like they are due for a pullback, but until I get confirmation, I’m still bullish.  I’ve modified the “watchlist stocks” section to only being stocks that I have a strong conviction on that are nearing good levels to buy or sell short at.  

I’ve also started writing my book which is exciting.  

The title will most likely be:

What I Learned Watching My Grandmother Trade Stocks: A Beginner’s Guide to Navigating the Financial Markets and Developing Your Trading System” 

I think the book has a nice clickbait title 😀


 

Anyways, today I will be discussing Weibo stock in depth since nothing too interesting happened with the broader market.  I will be reviewing some longer term charts of the indexes tomorrow and/or Sunday.  

WB Daily 5_11_2018.PNG

Above is the daily chart of WB.  I’ve been keeping a close eye on WB since the big earnings selloff on May 9th (2 days ago).  Although WB has broken through the 109-111 support level, I believe there’s a good chance we snap back above that level and resume the uptrend.  I will be buying aggressively in the 100-105 zone, and may start adding on Monday if we move above 109 again.  If we quickly close above 109 again, that would trap a lot of bears due to the false breakout.  This would likely fuel another move higher.

In case I’m wrong and WB doesn’t resume the uptrend, we will get stopped out for a loss somewhere near the 95-96 level.  Our target is somewhere between 132.5-140.  We risk about 5 dollars for a reward of roughly 35, an astounding risk to reward ratio of 7:1.  This means that you can be wrong 7 times and right only once on trades like this, and still break even.  If you’re clever, you’ll argue that volatility drag would make it so that you end up losing money if you lose 7 times first then win once, but don’t tell anyone that or else I’ll look stupid :^).  

The biggest risk here is that the momentum might continue to carry WB down, which would take out our stop loss.  If you wanted to wait for confirmation before buying, you can still get a low risk/high reward entry near current price levels.  

 

WB weekly 5_11_2018.PNG

Here’s the weekly chart of WB.  I’ve drawn a nice big arrow to show that we have been up-trending since 2015.  An uptrend is defined by price making higher highs and higher lows. 

For your viewing pleasure, I measured the pullbacks from the highest weekly close to the lowest weekly close.  Note that I did not include the tails of the candles in my calculations.  

I find it interesting that the current drop from the highs is almost exactly equal to the average drop from the highs before price reverses.  I’m still patiently waiting for WB to drop another 2-5% before adding aggressively.  

 

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