We are going to give China Medical (te/CMED">CMED) another try on the long side. Volume is non existent in this market so it is impossible to trust any moves, but this stock was absolutely hammered once they did their convertible announcement [Aug 12: China Medical Announces Convertible Debt Offering] and now will have a standing short position sitting in there (shorting common stock versus convertible holding) so we'll see if CMED can move up into that. But we have a nice low risk entry on the chart.
I don't know what is going on with these charts of late but they continue to disagree on stockcharts.com with what I have in other sources - the 200 day moving average is $44 (not $42) and with the stock hanging around there for a week and a half we have some minor bounce right here. So we'll increase exposure up to 1.3% allocation in the $45.20s and see if it can hold; I'd like to see a move over $48 to be convinced. If the stock breaks below $44, we can be out with minor damage. Further, this fits with my "buy the dip and not the breakout" mentality which seems to be the main money making methodology of late. But frankly the pickings remain slim and I feel little confidence buying anything and believing the move will hold for more than 2-4 days. We're so heavy into cash and cash equivalents, I'm just tossing this low risky entry in and see if it sticks to the wall.
I just cannot stress enough how short the timeframes are for winning trades now - anyone who bought the natural gas "trade" yesterday or 2 days ago on Gustavo is feeling a world of pain right now as it already reversed. This is simply a daytraders market or at most 48 hour holds for most positions. Totally outside our domain so hence this is why we are basically sitting on our hands and heavy in cash. Until we can systematically make money, actually holding a position for more than 48 hours all we would be doing is racking up huge costs trading in and out every 48 hours. Just doesn't work that way for a "fund" versus a personal account. Even the biotechs, everyone's favorite a few weeks ago, have been slammed for 2 weeks straight. So our leadership is extinct. There is no sector that is working consistently and hence nothing to over allocate into. It is death by a thousand cuts type of market and it will frustrate because you see the market going up but half your positions are down each day. Then vice versa. The only people getting rich off this market are brokers handling the trades of people chasing here, there, or everywhere trying to squeeze out any mindless trade. Better to be patient and wait for an opportunity that presents itself. I see very little appealing.
[Aug 5: China Medical - Back on Track; Valuation Should be Higher]
Long China Medical in fund and personal account
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