Lessons in Losing Money

LOSING MONEY IN THE STOCK MARKET IS EASY that you may never know what hit you if you are not prepared. Marginal Stock Trader learned that lesson today when he sold 10 shares of Ayala Corporation stock at 265 pesos per share. This was triggered by his stop loss setup of 5% distance below the Minor Bottom of 270 pesos according to his previous post Online Stock Trading Plan Updated. Hence, the decision to exit came sooner than expected.

Surprise move
In the preceding post published yesterday, Marginal Stock Trader still maintained a long on Ayala Corporation stock. There was even a mention of time-stop loss anticipating a sideways market until end of July 2009 based on relevant indicators monitored. Therefore, it is a surprise that the stock managed to fall below Minor Bottom so soon.

Emotions and money
Indeed, emotions can never be detached from money. More so if it is about losing some of our savings diligently accumulated over a period of time we deemed significant. Here is where our stop loss rules should prevail to avert any further loss.

Stop loss rules
Based on Marginal Stock Trader's updated trading plan, our stop loss rules are as follows:

• 12.50 pesos below the entry price, or
• 5% below the identified Minor Bottom of 270 pesos.

Our Ayala Corporation shares has an average acquisition cost of 299 pesos based on our latest post Accumulating Shares of Ayala Corporation. Our nearest stop loss order should have been at 287.50 pesos. But we decided to go beyond that and use the next stop loss dictated by our Minor Bottom. Thus, we must exit anywhere within the conservative range of 257.50 to 270 pesos based on our updated trading plan.

Decision time
Today the price hit 265 pesos that served as the closing price for the day and this month of June 2009. This event activated our second stop loss exit rule.

We sold 10 shares out of 30 shares we have accumulated over the month. We are willing to trade only 20 shares according to one lesson we discussed in a post Marginal Stock Trader Learns By Experience. We said it is important to always have an inventory of 10 shares or 1 board lot of the stock for protection against huge losses.

This means we keep 10 shares forever and we trade the rest. But we decided to just trade half of what we are willing trade, which means selling only 10 shares for now.

New Lesson Learned
Today's trade led Marginal Stock Trader to formulate a new rule for beginning stock traders with minimum number of shares or board lots:

"Always keep a cash position equal to one board lot based on identified Minor Top plus the minimum monthly Average Daily Balance for our BPI Direct savings account linked to our BPITrade account. "

This amount is prepared for extremely favorable and rare entry signals like when the price trades below stop loss level based on recent Minor Bottom.

Buy weakness
At this time, it would have been ideal if we have 3,500 pesos in available cash to take advantage of falling stock and buy weakness.

Outlook
Reading from the Market Watcher Daily Market Summaries for Philippine Stock Market prepared by BPI Trade this June 30, 2009, the keyword is consolidation, even a hint of continuation of current trading pattern. Marginal Stock Trader will, for the time being, follow the rules found in our updated stock trading plan.

Accumulating Shares of Ayala Corporation

AYALA CORPORATION price is so irresistible this month, Marginal Stock Trader needed to hike his stock trading equity for the second time last June 26 by another 3,000 pesos to build a total stock trading equity of 9,500 pesos.

With cash available, he bought another board lot of 10 shares for a total inventory of 30 shares with an average entry price of 299 pesos per share under his stock portfolio.

Date	No. of Shares	Total Cost	Average Entry Price	Comment
6/2/2009	10	3,150	315	Entry price is the highest closing price for this month to date.
6/18/2009	10	2,875	301	Entry point is ex-dividend date.
6/26/2009	10	2,925	299	Week 26 moderately indicated a RESTART. This signal is used to spot when the stock is likely to end its Reaction/Correction and resume its main trend.

Marginal Stock Trader has a total of 8,950 pesos for his stock position and 550 pesos for his cash position that is just enough to cover for the monthly maintaining Average Daily Balance of his BPITrade account.

We still affirm and abide by our decision made in a previous post Long Position in Ayala Corporation based on the signals exhibited by indicators, trend channels, and price support and resistance levels relevant to us.

Have we made a sensible decision? Were the indicators sensitive enough to detect the trend for the next couple of weeks? We will find that out by the end of July 2009 in accordance with our time-stop strategy mentioned in a previous post Developing Day Trading Strategy for Stocks.

Marginal Stock Trader Learns By Experience

MARGINAL STOCK TRADER learned recently by experience that online stock trading with a minimum stock position of one board lot or 10 shares of Ayala Corporation stock requires a different set of rules that may never concern adequately funded stock trading operations.

Among the rules that matter at the marginal level are those relating to:

• monthly maintaining Average Daily Balance (ADB) of our BPITrade settlement account;
• stop-loss and profit-taking considerations;
  
• stock trading strategy.
  

Maintaining Cash Position
Our online broker, BPI Trade, requires a monthly maintaining Average Daily Balance (ADB) of 500 pesos for our BPITrade settlement account with BPI Direct Savings Bank. As a non-ATM deposit account, the BPITrade settlement account earns annual interest according to the amount of daily balance:

• 0 - 499 pesos - 0.000% p.a.
• 500 and above - 1.750% p.a.

Suggested Reading: BPI Trade Settlement Account

Stop Loss and Profit Target
Our stop loss rule based on our updated Marginal Stock Trader Online Stock Trading Plan is as follows:

"Our stop loss rule shall be expressed in a fixed amount of 12.50 pesos per share of Ayala Corporation. We simply subtract the peso amount we specified from our entry price , and exit the trade as soon as prices move down 12.50 pesos."

For our profit target, here is what we have:

"Our profit exit strategy shall be expressed in a fixed amount of 35 pesos per share of Ayala Corporation. We simply add 35 pesos to our entry price, and exit the trade as soon as prices move up 35 pesos."

These rules are useful only when our stock position or the number of shares we maintain is more than one board lot of 10 shares for Ayala Corporation stock.

Here is what may actually happen.

Let us refer to the stock trading transactions found in Marginal Investor post Trading Profits Of A Swing Trader. For his first trade, entry price on February 23, 2009 is 202 pesos per share and exit price on March 27 is 220 pesos. For his second trade on April 1, entry price is 204 pesos and exit price on April 17 is 224 pesos. Marginal Investor boasted of as much as 8% in trading profits.

Profit-taking is good up to that point in April. The problem, however, is that Marginal Investor wanted the same profit target for the third time and waited for an entry price very close to his two previous trades. The price went to as low as 214 pesos on April 21, but he did not enter a trade. The price never looked back and went on to as high as 285 pesos a month later.

The hard lesson is for the beginning online stock trader with only one board lot to play, never trade that one board lot. Keep it as a kind of stock position maintaining balance, or an insurance policy, or a fallback. To be able to trade, make haste to accumulate enough money and buy another board lot.

In fact, this is what Marginal Stock Trader did last June 18, 2009. We increased our trading capital by another 3,000 pesos to have a total fund of 6,500 pesos. On the same date, we bought 10 shares of Ayala Corporation at 285 pesos per share based on tempting entry signals. We now have a stock position of 20 shares and a cash position of 560 pesos with BPI Trade.

Stock Trading Strategy
Like what we said in the previous section, our online stock trading plan will apply to the second board lot of 10 shares equal to one-half of our stock position. This is aligned with our risk tolerance of 50% loss of capital stated in our online stock trading plan.

Marginal Stock Trader has identified his own resistance and support levels based on Minor Top and Minor Bottom. As of June 18, we placed our Minor Top at 317.50 pesos and Minor Bottom at 270 pesos.

Better Strategy and Better Profits
We have improved our online stock trading strategy for the beginning stock trader. This should result to better performance and better stock trading profits.

Online Stock Trading Plan Updated

Marginal Stock Trader is updating his online stock trading plan with this post. Like what I've said before, this exercise is largely a practical application of the expert advise given in PART 2 of the international bestselling book The Complete Guide to Day Trading: A Practical Manual From a Professional Day Trading Coach by Markus Heitkoetter.

MARGINAL STOCK TRADER TRADING PLAN

For the year 2009

Section 1: Financial Goal

Marginal Stock Trader wants to make:

• 150,000 pesos per year
• 12,500 per month
• 3,000 per week
• (see the post Marginal Stock Trader SMART Goals and Plan)

Marginal Stock Trader account size:

• 3,500 pesos for opening balance
• (see the post Make A Living As A Day Trader)

Marginal Stock Trader is willing to risk:

• 50% of his trading capital
• (see the post Long Position in Ayala Corporation)

For more details about the next sections, please see the post Developing Day Trading Strategy for Stocks:

Section 2: Selecting a Market
Marginal Stock Trader will trade the following market:

• stock market
• Philippine Stock Exchange
  
• trading just a single issue, Ayala Corporation stock
• using BPI Trade for online broker
  

Section 3: Selecting a Timeframe
Marginal Stock Trader will trade the following timeframes:

• 10 days
• 30 days
  

Section 4: Selecting a Trading Style
Marginal Stock Trader will use the following approach:

• trend-following for primary trading strategy
  
• trend-fading for secondary trading strategy
  

The underlying idea is:

• for trend-following – when prices are moving up, we buy, and when prices are going down, we sell
• for trend-fading – when prices are trading at an extreme (e.g. upper band of a channel), we sell, and then we try to catch the small move while prices are shifting back into “normalcy.” The same applies for buying.
  

Section 5: Entry Signals
Long Entry:

• Using Simple Moving Averages for trend-following: BUY signal is generated when the closing price moves above the moving average
  

Short Entry:

• Using Relative Strength Index (RSI) for trend-fading: BUY signal is generated when the RSI crosses the oversold-zone from below

Section 6: Exit Signals

• Simple Moving Averages: SELL signal is generated when the closing price dips below the moving average.
• Relative Strength Index (RSI): SELL signal is generated when the RSI crosses the overbought- zone from above.

Profit Target: Our profit exit strategy shall be expressed in a fixed amount of 35 pesos per share of Ayala Corporation. We simply add 35 pesos to our entry price, and exit the trade as soon as prices move up 35 pesos.

Stop Loss: Our stop loss rule shall be expressed in a fixed amount of 12.50 pesos per share of Ayala Corporation. We simply subtract the peso amount we specified from our entry price , and exit the trade as soon as prices move down 12.50 pesos.

Minor Bottom: As of this date, Marginal Stock Trader has also identified a Minor Bottom at 270 pesos. Should there be any prolonged reaction period and we are caught in a long position, we set our stop loss at 5% below this line at 257.50 pesos.


Related Post:

Marginal Stock Trader

Harami Candle and Trend Reversal

TREND-FOLLOWING can be an exciting task for the beginning stock trader. And when you add watching the Japanese candlesticks on a daily basis for our favorite stock Ayala Corporation, you are in for a great game.

Marginal Stock Trader wants to share with you what he learned about a reversal candlestick called harami, the "pregnant" candle. When we see this on a daily chart following an up or downtrend of more than six days, we are advised to immediately ask ourselves if the Minor trend is about to reverse direction.

The harami candle can occur both after an uptrend or downtrend.

Let us use the trading days beginning June 2, 2009 when our Ayala Corporation stock established a downtrend. In this case on June 9, the day immediately preceding the green harami candle, there is a large, real body red candle. The bears appear to be fully in the driver's seat.


The next day on June 10, however, a small real body green candle appeared within the larger real body. This is the harami candle. It was said that the reversal signal is more potent if it is the opposite color -- like the one we have on June 10 -- as this color change shows that the decline has stalled. The bulls are now on strong ground and are engaged in a struggle for power with the bears.

We are told also by those familiar with candlestick charting to always look carefully at the next day's candle, the one that follows the harami candle. This refers to the one on June 11, last trading day of Week 24.

The experts cautioned that sometimes harami merely signifies that the stock is entering a period of consolidation (meaning that the shares will trade sideways). If, however, our Ayala Corporation stock advanced the day after the harami candle takes place, then there is an increased likelihood that the shares have put in a Minor bottom.

Indeed, this is what happened on Thursday: the stock advanced. The 297.50 pesos open equals the low and the 307.50 pesos close equals the high. Listening to those skilled in this field, then we should be alert to a change in trend.

Outlook for Week 25
Here is Marginal Stock Trader's beginner's forecast for trading period June 15 to June 19, 2009. Since the Ayala Corporation stock we are following is currently in a short-term downtrend, then today's advance following the harami candle of the previous day warns of an impending period of sideways trading, or perhaps reverting back to its Major trend: an uptrend.


Data Source
Philippine Stock Exchange through online broker BPI Trade

Suggested Reading

Harami: This Candle Can Help Nutrure Your Profits
Stop-Loss: How To Use It In Trading

Ayala Corporation Trend-Following Update

PRICES ADVANCED MODERATELY from open to close and buyers were aggressive in today's trading of Ayala Corporation stock. The close of 297.50 pesos is greater than the open that also equals the low of 292.50 pesos.

Buyers controlled the price action from the first trade and bid prices higher. Sellers, however, forced prices down from the high of 300 pesos by the end of the session. Consequently, today and yesterday's high and low are identical, which effectively prevented a gap down. In addition, the stock's high/low range of 5 pesos is somewhat narrow.



But check this out. Compared to the volume of 899,562 recorded in May 29, we now see a high volume decline that still means a bearish confirmation. Current volume traded was placed at 103,650 shares. The last time that we had a lower volume was 7 weeks ago on April 23, 2009 with 69,650 shares.

Outlook for June 11, 2009
To be honest, trend-following on a daily basis is not easy. In other words, it is quite hard. Admittedly. Even harder is to make an assessment and a forecast of what may happen in next day's trading. Marginal Stock Trader just tried this one week of trend-following exercise and learned a lot. The hard way.

Now, what is in store for tomorrow? Coming from a greenhorn in candlestick charting, we reckon that the pattern at hand is a bearish harami with respect to our existing uptrend. According to interpretation available from experts, we may expect sustained increase in selling pressure for this week's remaining trading days.

But here is the catch. If we would consider the last couple of days for our short-term forecast, then what we have instead is an existing downtrend to reverse. Thus, our pattern could also be interpreted as a potential bullish harami. This signals that significant selling pressure remains and could indicate capitulation followed by sudden increase in buying pressure and potential reversal in the next 1 or 2 days.

Data Source: Philippine Stock Exchange through online broker BPI Trade




Marginal Stock Trader would to like to share with you a comment we received through an email:

From: Jun
Date: Tue, Jun 9, 2009 at 12:19 AM
Subject: Online Stock Trading
To: microbusinessman@gmail.com


Hello Sir. I'm Jun. I work as an engineer at the Laguna Technopark.
Recently, I got interested in investing in the stock market. Actually po nag-apply nko
for an account at BPITrade waiting for approval nalang. Once, I was browsing the
web for tips regarding day trading, I happen to pass by your Marginal Stock Trader blog.

I will constantly check your blog for new post from now on, and read all your previous posts,
I find it very helpful.

I'm initially investing maybe 20k and try my luck at day trading, hopefully with the help
of your blog and dozens of others, I can also learn and earn from the stock market.

Sincerely,
Jun

Thanks Jun for the email. Your comments are much appreciated.


Suggested Reading

Candlestick Bearish Reversal Patterns

Marubozu Candlesticks Green and Red

SELLERS CONTROLLED THE PRICE ACTION from the first trade to the last trade on June 9, the second day of Week 24. The Ayala Corporation stock's 300 pesos open equals the high and the 292.50 pesos close equals the low.

Here is an example of a Marubozu. This candlestick do not have upper or lower shadows and the high and low are represented by the open or close.

Support level breach
Strong selling pressure is now clearly noticeable and is demonstrated by the break out below our 300 pesos support level. In addition, prices declined moderately from the open and sellers were more aggressive this time. Although we are waiting for a gap down for confirmation, we still think this day may foreshadow a turning point or mark a future resistance level.



Outlook for June 10, 2009
Selling pressure overwhelmed buying pressure for five days now within our trading range. But it remains unclear whether or not sustained selling or lack of buyers will continue to push prices lower. A gap down, long red candlestick or high volume decline means bearish confirmation.

Learning About Candlestick Charts

CANDLESTICK CHARTING has its own unique language and terms like Marubozu, Spinning Tops, Doji, Harami Position, Hammer, Hanging Man, Shooting Star and a more. Understanding their meaning, including a feel of the emotions involved, may give us a better insight about some ways we can be play the stock trading game.

Marginal Stock Trader became aware of candlestick charts only for a couple of weeks. Thus, his familiarity with it maybe described as superficial at best. Nevertheless, let us see how a novice can use this technical analysis tool for his day-to-day stock trading operations.

For Week 24 covering the trading period June 8 to June 12, our general outlook is to take a long position in Ayala Corporation. Please read our previous post Japanese Candlesticks for Stock Trading for more details.

June 8, 2009
Ayala Corporation open equals the high of 305 pesos and the close equals the low of 300 pesos. This indicates that sellers controlled the price action from the first trade to the last trade.

The stock traded at 305 pesos for over an hour until 10:10 a.m. The next 15 minutes of trading was at 302.50 pesos. And from 10:25 a.m. onwards, the price stayed at 300 pesos.

Trading range was narrow at 5 pesos and is equal to 2 fluctuations. Main number of trades was placed at 89. It looks like both sides - buyers and sellers - are positioning themselves for the next move. That includes Marginal Stock Trader who bought 10 shares at 312.50 pesos last week.

Learning by experience
Admittedly, Marginal Stock Trader is just very new to this candlestick chart. Nevertheless, we would like to write about how we are applying this tool in our online stock trading so we could learn some hard lessons by experience.

Trading range
By our own reckoning, we consider the trading range to be somewhere between 300 pesos (support) to 315 pesos (resistance). A break above 315 pesos is a victory for the bulls (demand) and a break below 300 pesos is a victory for the bears (supply).

Price fluctuation
In terms of price fluctuation, we would consider 5 pesos to be narrow, 10 pesos is somewhat wide, 15 pesos is wide, and 20 pesos to be very wide.

Outlook for June 9, 2009
Based on experience of recent weeks, we would say the trading range is good for 6 to 8 trading days, then price breaks out above the trading trading range. This break is usually indicated by a gap up, or sometimes by a wide price fluctuation. The trendine is consistently upwards for the past weeks. But we also know that today's close, as well as last week's closing prices, is already approaching the 52-week high for Ayala Corporation. In addition, the stock is approaching the current resistance level, hence an alert to look for signs of increased selling pressure and potential reversal.

Our data source is the Philippine Stock Exchange through our online broker: BPI Trade.

Japanese Candlesticks for Stock Trading

JAPANESE CANDLESTICKS or candlestick charting is a tool for technical analysis that can provide us some useful insights into market moves suitable for purposes of our online stock trading.

Marginal Stock Trader decided to play around with candlestick charting for his online stock trading activities starting May 18, 2009.

WEEK 21

May 18, 2009

• closing price equals the low of 255 pesos
  
• close is lower than its opening price of 260 pesos
  
• little price movement and may represent consolidation
• most of the trading action was confined near the open and close
• sellers controlled the price action from the first trade, dominated during the session and drove prices lower though buyers later resurfaced to bid prices as high as 262.50 pesos
  
• high - low range is 7.50 pesos
  

May 19, 2009

• opening price equals the low of 260 pesos and the close equals the high of 267.50 pesos
  
• close is higher than close of previous day
  
• buyers controlled the price action from the first trade to the last trade
• prices advanced from open to close showing strong buying pressure indicating buyers were aggressive
• high - low range is 7.50 pesos, same as first trading day of Monday

May 20, 2009

• open equals the low of 270 pesos
• close of 277.50 pesos is higher than its opening price and the close of previous day
• buyers controlled the price action from the first trade and bid prices higher though sellers later forced prices down from the high of 285 pesos
  
• high - low range is 15 pesos
  

May 21, 2009

• close equals the low of 275 pesos
• close is lower than its opening price of 277.50 and the close of previous day
  
• little price movement and may represent consolidation
• most of the trading action was confined near the open and close
• sellers controlled the price action from the first trade, dominated during the session and drove prices lower though buyers later resurfaced to bid prices as high as 282.50 pesos
  
• pattern is similar to May 18 but with higher prices for open, high, low and close, as well as a narrower open - close range of 2.50 pesos
  

May 22, 2009

• conveys a sense of indecision or tug-of-war between buyers and sellers
• closed lower than Wednesday and Thursday but higher than Monday and Tuesday
  
• prices move above and below the opening level during the session, but closed at the same opening level of 270 pesos
  
• neither bulls nor bears were able to gain control and a turning point could be developing
• high - low range is 7.50 pesos
  

Outlook for Week 22

• sellers were unable to overcome the higher bid prices of buyers resulting to higher closing prices of Tuesday and Wednesday
• sellers took Monday and Thursday but then Thursday prices were higher for open, high, low and close compared to their Monday trading
  
• Friday trading is a standoff and conveyed a sense of indecision or tug-of-war between buyers and sellers
• the trend is upward, buyers were aggressive during the week and overall controlled the prices for the week, but then sellers were always waiting for their turn
• BUY WITH CAUTION, look out for possible consolidation and turning point
  

WEEK 22

May 25, 2009

• close equals the low of 270 pesos and the close of last trading day May 22
  
• close is lower than its opening price of 272.50 pesos
  
• little price movement and represent possible consolidation
• most of the trading action was confined near the open and close
• sellers controlled the price action from the first trade, dominated during the session and drove prices lower though buyers later resurfaced to bid prices as high as 275 pesos
  
• pattern is similar to May 21 but with lower prices for open, low and close
• narrow high - low range of 5 pesos
• BUY TOMORROW if prices hit below 270 pesos
  

May 26, 2009

• open equals the high of 275 pesos
• close of 265 pesos is lower than its opening price of 275 pesos
  
• sellers controlled the price action from the first trade and drove prices to a low of 260 pesos
  
• buyers later resurfaced to bid prices higher by the end of the session but still ended with a close of 265 pesos
• BOUGHT 10 shares of Ayala Corporation early at 265 pesos per share for a total cost of 2,675.26 pesos
  
• high - low range is 15 pesos
  

May 27, 2009

• open equals the low of 270 pesos
• close of 275 pesos is higher than its opening price and the close of previous day
• buyers controlled the price action from the first trade and bid prices higher though sellers later forced prices down from the high of 282.50 pesos
  
• potential bearish reversal
• sudden and sustained increase in selling pressure was indicated
• high - low range is12.50 pesos

May 28, 2009

• open equals the high of 275 pesos and the close of previous day
  
• close of 272.50 is lower than opening price
  
• little price movement and represented consolidation
• most of the trading action was confined near the open and close
• sellers controlled the price action from the first trade, dominated during the session and drove prices to a low of 270 pesos
  
• buyers later resurfaced to bid prices higher but still ended with a close of 272.50 pesos
• narrow high - low range of 5 pesos
• SOLD 10 shares of Ayala Corporation at the high of 275 pesos with net proceeds of 2,713.22 pesos, yielding a net profit of 38 pesos and exceeding our profit target of 30 pesos for each board lot of 10 shares

May 29, 2009

• results of this trading day is almost totally unexpected save for reinforcing the validity of our upward trendline for the stock
  
• open equals the low of 272.50 pesos
• close of 287.50 pesos is higher than its opening price and the highest for the past 10 trading days
  
• buyers controlled the price action from the first trade and bid prices higher but sellers later forced prices down from the high of 297.50 pesos
  
• wide high - low range of 25 pesos
  

Outlook for Week 23

• prices continue trending upwards
• buyers remain in control of the overall direction though not as aggressive
  
• high - low ranges varies from a narrow of 5 pesos to a wide 25 pesos
• further consolidation and reversals may still be possible
• BUY at the first opportunity and prepare to have a long position in Ayala Corporation
  

June 1, 2009

• results of this trading day confirmed the validity of our upward trendline for the stock
  
• open equals the low of 290 pesos
• close of 305 pesos is higher than its opening price and the highest for the past 2 weeks
• buyers controlled the price action from the first trade and bid prices higher but sellers later forced prices down from the high of 312.50 pesos
• wide high - low range of 22.50 pesos

June 2, 2009

• little price movement since most of the trading action was confined near the open of 315 pesos and close of 312.50
  
• buying pressure may be diminishing and the uptrend could be nearing an end
• selling pressure is starting to increase
• a change in trend may be near
• high - low range is 7.50 pesos
• BOUGHT 10 shares of Ayala Corporation at the high of 312.50 pesos per share for a total cost of 3,150.37 pesos since uptrend remains intact and the intention is to have a long position
  

June 3, 2009

• confirmed the downtrend indicated the day before coming from increased selling pressure
• little price movement since most of the trading action was confined near the open of 310 pesos and close of 305 pesos
• sellers were still unable to drive the prices under the Monday low of 290 pesos
• high - low range is 10 pesos
• hence, no decision to sell the shares
  

June 4, 2009

• for the third day in a row, sellers prevailed over the buyers
• little price movement was maintained since most of the trading action was confined near the open of 302.50 pesos and close of 300 pesos
• sellers were still unable to drive the prices under the Monday low of 290 pesos
• high - low range is 7.50 pesos
  
• hence, no decision to sell the shares
  

June 5, 2009

• open equals the low of 302.50 pesos and the close equals the high of 305 pesos
• buyers controlled the price action from the first trade to the last trade
• buyers overcame prior selling pressure but remained unclear whether new buyers will bid prices higher
• downtrend of the past three days was broken
• existing uptrend in place for three weeks remained valid
• hence, no decision to sell shares
  

Outlook for Week 24

• existing uptrend will remain intact
• selling pressure will be diminishing with buyers getting more aggressive
• sellers will still make attempts to force prices down from their highs
• wider range of 5 to 20 pesos for high - low prices may occur
• closing prices may approach our support level or the primary trendline of our trend channel organised some weeks ago
• TAKE A LONG POSITION in Ayala Corporation
  

Suggested Reading
Introduction to Candlesticks. (2009) In Stockcharts.com

Retrieved June 5, 2009, from
http://stockcharts.com/

Candlestick Bullish Reversal Patterns. (2009) In Stockcharts.com

Retrieved June 5, 2009, from
http://stockcharts.com/

Ayala Corporation Declares Cash Dividend

AYALA CORPORATION (AC) Board of Directors, at its meeting held 04 June 2009, has approved the declaration of regular cash dividend.

Ayala Corporation will pay regular cash dividend of 2.00 pesos per share for the first semester ending 30 June 2009, the company said in a disclosure sent to the Philippine Stock Exchange after the board meeting.

Marginal Stock Trader remains firm on his decision to have a long position in Ayala Corporation stock this month of June 2009 even after the dividend declaration.

Our trendline moving upwards established almost a month ago remained intact despite the lower closing prices of the past two days. The downward closing prices are still above the primary and secondary lines of our trend channel.

Related Post
Long Position in Ayala Corporation

Long Position in Ayala Corporation

Marginal Stock Investor decided to have a long position in Ayala Corporation (AC) this June 2009 awaiting dividend declaration from the company.

A definition of long position found in the Merriam-Webster Online Dictionary is: "owning or accumulating securities or goods especially in anticipation of an advance in prices."

This decision is a little bit difficult to make since we are using the strategies designed for day trading.

You may recall we have said elsewhere that because of the rule provided by the Philippine Stock Exchange and our online broker BPI Trade - we may just be a similitude of the stock day trader, but more like the swing trader.

Nevertheless, here are some reasons why Marginal Stock Trader is now long on Ayala Corporation:

• stock price is trending upwards for over a month since May 2009;
• closing price on June 1, 2009 is above the 10-day moving averages for the two week period of May 15, 2009 to May 29, 2009;
• stock price high of 312.50 pesos on June 2, 2009 is still at a discount close to 50% compared to that when Marginal Stock Trader first invested in this issue sometime in February 2007 over 27 months ago .
  

Was the decision to buy 10 shares of AC at 312.50 pesos per share based on folly or wisdom? Let us find out after Marginal Stock Trader have sold the AC stock in a couple of weeks.

Reference
"long." Merriam-Webster Online Dictionary. 2009.

Merriam-Webster Online. 4 June 2009

Related Post
Ayala Corporation Stock Investment Update