Stock Trading Predictions & Technical Analysis: TIVO - Failed Reversal and lesson learned

Wednesday, October 28, 2009

TIVO - Failed Reversal and lesson learned

TIVO - WAIT

Today, TIVO failed to bounce back up after I indicated an inverted hammer pattern. Therefore, TIVO gave us a SELL SIGNAL, and pulled back towards its support level of $11.00, going as low as $10.89. TIVO could still go as low as $10.50, before bouncing back up over its 50 day MA. A close below $10.50 would give us a STRONG SELL SIGNAL. I think at this point based on TIVO's chart alone, it should stabilize very soon and perhaps trade more narrowly. However I would wait before doing anything, based on the Dow's chart, and I would wait to see the market bounce back up before making any moves, even if at this point TIVO doesn't look like it has too much more downside but we never know.

For my part, my stop loss got triggered and all my shares were sold at $11.50 at practically no loss but also with no gain. I've learned a good lesson from TIVO today and the latest trading strategy I've been trying to apply. I was up just over +10.00% last Friday, but exited with 0% of that gain. I did not foresee such a harsh pullback in one day that happened on Monday. I now believe that despite seeing the possibility of a pullback at $11.50, I made the mistake of assuming it would automatically bounce back up. Although this will happen at times, I have to realize just like everyone reading here that I cannot predict the future and I will not always be right. Therefore after losing this +10.00% gain, despite exiting with practically no loss, I shouldn't have sacrificed the entire gain. I believe that whatever gain you have, you should not sacrifice more than 5%, when your up just 10% or 15%. I think the moment your up 20% or more you may increase your stop loss to -7.00% to -8.00%. The truth is despite being disciplined and not taking losses of more than -7.00%, I did take an artificial loss of my gain of over -7.00%, and usually such a pullback should indicate that it will or could fall even lower. I will updating my "Y-Swing 2.5" trading strategy, and fix this issue regarding exiting a position.

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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.