Predicting the unpredictable. Impossible. That is the problem. We can’t predict the future in the market and we can’t predict the future in general. So we can choose to do nothing or we can choose to watch, learn, make educated guesses and adapt.
I am here to show you my methods and guesses. You and I will learn from my mistakes here in public. I may mention my trades, but what is just as important is what I watch. There are thousands of stocks out there, trading every day. I am watching more than I am trading, everybody is. I learn a great deal by watching others make and lose money.
One stock that I have been watching for a few months is ARNA. Art DeSale over at the Art of The Sale blog has been in this stock for a while. Since he mentioned it to me in conversation, I have watched it periodically. If you look at the one year chart, he has done pretty well. He knows that industry so he trades in that industry. I don’t. In the past I have tried trading the Biotechs and I usually lost money. So I watch to learn, maybe to trade another day…
So ARNA ran up to over $11 per share! Look at the 1 year or 6 month chart. You can see “low tide with that wave coming in”. Zoom in to the 1 month chart and you see it roll in and actually pull back. Then look at that 5 day to see the splash! They had some drug approved or something… The news hit and the splash took them up! Yay! So now what? You never know.
The charts we just looked at tell us the trend is up. The news tells us the trend is up. Market wisdom tells us buy the rumor and sell the news. What am I going to do? Nothing. Watch and learn. That is what you need to do most of the time especially in a sector where you have a record of loss.
So I missed making money on this one but I am having fun watching it and learning. The stock market technician in me, tells me that the trend is up. The stock market fundamentalist in me says, FORGET IT! The engineer in me sees the long wave, low frequency stuff but also the high frequency noise. But it is the street wise country boy in me that says look at the big picture and be careful.
Be careful and zoom out. Zoom out to a 5 year chart. Look at the price chart in 2010. The stock had a run up and lost over 75% of its value! Yikes!
So will this time be different? If so why? Or will this time be the same? Why? I don’t know. You never know. You can’t predict the future but you can have fun watching things play out. I am not trading this one but I am watching it to see what I can learn from it for the next time I do trade… I am guessing it will go lower, at some point but that’s a guess. It always is…