This is the seventh episode of our EquiTalks program. Today is Thursday, March 14, 2019.
Is this the first time that you’ve heard me talk about the EquiTalks?
EquiTalks is a program where I’m discussing one specific stock. I give you my technical analysis, my overall sentiment, and my trade setups or recommended plans of action, regardless if you already have a position on this stock or you’re still in the planning stage.
By the way, EquiTalks is produced into three different media. If you’re watching this, then this is the EquiTalks Video. There’s an audio version for those who prefer listening instead of watching called EquiTalks Audio.
For those who are not visual or auditory learners, we have the EquiTalks Note for you. Where will you find those three media for the same discussion? Visit our website www.equilyst.com and click on Learn.
In today’s episode, I will be talking about BHI or Boulevard Holdings, Inc.
There are no new dividend announcements yet for BHI for 2019.
BHI Stock Chart
As of the time of speaking (1:52 PM), BHI is trading at 0.076 per share. It’s a red candlestick.
Volume, although we aren’t done yet with today’s trading, is almost above the 10-day volume average for BHI.
What does that mean to me? If I see a red candlestick and the current volume is already equal or above the 10-day volume average, that means traders have seen something that catapulted them to join the panic selling. There’s a demand to sell.
If it’s a red candlestick and the volume is relatively low, say it’s below 50% of the 10-day volume average, then that means traders are just shrugging it off.
Volume at the Brink
In this case, it’s a red candlestick, and there’s a strong demand to sell the stock because today’s volume is already at the brink of crossing above the 10-day volume average.
On the other hand, the shorter-term moving averages are still hovering the longer term ones though it’s a red candlestick. Meaning to say, BHI is still bullish in the short-term and long-term time horizons.
If you are trading the name, don’t just focus on the position of the price relative to the position of the moving averages in terms of deciding on whether or not you’re going to sell.
I suggest that you only use the correlation in determining and finding out the overall bearishness or bullishness of the stock. But don’t focus solely on it to decide to sell.
So what should you do then? I suggest that you use a trailing stop loss. Once it hits, then you decide whether you will sell in tranches or sell everything in one go. That’s your barometer, trailing stop loss.
Reading the Minds of BHI Traders
Another method is by checking the position of the major support or the immediate resistance levels. Where is BHI right now? The immediate support of BHI is positioned near 0.0649; the immediate resistance is positioned near 0.08.
Observe this. When the price drew closer to the resistance near 0.08, selling was entertained. Have you heard of analysts who said you buy on dips and sell near resistance levels? So this is one example of that.
Traders bought BHI near this level when it was consolidating — moving in a topsy-turvy manner — close to the support at 0.065. When BHI was trading near that support level, that’s when the traders entered a new position.
When the price drew closer to the resistance, that’s when they decided to lock in some profits.
By just observing the position of the price relative to the whereabouts of your support and resistance levels, you can already peep into the minds of the traders.
In other words, the position of the price is a mirror of the psychology of the people trading the stock.
MACD Remains Bullish
Of course, MACD will remain bullish because the price has been going up since the last week of January. Now, a single red candlestick will not make the MACD line dive below the signal line.
BHI has to register a few more daily red candlesticks for the MACD line to cross below the signal line unless BHI would close below 0.065 today. If that will happen, we will see MACD moving below the signal line by the end of trading.
That’s not impossible; it is still a valid probability. That’s why I strongly recommend the usage of a trailing stop loss.
For the risk level of the stock, BHI already has a high-risk level. How did I know? Its volatility score is already at 89%.
How do you know if it’s high, moderate, low or extremely high by just looking at the volatility score? I’ve come up with some range of measurements for me to identify the risk level of a stock based on my personal studies.
Risk Level according to historical volatility:
- Low-risk level = volatility score is below 50%
- Moderate-risk level = volatility score is 51% to 70%
- High-risk level = volatility score is 71% to 100%
- Extremely high-risk level = anything above 100%
Price-Volume Distribution Analysis
Let’s take a look at the price range/s that got the highest number of trades and the biggest volume.
Why is it important to identify the range that got the biggest volume and the highest number of trades?
Price-Volume Distribution analysis is so important because this is a better way of knowing what traders are thinking about the stock. Are they positioning themselves near the intraday low, near the intraday high, or at the middle near the VWAP?
When I say positioning, I am referring to whether they are buying or selling. How would you know?
If you would like to buy or sell BHI today, for sure one of the many questions you would like to ask me is, “Jaycee, where should I buy? Do I buy at any price I see on the Ask spread? Should I be conservative and position at the cheapest price?”
A better way for you to position yourself in a more strategic manner is to identify the price points that got the biggest volume and the highest number of trades.
If a certain range gets a huge percentage of today’s volume and the highest number of trades, there is a high probability for the traders to keep on positioning their transactions within that range.
You have to find out where they flock, what is their go-to prices. Which price points are so in demand that most people buy or sell within that range? So that’s a strategic way of buying and selling.
Peso-Cost Averaging is 50% Good and 50% Bad
If you have attended my seminars-workshops or if you have gone through previous EquiTalks episodes, I’ve been saying that the concept of the Peso-Cost Averaging (PCA) is a good one.
PCA is buying regularly at any price. I like the definition by 50%; the other 50% I hate. I like buying at regular intervals, especially when it comes to long-term investing.
But, regardless, I do not buy at any price. I look for specific price points where the biggest volume and highest number of trades are registered. That’s where I position myself because by doing that, my potential earnings could be higher than those who buy blindly at any price.
For example, why would I buy at 0.08 (say, BHI is doing well today)? Not because BHI hit 0.08 per share today, it means I should park my buying price there. No!
Advantages of PVD Analysis
I see on my Price-Volume Distribution analysis that the range between 0.075 and 0.079 got the biggest volume and the highest number of trades. I have filtered the price points that I just need to monitor now.
I don’t have to monitor everything from the intraday high to the intraday low. Instead of monitoring every single price point or fluctuation, I have limited to just five price points.
This price monitoring through Price-Volume Distribution analysis applies not only for a stock that’s going down. It also applies to stocks that are going up. This particular strategy is not price-direction sensitive.
I’ve written nearly 5,000 articles both on my personal website and www.equilyst.com — giving proof upon proof just so you can visually see why it makes more sense to park your buying or selling transactions within the range that got the biggest volume and the highest number of trades than buying or selling at any random price.
All you have to do is search them on my personal website www.jayceedeguzman.com. There are also a lot of them at www.equilyst.com. You will see lots of stock analyses demonstrating what I have said about Price-Volume Distribution.
I hope you got something from me, not just about BHI but also about some concepts when it comes to buying and selling in a strategic manner.
Buy-Below Price Strategy Is Not Okay
Another thing, I do not like the Buy-Below Price strategy. If your Buy-Below Price is 100, you are technically and literally on your own to decide where you should buy from 99.99 all the way to the lowest possible price that the stock would get. It’s as if it’s okay for you to buy at any price for as long as the price is below 100 or whatever the buy-below price is.
There’s a marketing terminology for that here in the Philippines. When you ask people, “Where should I go if I would want to have my phone repaired or I want to buy new phones?” Most people would tell you to go to Greenhills. It’s a top-of-mind place.
The same psychology in marketing applies to trade and invest. Where do people often go? Imagine these price points as places. We can see that most people who want to buy BHI are visiting these places. What are these places? 0.075 all the way to 0.079.
My Overall Sentiment
I am already bearish. For me, traders seem to have already sucked every single possibility for BHI to go higher. They think that the price is already too expensive beyond 0.08.
With that thought in mind, the traders decided to lock in some profits. And with this towering red volume, specifically above the 10-day volume average, BHI traders are really that convinced that it’s time to sell. Maybe not all the way until it hits 0.60 but the prevailing sentiment is that they are willing to sell.
As always, sentiments change when things change. It’s possible that once the price hits again the position where the price where 10 SMA is positioned, the price would bounce away. That’s one possibility.
It is also possible for the price to rechallenge or retest the support near 0.065.
I also want to point out the intersection between the three SMAs. I am using 10 SMA, 50 SMA, and 200 SMA.
Plan of Action
My recommended plan of action if you already have a position in BHI (I do hope you bought BHI when it hit 0.052-0.06), congratulations! You should have earned some good profits in BHI.
However, if you were one of those newbie traders who bought the stock near 0.08, you should still implement the trailing stop loss so that your losses are limited according to the percentage of risk that you can only handle. That’s what we call calculated risk.
The goal here is not to make you exempted from losses. Everyone experiences losses at some point. I had so many losses. What’s important is that at the end of the day, month, year, or your career in trading, you should be a winner — a net gainer.
Be a Net Winner
In other words, it’s fine to have some losses. Nobody wants to have losses but it happens. No matter how data-driven your strategy is, sometimes, your analysis is being disrespected by the market.
The market calls the shots. What’s important is that you should be a net winner. You should have more wins than losses, that’s what matters.
To minimize your losses, you should apply the concept of using a trailing stop loss. That’s what I teach my clients at Equilyst Analytics.
We are strong advocates of using trailing stop loss here. If you don’t like the concept, tell me how do you manage your risks. You can’t just be very good at spotting those buy signals, your entry points. You should be equally good in identifying your exit points as well. It cannot be one-sided goodness.
If you don’t have BHI yet, you should not buy it yet. I suggest that you wait for the price to draw closer to the immediate support at 0.065.
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