I entered long at €11.48 on January 13th and exited at €12.32 on the 21st for a gross gain of +7.3%. I'm happy with the entry I took since the trend was up, the index's bias was up and the drawdown has been minimal (it lasted just one day). My mistake has been closing the trade too soon. Waiting for confirmation of no demand (candle 10), would have kept me in. Also, from a VSA perspective, no demand in an up-trend doesn't trigger an exit until the background, as in this case, is still strong. I'm not satisfied with my decision also because my intention when entered in this trade was to keep it going until I would have more than one sign of weakness, since it is important riding a trend and avoid too much trading due to costs. This is an aspect I will pay more attention next time and a weakness in my trading that I must overcame.
This morning I closed my position on Moncler (MONC.MI) at 12.32 for a gross gain of +7.3%. The reason is that yesterday's candle showed again weakness at these prices, and a retracement could be underway. I wanted to keep this position longer, not because I'm particularly enthusiastic about this stock, but because I don't want to be such an active trader. Costs kill much of the possible returns, and entry/exit timing can't be perfect simply because movements can't be accurately predicted, you can just have an idea about when risk/return favours a certain position. I probably wouldn't close the position on Moncler only for this lack of demand sign. What made me cautious has been the index behaviour. Last two days we saw increasing volumes on narrower spreads: sellers entered at these prices. Also, tomorrow there is the ECB press conference on quantitative easing, so I opted for the conservative choice. (Detailed technical analyses on Moncler and the FTSE Mib).
FTSE Mib closed today off its highs on high volume. This means that there could have been some selling at these prices and a retracement could start from here. The situation is slightly different on Moncler (detailed technical analysis here) and Unicredit (detailed technical analysis here), although the conclusions are the same. Today Moncler closed higher but the spread of the candle is narrow, the volume is low and the candle closes off its highs. This evidences lack of demand so there is risk that the stock, like the main index, could retrace. The same behaviour had today Unicredit, although the difference here is that today's range isn't narrow. This is something I was expecting (always keeping in mind that "expecting" something in the stock market is a dangerous thing to do), and it is "natural" for a genuine rally to test the presence of subjects willing to sell at these low prices before marking them up. The risk is that selling could be too much and the accumulation phase last longer. This could be the case would the S&P 500 keep falling since the FTSE Mib is often affected by the US market.
Yesterday saw two different behaviours for FTSE Mib and S&P 500. First of all let me know that yesterday I reported wrongly the volume on the FTSE Mib, that was increasing instead of decreasing. That means there are still sellers out there (side note: for the sake of transparency, I will let reported the original comment and add the new comment in the technical analysis section). The good thing is that yesterday action was again bullish, which sustain my long bias. The candle went near lows without breaking and closed the day higher on high volume, locking in sellers in the previous day. This is a good action that needs some low volatility confirmation, but it would be safe looking for long positions on Italian stocks. Indeed, I have a long position on Moncler (MONC.MI) that is paying well, although yesterday's volume was very high on a long spread candle. Market doesn't usually like this kind of candles and could test the presence of sellers. A low volume signal in the area 11.34-11.85 would provide a good long entry. What makes me wondering is yesterday's action on the S&P 500. To start looking for long entries on US stocks, I would have preferred a higher closing after that pin-bar. That said, yesterday's candle could hide some buying, so today's action will be important, but sellers are still there. To have a confirmation of the long bias we need a low volume down day. Since there is some mixed signal, I would stay on the sideline for the moment (because of the index's action and because I didn't find a good setup on US stocks I'm watching),
Yesterday's action wasn't good since my position on Moncler entered in red territory, but I think that it's important not to focus on the day-to-day returns and pay more attention to the underlying behaviour of the stock instead. In light of this, yesterday's retracement doesn't invalidate my long bias both on Moncler and on the FTSE Mib. The retracement on the stock was on average volume (and lower than the day before) and stopped in an area that's good for long entries. A test in this area would provide a long signal for those that are waiting on the side line. The action on the index was also good, since the retracement was on very low volume, providing a test in an area of resistance. If today's action will validate it, the long bias in the market would definetly be validated. Here's the complete technical analysis on the FTSE Mib.
Today I bought Moncler (MONC.MI) during the morning at €11.48. Yesterday's candle was a test and I bought the stock anticipating a confirmation (for the test to be confirmed, today's candle should close higher). A safer trade would have been waiting for today's close that, if higher than yesterday, would confirm the test bar. You can find the technical analysis of Moncler here. Today will also be important for the FTSE Mib since yesterday's candle was a test of supply, if today the market will close higher on higher volume this would be a sign of strenght and possible higher prices. You can find the technical analysis of FTSE Mib here.
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