From the Trading Desk

AIRM 3-5-02 to 5-29-02

AIRM was not a huge winner but the chart was near-perfect to perfect and that produced an excellent gain in a short amount of time. What I want to point out about this stock is that I had to wait a whole month before the prize was realized. I continued to hold the full amount as the BOP stayed green to max green the entire way. That helped give me confidence that the trade would work out. It was a good thing I held on because I did not add to the stock on 4/16. I am not sure why but I believe it was because of the weaker close. However, I think it could have been a mistake (maybe I went drinking that day; I was still partying hard then). In a short two months and three weeks AIRM was able to produce a 50% gain. Both of my large sells are posted below (my biggest sell came at the top as a climax top was clearly made, after such a long uptrend in a bear market, with the huge surge in volume).

the buy:

airm3_5_02__Large_.PNG

the top:

airm5_15_02__Large_.PNG

airm5_29_02__Large_.PNG

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Comments

  1. starling Hunter says:

    Josh, as I look at “the buy” I note that March 05, 2002 was the breakout day. From my examination of the chart, this was an all time record for daily volume and the price went up almost 13%. I recall that your frequent statement that you don’t trade intraday. Was this true back in 2002? I wonder if you actually bought on March 5th or the next day. This is of interest because I note that there was a reversal the next day of nearly 8%. If you bought on March 5th (and at the wrong price) you could have been pushed out the next day. It would be interesting to know a little more about how you handled this buy.

    What I also find interesting is that despite the a lot of green BoP in this chart in the days and weeks after the March 5th breakout (including a lot of max green) it took almsot 40 days for “the prize” as you put it- a 9.1% uptick on April 16th.

    I think a less savvy trader- one who did not know how to read a chart or understand the importance of so much green BoP- would have had second thoughts about this trade given that it basically went sideways (and often on very low volume) for 6-7 weeks after the initial buy.

    Finally, could you explain why this was a climax top. I see that there was a gap-up on 5/29/02. But is one day of a gap-up enough to make a “climax top” or were there other things that you took into consideration?

  2. I think a less savvy trader- one who did not know how to read a chart or understand the importance of so much green BoP- would have had second thoughts about this trade given that it basically went sideways (and often on very low volume) for 6-7 weeks after the initial buy.

    response in caps for visual purpose:

    AMEN AND THIS IS WHY MY RETURNS ARE SUPERIOR TO ALMOST ANYTHING YOU WILL SEE BEING DONE OUT THERE ON ANY WEBSITE. MOST PEOPLE SIMPLY DO NOT HAVE THE PATIENCE TO HOLD A STOCK AND WAIT FOR IT TO WORK. BUT AS YOU KNOW AFTER BEING A SUBSCRIBER FOR SO LONG. I DO THIS ALL THE TIME. IT ISN’T JUST AIRM. I HAVE BOUGHT A TON OF STOCKS, THEN BEEN FORCED TO HOLD AS THEY MAKE ANOTHER BASE, ONLY TO BE REWARDED…AND SOMETIMES DISAPPOINTED. IT IS THE NATURE OF THE GAME. THIS IS WHY I SAY DON’T LOAD UP ON A CHART UNLESS IT IS PERFECT. THIS ONE WAS AND IT DID TAKE A WHILE TO WORK BUT IT WAS WORTH HOLDING. IT IS NOT MY FAULT OR PROBLEM THAT MOST TRADERS HAVE NO VISION AND THEREFORE WILL NEVER BE ABLE TO HOLD AND TAKE THE GAINS I TAKE.

    TO BE HONEST IT IS ALL ABOUT THE INDIVIDUAL. 99% THAT TRY TO DO WHAT I DO FAIL. THIS IS THE BIGGEST REASON WHY.

    STARLING, ONCE AGAIN, LOOK AT AN ARITHMETIC CHART AND ONCE AGAIN LOOK AT THE VOLUME!!!!!!!!!! IT IS CLEAR IT WAS A CLIMAX TOP. HUGE PRICE GAP HIGHER AFTER SUCH A HUGE!!!!!!!! GAIN ON THE BIGGEST VOLUME EVER. WHY ARE YOU ASKING THIS QUESTION? :)

    As for the first part of the question: I saw nothing wrong with this stock. Did it close below the 50 dma? Did it close below the low of the b/o day? then what is the problem?

    Once again, by NOT trading scared, this is why I do better than almost everyone I have ever met.

  3. Also don’t measure the top by where I bought. Measure the climax top from the start of the uptrend. Focus on that long term view. Not from where I bought it. If you only look from where I bought it it wouldn’t seem that “climaxy.” However, due to prior run it was CLEARLY putting in a possible climax top.

  4. Several helpful points here Josh, and in the chat

    1) be sure to look at arithmetic charts, especially when gap-up’s are present

    2) don’t take the definition of gap-up too literally/strictly… “See the forest for the trees”

    3) Pick the right reference point for considering a thebeginning of a climax run, and never neglect to consider volume (especially record volume) when doing so.

    4) as in other areas of life, patience is a virtue.

  5. On point three, I meant beginning and “end” of the run.

  6. Yes, starling.

    You are a brilliant man and I am very happy to see this area being used the way you are using it in your classroom. I am very happy and I hope all those fine young students are getting a great lesson from you.

    Keep on fighting!

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