May 2021 Stock Strategy Review

 So I have started a new stock strategy during the month of May, so let's see how it has performed.  

I started May at 163% of my initial investment, and I finished at 179%, so I made 16% ROI from my initial investment.  Not too bad since I was just getting started in the new stock strategy, and since I am not planning on adding any more money to my IRA.  May was a pretty good month.

I am targeting 10 trades a month making 4% per trade.  Including the exponential growth factor, that ends up being 48% per month.  The 16% was the end of the last stock strategy I was using with Humanigen, HGEN stock.  I was heavily loaded in on HGEN, and was holding until the submitted the application for Emergency Use Authorization with the FDA.  If I would have sold the day before, I would have ended up making 40% growth for May.  I learned that HGEN has been following the principle of "buy the rumor, sell the news."  That is where the stock price increases on anticipation of a catalyst and then as soon as it happens, there is a mass sell-off.  I expect the same thing to happen again before receiving EUA in a couple of weeks.  It's not that HGEN is a bad stock.  I will probably buy more the 3rd week of June, but it depends on the price.  HGEN does meet the general qualifications of my stock strategy (see the screenshot).

June is off to a good start with ASTS.  I went all-in on 6/3 for 7.20 and sold on 6/4 for 8.20 and made 14%, but because of the exponential factor, I am now sitting at 203% ROI.  

If you have followed my previous blogs, you might be checking out WINT stock as well.  The Windtree Therapeutic stock went way up on Friday, from 1.99 to 3.40.  That would have been a good one to have, but you never know when a stock is going to go up like that.  However, I think it is strange that two stocks I have been targeting went up quite a bit this week.  That is a good sign that my strategy is picking stocks that have a lot of potential.  I have noticed that targeting 2.5-3.0% less than the open is more successful than 3.5-4.0%, and that makes sense since most stocks have about a 2.5% decline from open all the time.  Not a rule but an average.  I have yet to review the stocks completely for Monday, so I am not sure which one I am going to target.  It could be one of the ones that I have already targeted before.  Maybe HGEN since it has been in a little slump, but I see that one going down some more before EUA is granted.  Also, I am not too keen on ASTS or WINT since both of them had a big spike on Thursday and Friday.  Happy trading!

Investing the Bits and Pieces

 Investing the Bits and Pieces

 

As always, let me preface by saying that this is not investment advice, but this is my plan for investing in stocks.  Here we go.

A big part of my investment plan hinges on two things:

1.            1.  Weekly small wins of 3-5% growth

2.            2.  Exponential growth from reinvesting earnings

I would like to give a real-world example of trades I made this week that illustrate both of these hinge-points.  Since most of my investment is currently tied up in Humanigen  (HGEN), that leaves me with few investment options.  However, most accounts will end up with some cash on-hand available for trading just because it is hard to invest 100%.  I would like to show how investing the bits and pieces can grow that uninvested portion of an account.  It may not be much, but it does make a difference.

 

So I looked for a stock that was at or near its low and selling around $2-3.  I decided on Windtree Therapeutics (WINT) which I have previously traded.  The stock has been in decline since last summer when it hit around $10/share.  But it met my criteria for trading since it hit a 52-week low and would support my growth plan of 5%.  The growth support is derived by averaging the range of previous day lows to next day highs.  If that range supports a 3-5% gain, then I go ahead with the trade even if the stock is in decline. 

WINT stock recent average range will support 3-5% growth since the previous day low to next day high average is greater than 5%.  It is important to target a good leverage entry point, so if my Low-from-Open (LFO) is 5% average, I want to target an entry point that is 4-5% lower than the daily open.  So on 5/12 I entered at $1.80.  It took a big drop on 5/10 and had a low of $1.77 on 5/11, so I thought it was set up to increase.  It is like pulling on a rubber band.  There was tension in the stock price leveraging upward, so I did not want to put a bid in that would likely not be picked up.  It felt like the bottom, so I went in at $1.80 and it was right in the middle from the open.  It bottomed out at $1.78, then it took off, but since I am trading in an IRA, I couldn’t sell the same day as I bought.  But the next day I targeted my 5%.  Good thing I was not greedy!  It sold on 5/13 at $1.89 (exactly 5% growth), then the stock tanked again.  The trade cleared sooner than I thought it would, so I was able to buy again the next day at $1.67.  It closed 5/14 at $1.76, right at my next 5% growth sell price.  No point in being greedy, so I follow the plan.  This stock has some history of not gaining in a day, so I have set my sell price at $1.76 for Monday, and I have confidence I will hit it. 

 

This technique is what I will exclusively use after I sell my HGEN stock.  Waiting around for a parabolic seems to me a waste of time.  I’ve made good money doing it, but I think the low-growth strategy seems more certain and risk adverse.  I was able to make 2 trades in a week, which is twice as fast as my stock growth strategy plan.  That’s ok, but I am not a fan of rushing into things, so one positive trading cycle a week is still success.  Two is the max.  Besides, there isn’t a CD or a savings account out there that can give a 5-10% return a week.  So I’m pretty happy with this strategy. 

 

Regarding the exponential growth, since I only had enough money for 6 shares on the first trade, I then had enough for 7 shares on the 2^nd trade, thus investing a greater portion of my stagnant account.  So in 2 trades targeting 5%, I actually end up making 10.8% off of the original investment.  I am always amazed at the power of exponential growth in trading stock.

 

Thanks for taking the time to read this and, if you trade, I hope you found this encouraging. 

 

-Johnie