Stock Pick (Tat Hong) Part 2
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Share Synthesis
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Picks - Melynn,
Singapore Stocks,
Stock - Tat Hong
3. Exit Point
Fundamentals
- I will sell tat hong when its fundamentals has deteriorate like decline in cash flow, huge 1 time profit that attribute to the net profit and also when , I am no longer optimistic on its growth again.... I will compare the quartely result against the previous quarters and also the annual result too .. Will probably come up with a list similar to the one I come up for entry to decide again. (This will be an exception whereby I will sell off the stock without adhering to my below stop trail set)
Technicals
- Determine the trend using adx... Strong trend if its above 40. When adx begins to strengthen from below 20 and moves above 20, it is a sign that the trading range is ending and a trend is developing
- Set a trailing stop by subtracting three times the value of the ATR from the highest high since I entered the trade.. For this case, the highest since I entered the trade is 0.680 and the stop will be (0.680 - (3*0.028)) = 0.596. Wait a sec, isn't this value similar to my estimated intrinsic value where the decision contradicts each other..In that situation, I will need to re assess the fundamentals. One key idealogy in my system is that I have adopted Soros concept by making an assumption that stock prices affect fundamentals just like how fundamentals affect stock prices(might be over simplifying it) therefore I will cut loss when there's massive sell down and a prolonged downtrend as I believe the fundamentals will be adversely affected.
FUSION
Fundamentals can be thrown in by tightening the trail to a smaller percentage when it is apparently to be over valued or detoriating fundamentals or either give me space when the company's fundamental is intact or a forseeable growth. Following is the table I used to derive the multiplier for the above number..
Overvalued (Current price > estimated value)
<30% variance = 3
>30% variance = 2
Undervalued (Current price < estimated value)
Fundamentals
- I will sell tat hong when its fundamentals has deteriorate like decline in cash flow, huge 1 time profit that attribute to the net profit and also when , I am no longer optimistic on its growth again.... I will compare the quartely result against the previous quarters and also the annual result too .. Will probably come up with a list similar to the one I come up for entry to decide again. (This will be an exception whereby I will sell off the stock without adhering to my below stop trail set)
Technicals
- Determine the trend using adx... Strong trend if its above 40. When adx begins to strengthen from below 20 and moves above 20, it is a sign that the trading range is ending and a trend is developing
- Set a trailing stop by subtracting three times the value of the ATR from the highest high since I entered the trade.. For this case, the highest since I entered the trade is 0.680 and the stop will be (0.680 - (3*0.028)) = 0.596. Wait a sec, isn't this value similar to my estimated intrinsic value where the decision contradicts each other..In that situation, I will need to re assess the fundamentals. One key idealogy in my system is that I have adopted Soros concept by making an assumption that stock prices affect fundamentals just like how fundamentals affect stock prices(might be over simplifying it) therefore I will cut loss when there's massive sell down and a prolonged downtrend as I believe the fundamentals will be adversely affected.
FUSION
Fundamentals can be thrown in by tightening the trail to a smaller percentage when it is apparently to be over valued or detoriating fundamentals or either give me space when the company's fundamental is intact or a forseeable growth. Following is the table I used to derive the multiplier for the above number..
Overvalued (Current price > estimated value)
<30% variance = 3
>30% variance = 2
Undervalued (Current price < estimated value)
<10% variance = 4
>10 % and <20% variance = 4.5
>10 % and <20% variance = 4.5
> 20% and <25% variance = 5
>30 % = 5.5
>30 % = 5.5
I will do a weekly review on the stock to re adjust the stop trail point and as of now, it will be at 0.596. The above adx and stop trail are just used as an example to give myself an idea. The actual atr used to derive the stop trail will be based on the day I purchased the stock...
4. Scenarios
Bull
If Tat Hong surges 20% within a day, will I sell off or cling on to hit.. Answer is that I will stick to my above stop trail. If such a case happen, I assume that there might be a wide divergence between the intrinsic value and current price therefore a tighter a stop trail will be imposed.. Let's say Tat Hong surges to 0.80 and 50D ATR is at 0.028, I will set my stop at (0.80- (3*0.028)) = 0.71. Assuming Tat Hong surge more than 30% more than my estimated value, i will probably sell off my holdings..
Bear
If stock plunges to my preset stop trail, I will try to be disciplined enough to sell off my holdings .
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