This is NOT a stock recommendation. I am only sharing my data-driven insights on MEDCO Holdings, Inc. (MED). You can use my insights in conjunction with your due diligence, investment horizon, and risk tolerance. Thank you.
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MED is currently trading at 0.56 as of this time of writing. It is 6 ticks above its current support near 0.51. Its ascent in price was unanticipated since it did not show any organic or gradual increase in its daily volume. Nonetheless, this issue was in a consolidation period for 2 months between 0.44 and 0.47.
A half-baked buy-signal appeared April 12, 2019 but I was not convinced due to the relatively low volume. Why a half-baked buy-signal? While the price moved above the 10SMA and the MACD line crossed above the signal line, volume was relatively thin.
I missed the bus on MED’s ascent this Monday. It’s a feeling of half regret and half gladness. I’m still half-glad because I was disciplined enough to stick to my system.
It’s not the “end game” for me because there is still an opportunity to buy on breakout if and when the upward momentum is still relatively strong based on the prevailing price-volume distribution.
The immediate resistance is pegged near 0.59. It’ll make 0.66 as its next resistance level once it breaks above 0.59.
Here are some key takeaways for newbie traders.
1. When you’re at the initial stage of formulating your trading methods, discipline is the key element. There will be times when a certain stock will make you doubt your system. For example, in this case, one of the possible thoughts you could have in mind is, “Why not just remove your volume parameter, Jaycee? Had you not included your volume parameter, you would have entered a position on MED before it flew away.”
Remember, hindsight is perfect always. Removing my volume parameter may work in this case of MED but not in most cases. The consideration of volume is one of my non-negotiatables when identifying confirmed buy-signals. I’d rather miss the bus on MED than entering too early (and wrongly) in most of my trades.
2. Earnings in trading don’t always come from being able to enter a new position before the price flies through the roof. There is still an opportunity to buy on breakout provided there’s enough strong momentum towards the immediate resistance level.
If the current price is trading above the Volume Weighted Average Price, if volume is almost equal if not above the 10-day volume average, and if the most traded and most voluminous range is registered closer to the intraday high than the intraday low, it’s a sign that the ascent in price is more likely to continue for me. If those signs are all present, doing a test-buy is an option for me.
VWAP: 0.5608
Most Traded Prices: 0.55, 0.57, 0.58, 0.56, 0.59
Most Voluminous Prices: 0.55, 0.56, 0.57, 0.58, 0.59
Trading participants of MED with a 100% Buying and Selling Activity as of Apr-22-2019 at 12:00PM:
5 out of 46 participants or 10.87% of all participants registered a 100% BUYING activity
19 out of 46 participants or 41.30% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 0.5532
Top 10 Players’ Selling Average: 0.5576
The current price is equal to its VWAP. The prevailing volume is above MED’s 10-day volume average. The most traded and most voluminous range is registered closer to the intraday high than the intraday low. I’ve already mentioned the price points that got the biggest volume and the highest number of trades for your convenience.
Should you decide to do a test-buy on MED, please make sure you know where your trailing stop loss. There are many ways on how to identify your selling price. You can stick with your trailing stop loss if you want. You can sell at the 61.8% of the Down Fibonacci retracement if you like (and if you’re a Fibonacci believer).
However, understand that MED has a volatility score of 109% percent already. That gives MED an extremely high-risk level based on its latest price fluctuation. When a stock’s price does not fluctuate in an organic, gradual manner, expect its volatility to shoot up above 70%.
You might want to ask, “19 out of 46 brokers who traded MED this morning registered a 100% selling activity. Why is that MED is still in the green zone?”
It’s because those 19 brokers are not in the top 10 brokers with the biggest total turnover value on MED. The individual TTVs of those 19 brokers are relatively insignificant when compared to the size of the TTVs of the top 10 players.
This is more than just the classical “brokers’ analysis” you may know. For me, the collective actions and overall sentiment of each of the top 10 players and all participants serves as a sneak preview of the psychology of traders on MED.
Looking at my Top 10 Players chart, I would say that current traders of MED are in an eaves-dropping mode at the 0.55 price point. In layman’s terms, everyone’s waiting who’s going to buy a significant amount of shares above 0.55 this afternoon.
If you’re eyeing MED this afternoon, stay in an eavesdropping mode as well. You can check if there’s a growing interest to buy MED at a price higher than 0.55 by doing your own price-volume distribution analysis like I did.
If your analysis leads you to think that the ascent in price of MED is more likely to be sustained, do a test-buy not at any price but within the range that got the biggest volume and the highest number of trades based on the latest PVD analysis.
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