Mind at Work

Great news! This morning as I dreaded waking up and getting moving, that is when my pulled/torn side muscle is the WORST, I actually only felt a dull way off pain! I can now actually raise my right arm and move pretty freely! Amazing. I can put the duct tape away if this keeps up. I am actually excited about this, what a relief.

Getting plenty of web traffic from the Honey Badger content! I'll take it anyway I can get it. Tomorrow is Friday night so get those requests in. I have a outline for a longish "is silver in a bubble" post but I don't have time to get to it. Maybe this weekend.

Chicken Parm FAIL!
Last evening my wife had a function to attend so I was on my own. This means I swing by the liquor store and buy beer. I was sort of hungry and in the small strip mall there is the beer store and a pizza place. I went over to the pizza place to grab a sub. I had never had food from this particular place before, so I went with a chicken parm sub. This choice is a good way to test a new joint's food I think. Here's how it went.

It sucked. This place uses grilled chicken for the sub! I mean, who does that? If I want healthy grilled chicken I will cook it on the Big Steel Keg. I wanted deep fried crunchy goodness. Instead of a great crunchy, cheesy, saucy treat I had a soggy, mushy mess of a Italian dinner plate on bread. FAIL.

There should have been a heads up here. The menu listing should have said "We don't fry food like all other sub shops since time began, we grill it instead. Buyer beware." What a bunch of clowns. I ate about a quarter of it and then pitched it. This is just not right.

Mind at Work
Before I trot out some charts and a direct line as to how I think (scary indeed) I want to say a couple things:
-Technical analysis/charting varies among users. There are rules, definitions and accepted criteria for various parts of it. That's great. I do what I can but I am not perfect.
-Terms and lingo are not things I ever really mastered.
With that said, don't email me or comment with "you drew that line 10 cents off!" or "that is NOT a so and so pattern". I am a hack, if I am doing it wrong then I try to improve. The point of this section is to show a couple trades and what I was thinking, more for me as a record, but I thought readers may like to see it. If you think it was all bullshit because my charts are all wrong, it may well have been. I do my best. I am fine with that because I am the honey badger and honey badger don't give a shit!

With that out of the way......

RPM Trade
After talking to my wife she had a couple ideas about stock sectors to try out. One idea was re-painting and fixing up things in the springtime. I found RPM International (RPM) which is the maker of "Rustoleum" and many other products. They sell to big industry too. I was not looking at it fundamentally, but I wanted to see if I could find a technical signal to try the stock out.

Last caution; I am going to mention some additional indicators that I use for supporting evidence for stock positions. These are even more amorphous than candlestick charts. I have seen stocks with the worst stochastic's moon shot and stocks with the best get firebombed like Dresden. If you think I am using them wrong, honey badger don't give a shit.

Here is the first daily chart for RPM (click for bigger view):

Here is how I work:
-Place long term support/resistance lines for the stock. This will need longer term charts to see where that is. For RPM I drew white lines for:
$22.80 - long term support
$23.60 - first resistance
$24.00 - long term resistance
When I was working on this stock on Sunday March 21st RPM was just coming back to the old support at the $22.80 line. Old support can be new resistance so what made me interested?

The green arrows on the stochastic (bottom pane of chart) show a double touch pattern. The last time this happened (far left) the stock had a nice run up. The second pane down shows volume and the buying interest was good as well. Both added to the idea that RPM would regain $22.80. I bought at market open on March 22 at $22.79. I mentioned I liked it here on Monday the 21st.

RPM moved well after breaking above $22.80 and it soon crossed first resistance of $23.60 easily. Buy volume was great so I let it ride. On Friday April 1st RPM was breaking long term resistance of $24, so I sold the stock at $24.05 for a nice 5.5% gain. I saw nothing wrong with the chart, but I just wanted to take a win. RPM earnings were today and they did very well. The stock is at $25 and change so I missed a bit of profit there. That's the way it goes. Here are my entry and exit points marked in red arrows:

I will revisit this stock in the near future should it base well here.

At the same time I looked at Sherwin Williams (SHW), the paint company, in the springtime thesis provided by my lovely, sexy, brilliant wife. This one was a bit different but I did get interested. Here is the first daily chart (click to get a bigger one):

Again you see my white lines:
$83.25 - long term support
$86.00 - long term resistance

So why the heck was I buying in on March 22 at the open at $82.08, a ways off from old support? Do you see the rectangles I have made in the picture on the candlestick chart?:
-Buy volume was coming on big (not 20/20 hindsight, 3 great accumulation days into the 22nd)
-Candlestick pattern of "bullish squeeze" with a big red candle and then two subsequent inside days (within the last candle both times). Usually a good sign. Both the MACD and stochastic gave weight to the move up (green arrows).

I waited for a little upside confirmation and went long on March 22nd at the open at $82.08.

Long story short SHW moved well right up to old highs at $86 on April 1st and I exited at $86.00 that day. Red arrows show entry and exit:

As of now SHW is still looking at that level and may be interesting later on should it break out over $86 and hold.

So that is how my mind works. In a post a while back I went over what it takes to do your own trading. Homework was a huge factor, you have to work up ideas with real effort. Why did I do this post? I wanted a blog record of these two trades as I feel I executed very well. I also thought maybe some of the readers that have an interest in this stuff might like it. Trust me, I have had false signals, failed patterns, and just bad trades too. Maybe I will cover one of those if anyone is interested.

Have a good night.