NEO - Positioning for The Longer Term
NEO' is a long term core holding of mine that has performed rather well over the past two months. Corrections happen but this was only an opportunity to add as the market pulled profits off and re-priced and consolidated equities across the board setting up for the next bull run. As we likely have completed wave IV' and appear to have started our ascent into wave V, I want to add some positional trades along the way. Trading wave V's can be tricky as they often end abruptly with a significant pullback.
We added at the 145 level during leg B of the correction and originally intended on adding at a lower level or a breakout of the 165 level, but hesitated as it appeared that the market may go lower than previously thought. Either way hindsight is hindsight and we are still well positioned in NEO' at much lower levels. The low hanging fruit may have already been picked but the tree is still ripe for picking. I want to buy a pullback and not be compulsive just to buy because the market is moving up. This is a risk to reward where I would rather miss out buying here at the 132 level, and see if I can pick up NEO' at the 111 to 121 levels which is the 0.618 and 0.382 of the current mini rally. This is 10%+- less, and if I buy at a pullback from the 145 level it is likely I can add at the 135-140 (or less) which is a 1-5%+- more. I like having 2-1 on a coin flip.
There are two Resistance/Support levels I am looking to clear to further confirm wave V has begun. Currently we are consolidating at the first one, and a if we clear the 145 level we can look for a swing trade to the 165-175 zone. Again I do not use stop losses and will monitor it as we go but this is a likely area for a reversal to happen as this is the 0.618 extension of wave III' and the 0.786 retracement of wave IV'. My overall trade target is 185-193 which is the 1.618 extension of wave 1 and the previous high. Again look for consolidation at this level and we will play it by ear whether we close the trade or hold for the 230-245 level which is the 1.0 extension of the previous bull run.
As the market starts to move I am looking for pullbacks in good coins, not just buying to buy. One thing I hate more than missing a rally is buyers remorse. There is always a deal somewhere and this is why we need to be selective in buying. Nothing worse than being fully vested and something goes on sale and not having cash on deck to take action especially this early into a recovery.
We added at the 145 level during leg B of the correction and originally intended on adding at a lower level or a breakout of the 165 level, but hesitated as it appeared that the market may go lower than previously thought. Either way hindsight is hindsight and we are still well positioned in NEO' at much lower levels. The low hanging fruit may have already been picked but the tree is still ripe for picking. I want to buy a pullback and not be compulsive just to buy because the market is moving up. This is a risk to reward where I would rather miss out buying here at the 132 level, and see if I can pick up NEO' at the 111 to 121 levels which is the 0.618 and 0.382 of the current mini rally. This is 10%+- less, and if I buy at a pullback from the 145 level it is likely I can add at the 135-140 (or less) which is a 1-5%+- more. I like having 2-1 on a coin flip.
There are two Resistance/Support levels I am looking to clear to further confirm wave V has begun. Currently we are consolidating at the first one, and a if we clear the 145 level we can look for a swing trade to the 165-175 zone. Again I do not use stop losses and will monitor it as we go but this is a likely area for a reversal to happen as this is the 0.618 extension of wave III' and the 0.786 retracement of wave IV'. My overall trade target is 185-193 which is the 1.618 extension of wave 1 and the previous high. Again look for consolidation at this level and we will play it by ear whether we close the trade or hold for the 230-245 level which is the 1.0 extension of the previous bull run.
As the market starts to move I am looking for pullbacks in good coins, not just buying to buy. One thing I hate more than missing a rally is buyers remorse. There is always a deal somewhere and this is why we need to be selective in buying. Nothing worse than being fully vested and something goes on sale and not having cash on deck to take action especially this early into a recovery.
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