China imploding, added to loser KWEB, winner MGMLF, and a little more MUX

I might as well start with the Chinese internet stocks, as they are in the news and continue getting demolished. I don’t often trade off news items, but of course I consider them and how they are affecting prices. The news out of the government in China is nothing short of economic suicide, with over $1 trillion lost already, I think they started this campaign in February or March or 2021. I try not to let headlines force mistakes, so while the KWEB etf has come down enough that I could justify cutting it loose, since I am still not in a full position as defined by my total dollars at risk, I am willing to keep looking for spots to add, in order to bring me up to full size. I choose this route because these can be big winners, after such devastating declines on the charts. Note that my accounts are not devastated by the China events, just the the chinese stocks are, so we should have a big bounce play here soon. One after the other, chinese internet giants are getting taken out back and shot in the head, today saw Tencent Holdings ADR down over 10%, and that sounds bad enough, until you look at the chart of the last few months!

So this is an interesting situation that I might as well address right now, because I am sure to get lots of questions regarding how I handle a stock that drops to my stop out level BEFORE I even have a full position size? It’s pretty simple, if my total dollars lost are not yet at my Total Risk level, I consider the trade still valid and active. In fact, I like to buy at the cheaper prices, however we must keep an eye on such stocks as there is something much bigger happening than what charts typically tell us. That does not necessarily mean it’s a negative, it could be a huge winner depending on the news flow, but we must admit that we cannot know so early, otherwise the KWEB etf and it’s components would not have gotten hammered so hard to begin with. I will continue to build up to a full position, and always keep my total risk amount in the back of my mind. I hope I’m not stopped out of KWEB, being it’s already suffered so much that I think the upside could be very substantial as soon as the bleeding stops. Let’s see if I can stay in it long enough, and without losing too much sleep, before its starts screaming higher as everybody looks for bargains they threw out yesterday! I’ve already posted it many times recently, as my buy orders got filled here and there, but let’s take another look at the daily chart, then the monthly chart to step back and get the bigger picture. Suffice to say, if a trader can be invested in such a terrible looking chart and still make money on the trade, he is adept at risk control and money management. Heck, if they can lose just a little on such a horrendous chart, they are likely a very profitable trader overall. KWEB daily and monthly charts:

And here we have the MONTHLY KWEB chart, equally as ugly, which is pretty rare in this business!

The final take for today is that I will keep it simple and trade KWEB like I would trade any other setup. This could end up being a huge winner with so much potential, maybe we have bought the leaders in China’s e-commerce at bargain basement prices for many years, or we might be too early and get washed out along with millions of other investors that are hating these stocks at the moment. It’s ok, we don’t care about any one trade more than the next. We want them all to work, but realize that isn’t what will happen, we will win, we will lose, we just want to win a lot more than we lose. Simple! 🙂

I also added to my winner in Maple Gold (MGMLF) on this big pullback in the mining sector. I have a large position already, soo didn’t go overboard, this buy was just to remind myself to keep and eye on MGMLF and be look to add over the next few weeks as opportunities set up. I have watched pullback to its upward sloping 200 day MA, where it sits now, so today was a good time to step up and get my feet wet (again). Member can see my current total holdings, average price per share and unrealized gains and losses on the tabs above. I haven’t adjusted the stop levels on this stock yet, as I’m up a good amount and not near stopping out, so wasn’t pressed to get it done considering all the fireworks happening in China, bitcoin, etc. Take a peek at what I was looking at when I added today.

I also nibbled some more on shares of MUX (McEwen Mining), this one has to be reported as added around break-even. I will post the chart again for those interested, there wasn’t any news or catalyst for the buying today, but I like that miners appear to be running out of downside, as a group. I also like that MUX does not seem to want to drop more, it hangs in on days the sector is weak, leading me to believe it’s had enough downside and sellers are getting exhausted. That might change, and that is what stops are for, but for now I like adding to names like this when they hold up, after having already pulled back to support levels, in this case the 200 MA. Yes, I realize that perfectionists will remind me it’s actually sitting below it’s 200 day MA, but to me it’s close enough. Remember that I always assume support and resistance will HOLD UP, rather than get ¨broken¨, but of course breakdowns do occur sometimes. Again, that is why we use stops. I will assume MUX has a higher probability of bouncing soon, than collapsing or especially dropping much further from here, after a substantial pullback. Let’s see if I’m correct, for now here is the chart to contemplate.

Tomorrow, I will look to buy more KWEB LEAP options, I had other limit orders in today, but only got filled on one order to buy. While the KWEB etf did go lower during the day, the LEAPS held up and didn’t trade as low as my entry price the whole day. Maybe they are signaling it’s done with most of the drop, or tomorrow morning the LEAP options “catch up”and drop some more, giving me some great fills as I get up to a full-sized position. That’s ok, we are not in a rush and we know patience is a virtue!