Riding on the shoulder of a Giant - Making money on Insider Buying

I happened to come across an article with TradingPub.com entitled "Piggybacking Hedge Funds for big profits". The article is really very interesting and also supports the idea mentioned in the article of Investopedia.com which was titled "Buy stocks with Insiders: How to track Insider buying." Definitel, a surge of volume associated with Insider buying of which public documents show that Big Institutions are accumulating shares of a particular stock or company could mean a lot for an ordinary trader or investor. To be able to catch this move and ride with its momentum is a big winning strategy. It is like "Riding on the shoulder of a Giant."

The best way to do this is monitor stock volume surges and price movement and look at tools that will provide you with the data you are looking for whether a company is under accumulation. Under the Securities Commission laws, any public company listed in the stock market in the US except those traded over the counter should file a public document concerning insider trading. Sec Form-3 is for initial ownership, Sec Form-4 is for any changes of that ownership, Sec Form-5 is for any other changes not recorded in Form-4. This forms can be accessed through the following online tools:

1. Sec.gov under Edgar Search Tool.
2. otcmarkets.com - You have to enter the stock ticker into its Quote field and press enter. Then once the stock is listed, you have to click on "Disclosure" from the menu which starts with "Overview | Quote | Company Profile | Security Details | News | Disclosure | Research". This will bring up the list of Forms associated with the company you are searching for. What I like with otcmarkets compared to Edgar Search tool of Sec.gov is that when you click the hyperlink it opens right away as another tab or window in your browser with the documents listed as one which you can scroll all the way down, instead of selecting one by one as with Edgar.

For more Insider trading details you can use the following tools.

1. Finviz.com provides a very good list of insider trading. Although, not all companies might show the Insider trading.
2. Insidertrading.org - This site is reported to be listing this insider trading too. But I found it very hard to search for specific stock.
3. GuruFocus.com - This site has some cool features and one of which is the Insider trading. But the listing of the Insider Trading can only be accessed for Premium members which will cost you $449.00 US per year. They usually give you 7 days of free access.
4. j3sg.com - This site can get you insider listing right away, just by signing up with their free membership. 

AUDC - 25days after New 78 days High

Mar 5, 2019

New 78 Day High - AUDC - 26days after

Last January 30, 2019 I posted AUDC having a similar move with SPPI reaching a New 78 day High.  It has been 24 trading days that passed by and the stock has not broken its previous high yet.

THE SPPI DIFFERENCE

Unlike with the SPPI, it rallied after 5 days in small increment along the 18SMA (Green simple moving average) reaching a new high of 10.77 from 9.09, $1.68 more. This was 135% increase from the original height of the New 78 day high candle which was only $1.24 in height (Low of 7.85 and high of 9.09). The 1st New 78 day High of SPPI had a gap-up (See N78 1st Gap-Up), which was followed with another New 78 day high after 24 days up and 12 days down. These are some of the differences.

TECHNICAL EVALUATION OF THE AUDC MOVE.

If we have to observe carefully, AUDC have the following discernible pattern.

1. The price is no longer respecting the 18SMA line (green line). Feb. 13 to 21, 2019 the price was below 18SMA but had been supported by 50SMA (purple line). Feb 25, 2019 AUDC broke out above the 18SMA and yet broke down again today March 5, 2019 under 18SMA line.
2. There is a very noticeable discrepancy of AUDC's price/volume pattern. The red candle today March 5, 2019 is a big red candle signifying a strong selling sentiment. But if you compare this to its volume, it does not add up. The volume is very low. Something is being manipulated here. The Market Maker seemed to be shaking the apple tree to wipe out stop losses and bring down the price to waiting and hungry deep pocket buyers. 
3. If you base this pattern with Turtle Trading of which when a stock makes a new 55 days high and does not follow through for 21 days, then trade should be exited. AUDC failed to break-out from the New high and price had been contracting for 25 days, it is time to be on the sideline for the time being and wait for the right timing.
4. The over-all trend is still up based on the 200SMA and 50SMA. 50SMA is above 200SMA and the price is still above 50SMA.
5. Based on the book "Trade like a Stock Market Wizzard" by Mark Minervini, AUDC seemed to be creating a VCP (Volatility Contraction Pattern). The following charts showed that it has created a footprint of 25D-18/8-3T. Since the time it made a new high, it's been 25 days with a contraction ranging from 18% to 8% with 3 consecutive contractions. We need to wait for another contraction of which the percentage ranges from 7% to 1% then followed with a breakout at that tip of the yellow triangle. The candle should be a strong break-out candle with a good amount of volume to sustain the move.

If the next bottom will not break B2 and the price will continue to funnel to the end of the yellow triangle the possible pop-up would be on April 22, 2019.  If it continues to break down then we are looking for possible support at 12.91, 12.00 and 11.71.

FUNDAMENTAL EVALUATION:

From the Disclosures compiled by OTCMarkets.com AUDC had the following:

1. Jan 28, 2019
   > AUDC posted a Q4 result of 10.4% Year over Year Revenue growth,
   > Net cash provided by operating activities for the quarter
       was $11.62M, compared to $9.36M a year ago.
   > Company has Cash and cash equivalents of $31.5M, as of December 31, 2018.
   > Repurchased 250K of its ordinary shares.
2. Feb. 11, 2019, AUDC declared 11cents semi-annual dividend.
   > This is a new incentive to investors.
   > Although most investors shy away from dividend stocks
      if the track record is below 10 years. AUDC has only 1 year.
   > Nevertheless, This is a significant additional incentives to investors
      who would like to commit early.
3. Feb. 13, 2019 Amended Disclosure of Morgan Stanley Capital having
   > 2.3M shared volting power
   > 2.3M shared dispositive power
4. Feb. 15, 2019 Ammended Disclosure of Richard Marshaal, Senvest Management LLC
   > 678K shared voting power
   > 678K shared dispositive power
5. Feb. 11, 2019 Ammended Disclosure of Shabtai Adlersberg
   > 5.3M sole voting power
   > 5.3M sole dispositive power

Now if you interpolate the Fundamentals and the technical it seemed that we have a lot of supplies held by the higher management. With the rise of AUDC's stock, it's but natural that they probably liquidate a portion of what they owned as shares. Since there is tremendous amount to dispose, they have to liquidate in smaller quantities so as not to create a waterfall. This is also a strategy of bringing the stock down so they can purchase more shares at a lower level. We are looking therefore a temporary downfall of AUDC's share price until these deep pocketed guys start buying again.

NEO hitting MINOLA and how to position for Entry using the previous high volume

MINOLA as I termed it is a combination of the VCP(Volatility Contraction pattern) strategy of Minervine, Pocket Pivot of William O'Neil and the ADX(14) of Larry Williams.
Last Oct. 30, 2018 NEO had just made this new high triggering a MINOLA move. See our entry on NEO hitting MINOLA.

NEO Chart from Stockfetcher.com

OBSERVATIONS:

1.  As you can see the price candle had reached the top channel of the trend (upper blue inclined line). Some stocks, upon reaching this kind of top channel would eventually break it and then form a new channel above the previous channel. In this case, it was quite different.
2. Notice also, that the volume of the empty red candle with a gap down (candle inside the red circle having the tallest red volume) was so huge compared to the volume of the bull candle hitting the New MINOLA day (candle with letter "N" on top). 
3. The bottom of the red empty candle with a huge red volume is practically at the same level with the long red empty candle on the left with volume 1/4 of the tallest red volume.
4. If you scribe a line (a red line) on top of the volume on our MINOLA day candle the volume hit by that line is only the huge red volume (using stockfetcher.com chart). You can use the bottom of the red empty candle as entry, which is around $12.00.
5. If you continue scribing the line past the tallest red candle, the next bull candle with volume touching the blue line slightly above the mid height of the MINOLA day volume has a low of the day around $11.63. In between $12.00 and $11.63 the best entry would be around $11.75.

Here are the series of charts to study how this kind of entry position panned out.

It took almost 2 months for the entry to get hit around Dec. 20, 2018 followed with 2 more lower candles hitting as low as $11.03. The 1st 3 days you would have been at a loss but on the 4th day, Dec. 26, 2018 the price went as high as 11.96. Jan 9, 2019 the price made a gap-up reaching the high of $15.12 and going forward it reached beyond $18.00. The high of $18.00 was our target since this was the previous high.
Entering at 11.75 and hitting the target of $18.00 gained $6.25 profit. Multiplying it to 1,000 shares it translated to $6,250 in 2 months.