ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NASDAQ: ASPS
Price: 13.34
A little background on my philosophy regarding investing or position trades.
An investor or position trader refers to an individual who holds an investment for an extended period of time, typically measured in weeks to months.
I believe in Trend Following which means that once a trend starts, it is likely to continue.
This means I try to take a position in a stock at the beginning of a trend or in an established trend across multiple timeframes.
One of the best ways to identify a trend is with moving averages.
For Investor Class Ideas, I analyze using a weekly chart using the 30-, 40-, and 50- week simple moving averages to define the trend on that timeframe.
To identify a trend, I look for the moving averages to be travelling in the same direction with the short-term moving average above the intermediate-term above the longer-term moving average.
To clarify, the 30- week MA is above the 40- week which is above the 50- week and all are advancing.
A downtrend is identified using the reverse of those considerations.
Let’s begin with the Weekly chart.
**Click on any chart to enlarge**
ASPS had quite a run since it started trading in 2009, opening at 5.33 and peaking in 2013 at 171. It looks like it could be Hyperwave, however, there is no need to spend time determining if it was or not.
Price is currently above the declining 30- and 40- week moving averages and is testing the declining 50- week moving average.
The weekly chart of ASPS shows the price forming what could turn out to be a nice ABC pattern if it breaks above the 16.00 level.
This is a chart that I would typically stay away from as an Investor Class Trade.
Using the Investor Class Trend Following strategy described above, my ideal time to enter a long position would have been back in 2010 when the moving averages were aligned and advancing before exiting in late 2013 or early 2014.
ASPS had its IPO back in August 2009.
Let’s consider the VWAP from the IPO.
The VWAP measures the average price paid per share or unit during that period of time.
The VWAP is a great indicator to measure sentiment.
If the price is above the VWAP for your time period then the average holder feels pretty good and is more likely to add to their position.
If the price is below the VWAP, then the holder is not feeling so great and is more likely to exit the position.
Let’s take a look at the VWAP on the weekly chart:
As you can see the price is below the VWAP from the IPO and above the Year-to-Date (YTD) VWAP at 11.88.
Since the IPO, the average holder is down 67%.
Why is the YTD VWAP important?
Most money managers are evaluated by their yearly performance. If they are down, they may sell to remove the loser from their books putting additional pressure on prices.
If the price is above the YTD VWAP then holders are more likely to continue holding or increase their position.
Let’s move down to a lower time using the Daily chart to see if there are indications of a trend change.
The Daily chart is effective at showing the bounce off the March low and how the purple 200 DMA has acted as resistance.
The price is above the green 50 DMA and the purple 200 DMA, however, the 200 DMA is still declining.
My investor Class criteria require the price to be above an advancing 50- DMA and 200- DMA.
I would be interested in an Investor Class position once the weekly moving averages are in alignment and advancing with the price breaking out of consolidation.
For me to be interested in a Swing Trade, I need the price above an advancing 50- DMA which would be above an advancing 200 DMA.
This could be a great time to buy, however, I believe that there are lower risk, higher probability opportunities to choose from.
Can the price go higher from here? Yes
When will it go higher? We have no idea.
Is there a lower risk, higher probability investment available? Yes