Case Study - Make My Trip ($MMYT)

Following rules, doing your process and listening to the music.

I had several conversations in my trade group about our position in MMYT this past week. Among the discussion topics were:

1. Should we be selling into strength

2. buying more, or

3. Doing nothing and hold.

Most sold into strength. No one bought more. I did nothing and held.

Most in our trade group picked up a position in MMYT when I posted it on X back in Feb 28th.

I am not claiming that I did the right thing, but I want to outline WHY I did what I did, why they did what they did, and how having a process and passion might help you.

Lets get started: Below is the post I made on X

Although we missed the initial breakout, we thought this was a good continuation pivot for an entry and the company met all three of our main investment/trade prongs. I like the fundamental growth of MMYT, the strength and story behind growth in India, and the technical setup MMYT presented. For me, those are my three prongs of investment analysis (fundamentals, narrative, technical buy points).

I want to walk through how this trade has progressed, why I did not sell (while many others in my group did), and how having rules really helps listen to the music of the market.

I am not writing this as a boast or brag. The stock is not even up that much (currently around 25% from buy point). But only to highlight something I have been working on lately and has really helped my performance.

The core element is simple. Each day I review all my holdings carefully. I analyze each daily bar that has just closed. I take notes and write what has happened. Without overthinking, I listen carefully. I also do this for all the stocks on my focus list. What I am trying to do is listen to what the market is singing. In other words, I am trying to see the music.

Let me explain how my rules, and process, helped me stay in MMYT without feeling any need to sell, while others got out lower.

Buy Day

Below is what the chart looked like on the day we bought it.

I always take 25% of my trade off at R1 and widen my stop a bit. That allows me to catch bigger trends. My stop after taking R1 is usually the low of the bar that triggered an entry. In this case, the low of Feb 28th. I then use structured stops with the 9ema, 21ema, and eventually the 50sma if the trend lasts and the moving averages catches up to my stops. This is very systematic.

I this case, I was able to take a quick R1 (removing 25% of the trade for a small profit) 2 days after entering. Since I usually start positions with 20% of my account, this helps take some emotional pressure off and reduce the share count to a manageable swing size. Price came back in (which is normal) but NEVER broke below the low of the breakout entry bar. No reason to sell. Rules not broken.

MMYT and the market rallied nicely thereafter. MMYT never got back below the 9ema. Per my rules, I just sit back, evaluate each day, and do nothing. And then April 2nd came.

What inspired me to write this post was a conversation I had with several members of our group on April 2nd.

My friends sold. They gave me all the reasons in the world why. I simply asked what did their rules state?

They did not have any for this situation.

I told him unless the action is VERY ugly, my rules dictate I can take another 25% of the trade off IF IT closes below the 9ema, and then another 25%- remaining position off IF IT closes below the 21ema. But the action during the day was not ugly enough to warrant a mid-day sell. So I told them I am following my rules and not selling (yet).

Before the close, the price reversed back up, closed above the 9ema and singled a strong RS and support day. I spoke with them after the market closed and told them that I believe this was actually a very constructive day. I call these days “clue” days. To me, it was a clue that buying demand was still strong.

I am not saying I am right, or they are wrong. But they did not really have rules. So how can I judge their decision?

More Clue Days

The next two days also provided additional clues. For me, this is the fun part of the game. Listening to the music of the market and seeing what is happening.

April 3rd saw a large rebound in the stock price. After the action of the previous day, this just continued my thesis that buying demand was still present. But the biggest clue came on April 4th.

This is when a confluence of events led to a large reversal in the markets. Indexes were solidly green, and finished the day red.

As I do every day, I look at each one of my holdings. I noticed while many names needed to be trimmed, or sold, MMYT was holding up exceptionally well. I mean, it never even got below the 9ema or the low of the previous day while indexes made fresh multi-week lows. To me, holders were reluctant to sell this name.

Now, any single day can mean anything. But it’s about putting the whole story together, day by day.

First,

1. A textbook breakout on increased volume after a strong trend in price.

2. Backrest without an undercut of breakout bar.

3. Rally in price that holds all KMA’s

4. April 2nd support day with high range close

5. April 3rd, Strong rebound, showing continued buying demand

6. April 4th - HUGE support day with strong relative strength

7. April 5th - Below

Are you surprised that after pressure was taken off the market on Friday, even a little pressure, MMYT ripped higher?

It is not a surprise if you learn to listen to what your stocks are doing. Learn to analyze the action day by dy. Pay attention to what is normal and not normal for stocks under accumulation or distribution. I have found, personally, staying in stocks under accumulation and only selling when my rules have been broken is a major contributor to my success. I try and give good stocks, acting well, every change to go higher.

On the flip side, if pressure was taken off the market and MMYT did NOT rally, or even went down, that would be a character change from the previous support days. That would be a red flag and indicate buying is drying up.

Conl:

I am glad my process turned me on to this name. I am glad my rules kept me in. I am glad my passion for listening to the markets and stocks. This all helps me make just a little sense out of this crazy game.

I hope this helps.

—NS