BUY and SHORT LIST

BUY LIST: (This does not mean buy now. It means these are on my watch list for buying opportunities)

AAPL, ACH, ARD, BAP, BHP, BIDU, BOOM, CAE, CAM, CLB, CMED, CRNT, DECK, DRYS, DSX, EDU, ELP, ESI, ESV, FLIR, FMCN, FSRV, FSTR, FTI, FTK, GRMN, GSF, GSOL, HAL, HURC, HURN, ICE, IEX, ISRG, KMGB, MICC, NILE, NOV, NVEC, NVT, OMCL, OYOG, PCLN, PCP, PCR, PCU, PDE, RDC, RIG, RIMM, RIO, SII, SQM, SRCL, TBSI, TNH, TWIN, VIP, VMI, VSEA, VSEC, WBD, WFT, WOOF, WHQ

SHORT LIST: (This is my list for "shorting" stocks when the timing is right)
AEPI, ALX, ARE, BXP, CT, DSL, GHL, ITMN, KB, LPNT, MSTR, NVR, PJC, SEPR, SHLD, SLG, STU, VNO, WSC, WY

NEW TRADING OPPORTUNITIES

With the Dow Jones finally holding above 14,000, I believe we are going to head higher. 14K is a tough barrier to cross and we finally have done it.



So let's look at a couple of the trades we were looking at earlier - ICE. ICE has broken out of a cup and handle. The pivot point (a.k.a. buy point) was $162.57 as determined by being $0.10 higher than the previous high. With the huge trading volume breakout, the stock has come back down to the pivot point again. Trading volume has not increased with stock pulling back. That is all a good sign. Personally, I am going to add on a few more shares near the pivot point.


CROX has also pulled back and hopefully it may make a run at $50. That may be its resistance point. Anyway, if you click on the chart it will enlarge it and the ellipses outline the buy point areas. Let's see how this one goes.





CTRP is presenting itself as being a buy candidate with support arising at $82. The yellow elipse shows a cup and hadle and the highest point after the breakout was $82.09. Using the IBD theory, a secondary pivot point/buying point is $82.19. Today, the stock showed that support will probably come around $82.



On the short side (i.e. a stock that gains profit if the price goes down), MTB looks good. The elipse shows that the Stochastics is overbought and ripe to go down. The resistance around $114 has been tested a few times without success.

GOOD LUCK TRADING.

JD

TRADING RULES

I have been successful with my approach to the stocks I want to look at to buy/sell. Since I revisited my old trading system, my whole portfolio is up 18.4% from June 9th until July 11th. The way I came up with this system is re-reading "How to Make Money in Stocks" by Wm. O'Neil. I had used his book in the past, but deviated from the trading plan and definitely did not do better with my personal trading plan and have done much better sticking to the IBD plan.

There are a lot of factors in selecting stocks to buy. I say that I am a chartist which means that I only buy a stock based upon what a chart shows me in relation to price and volume. However, I primarily base my decision to buy based upon a company's fundamentals such as earnings per share (EPS).

Here is how I select the stocks based upon a stock's fundamentals:
1. Use the IBD newspaper and look at "Stocks on the Move" or "IBD Timesaver Table."
2. Smart Select Composite Rating must be greater than 98 or 99
3. EPS must be higher than 90
4. Relative Price Strength must be higher than 80
5. Industry Group Relative Strength must be A or B
6. Sales/Profit/ROE A or B
7. A/D must be A or B
8. Beta must be 1.4 or higher as noted in the Stock Checkup at http://www.investors.com/

http://www.investors.com/ has already done all of the research for me when it comes to stocks with high earnings per share (EPS), if it's in a strong industry group, etc. I then am a "chartist" and I anlayze a chart as to when it is the best time to buy or sell.

So here are the buy rules: (price and volume are key)
1. Breakout from a cup with handle or any other base as described in the "investor education" section of http://www.investors.com/
2. Stock makes a new 6 month high and meets all the above criteria

Learning to identify the proper buy points (aka pivot points) are critical to profit. I try to talk about pivot points in this blog to help find them.

So here are the sell rules that need to be stictly adhered to:
1. Once your stock drops 8% below the proper buy point, sell it.
2. Once a stock gains 20% from the proper buy point, sell it. However, if the stock rose 20% within a 3 week span, hold it for at least 8 weeks.

That's it. That's my trading plan. Granted it means that I am in and out of a stock as it rises, but that can sometimes add up to more than just sitting in the stock. I just want to be out before any correction occurs and I lose all my profits.

I will try to add to this segment to give proper buy points/pivot points. If you look at ICE today (7/11/2007), it has just broken past a buy point/pivot point today at $162.57 so if you are into buying, here is your baby.

GOOD LUCK TRADING.
JD

STOCKS STILL PRESENTING BUYING OPPORTUNITIES

I did scratch CROX off my list due to a little weakness, but today it presented a buying opportunity. Click on the chart to enlarge it to see what I am talking about. CROX broke out of a RESISTANCE line (red line) on higher than average trading volume which is seen at the bottom of the chart. The yellow circles denote two other factors which help contribute to a buying opportunity. 1. The stock bounced of its 30 day moving average (larger ellipse) 2. The stochastic indicator was near an oversold area and has now turned up. Based upon all of these factors, CROX is a buy opportunity all the way up to $49.50.

AMZN has also presented a buying opportunity as it has broken out of consolidation as noted by the stock breaking above the red line on higher than average trading volume. Personally, I am going to buy anywhere up to $75.

If I were to pick between these two stocks to buy, CROX would be my baby due to the fact that CROX is a new company with earnings that are growing a lot faster than AMZN.

GOOD LUCK TRADING. JD

THE US DOLLAR IS STRENGTHENING. CAN STOCKS HOLD OUT?

I saw the title in a quote today and had to take notice. I have been a little on the bearish tone here as of late and I am beginning to wonder if it is true or not by looking at the SPY. Click on this chart and you will see that there are a few things I want to point out.

1. The stochastic is in OVERBOUGHT area as noticed by the yellow circle.


2. There is a downward slope for the past month or so as noted by the red line.


3. There is a negative divergence as noted by the rise in price, but a drop in trading volume as noted by the different directions of the yellow lines. Price is going up and trading volume is dropping. NOT a good sign. These are signs that the market may be heading lower for a little while. In response to this, I created a bear call spread today. Meaning, I sold a near the money call and bought an out of the money call. Since the current price is near $151, I sold a July $153 call and bought a July $155 call at a credit of $1 for 30 contracts. So if the market stays below $153 in two weeks, I get to keep the $3,000 ($1 for 30 contracts and each contract has 100 shares 1 x 30 x 100 = 3,000).

Watch ACTU closely. It is coming back down to "support" after the breakout from a cup with handle.

I cleared out a few stocks today:

SOLD: FLIR for a 10% profit.

BOUGHT: PAC and JADE. PAC is breaking out above previous highs on higher than average trading volume. JADE is breaking out of a symmetrical triangle on higher than average trading volume.

If I could only trade the GBP/CAD I would sell the pair since I received a signal on my chart using 3 indicators. The reason I can sell the pair is that by forex dealer doesn't trade the pair. I need to pick a new dealer for forex.

GOOD LUCK TRADING.
JD