MARKET IS IN A RALLY PER IBD

IBD stated that the market had a follow-through day as of Wednesday and that the market is in a confirmed rally. Well, I like to follow what IBD says so I started scanning some stocks that I think look as if they are going to breakout.




MR is high on my list. Just click on the chart to the left to enlarge it. MR recently ran up, touched the 50 day moving average line twice (blue line), and is poised to break out above its previous resistance at $36.05. If MR breaks out above $36.15 in high trading volume, it becomes a buy.

KMGB is a stock that recently had a run up and is correcting in a positive way. If you draw a trend line down the top of the recent down turn, you will see that the downtrend was broken a few days ago around $20.50. Since then it has risen in higher buying volume as noted by the rise in price and the trading volume picking up as seen at the bottom of the chart. I picked some shares up today at $23.48 since that broke a previous area of resistance a month ago.

As for my current holdings in my portfolio, BCSI continues to do well and I am hanging onto this one. I am still waiting for OMCL to breakout to the upside. ICE may be on the rebound.

PCLN triggered my 10% profit rule in a down trending market. What???? you ask. Well, in a downtrending market like the one we just popped out of, IBD recommends cutting your losses at 5% and taking your profits at 10%. Well my 10% target in PCLN was $82.30 and it go taken out today. Thanks. I'll take it.

What I am going to try and to is keep the stocks that I own in my portfolio in the Yahoo! stock list on the right of this page.

There is another subject I have to mention that is just driving me crazy. I believe that Americans are becoming the softest, most emotional and dumbest people in the world despite our "superpower" status. Young kids are more concerned about what Hollywood star ditched jail (Spears, Lohan, Richie) or attempted suicide (Owen Wilson) than looking at the world as a whole and seeing what is happening to the USofA as a country. Here is a perfect example of that stupidity. http://www.youtube.com/watch?v=lj3iNxZ8Dww

Thank you Ms. Teen South Carolina. You have proved my point.

Good luck trading.

JD

OMRI ???

Why OMRI??? I'll find out later.

Short RIO and CAE.

MARKET STILL IN CORRECTION.

When looking at a chart of the indices, SPY and DJIA, the market still looks weak and I am waiting for a "follow through" in order to go fully back into cash. The funny part about this downturn is that I am actually still doing very well since only one stock has tripped my 10% sell rule and that was CTRP. Kind of ironic isn't it? The name that is.

BCSI has given me more than a 50% gain in the past couple of weeks especially with the positive earnings announcement. I did take 50% of my original purchase off the table when I reached a 50% target. OMCL continues to make no movement, but I completed all of the buying that I was willing to do between $23.60 and $24 and that totalled $100K. I believe it is waiting for the overall market to follow through or crash and OMCL will follow suit. PCLN is nearing a 10% profit and I will take it if it gets triggered at $82.30. Remember, IBD recommends selling stocks at a 10% profit when the overall market is in a correction.

Another funny factor in my life is that now that I am a born-again IBD trader since July 11, 2007, my portfolio has thanked me even despite this downturn. To prove it, here is a copy of one of my accounts that has bobbed up and down for about 8 months while I kept trying to get fancy. Once I committed myself to the IBD system again, well.... just look at the graph:
(For those of you who have a Scottrade account, I'll bet you can attest to this graph.)


I have also added a Yahoo! link on the right side of the column and changed the color of my blog to match. I hope you like the new change. The text is a lot easier to read.

Good luck trading.
JD

THANK YOU BCSI !!!!!!!!!!

Who would have ever thought that BCSI would jump 29% in one day. All b/c of earnings. This stock is now one to hold on to for at least 8 more weeks based upon the Investor's Business Daily rules.

Since the overall market is in a correction, it is hard to make any recommendations to buy; however, I am liking MR as a buy candidate. I have noticed that the market held its 200 day moving average which is a good sign. Let's just wait and see how the market holds out.

Good luck trading.
JD

Hmmm. HAVE WE REACHED A BOTTOM?

A new rally may be in the works, we will just have to see. Still in on BCSI and OMCL. I am really liking the charts of VMI and ANST. VMI is in a better buying position. If a market rally ensues, I believe I am a buyer. (read in the book "How to Make Money in Stocks" on how to recognize a "bottom" in the market and prepare yourself for a follow through day.

BTW, BCSI reports it earnings Monday.

I just had to bump this blog back up top.

TRADING RULES
I have been successful with my approach to the stocks I want to look at to buy/sell. The way I came up with this system originally was to read "How to Make Money in Stocks" by Wm. O'Neil. I had used his book in the past, but recently 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 www.investors.com

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 www.investors.com
2. Stock makes a new 6 month high and meets all the above criteriaLearning 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.

INDICES HAVE CUT RECENT LOWS. GOING TO SHORT THE MARKET

Basically, the best thing to do right now is to move into cash. These last two rally attempts have failed and the market is in a correction. I have gone mostly into cash but am still holding onto CROX, OMCL, and BCSI.

One stock that I found to short today on a 7-20-55 day EMA cross is AINV.

Good luck staying in cash, but get ready to jump back in when your stocks give buy signals.
JD

MARKET HAS BOUNCED AGAIN. I'M LOOKING FOR MORE BUYING OPPORTUNITIES

This market continues to be bipolar. A few days ago, I went into cash. Now I am back into buying mode.

Today, I bought into a few stocks. STP near $42 and WFT near $54.20. Why?

STP has spit out a weird cup with handle. After the breakout, the stock came back down with the general market, but trading volume also declined. I am looking at the Stochastic and am noticing that the stock is OVERSOLD and it is ripe to head back up. Bought in today at $41.59 and again at $42.

On WFT, I am only looking for a 10% profit since the stock seems to be fluctuating and not making any significant moves in the past few months. Bought in at $54.20 and looking for a target near $59.20 since $59 has been a resistance point a couple of times in the past few months.

I am also continuing to accumulate shares in OMCL from $23.60 to $24.00. This should be a support area and hopefully the stock should rise again here soon.

Good luck trading.
JD

Some stocks have now popped up onto the watch list to buy at an opportune time. These include: LAYN, NVDA, VDSI. In fact LAYN, is currently in buy territory, but I have to mention that buying a stock during a market correction is tough to do since a trader should be in cash and not into buying stocks.

On the flip side, many stock have jumped on the "short" list. Remember, shorting a stock is tough to do so make sure you are comfortable doing this type of trade. New additions to the short list include:

ABK, AHM, AIV, AVB, AXR, BFS, BIO, BONT, CAC, CAKE,CHKE,CPKI, ESE, FACE, FED, IGT, INSU, LEAP, LXK, MBI, MBWM, MKL, MTB, MWRK, PFB, PMI, PSA, PVTB, RAS, RCII, RWT, SHLM, UCBI, VTAL

In July, I made mention of some stocks that I thought were going to make a move.

ICE was cut at an 8% loss.

CTRP came within $0.56 of the 8% stop loss order, but today bounced more than 8% on huge trading volume. To me that is a signal to buy again.

On July 10th, CROX was mentioned and has been the great winner of the three. So far it is up 24% from the buy point and that is less than 3 weeks. REMEMBER - ONE OF IBD's RULES IS TO HOLD ON TO A STOCK FOR AT LEAST 8 WEEKS WHEN IT RISES MORE THAN 20% IN LESS THAN THREE WEEKS.

MBT was a perfect "short" set up and it worked out for an 18% win when the stock went down.

You can always go look at these charts for free at www.stockcharts.com

Good luck trading.
JD

BUY LIST:
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, LAYN, MICC, NILE, NOV, NVDA, NVEC, NVT, OMCL, OYOG, PCLN, PCP, PCR, PCU, PDE, RDC, RIG, RIMM, RIO, SII, SQM, SRCL, TBSI, TNH, TWIN, VDSI, VIP, VMI, VSEA, VSEC, WBD, WFT, WOOF, WHQ

SHORT LIST:
ABK, AEPI, AHM, AIV, ALX, ARE, AVB, AXR, BIO, BONT, BSC, BXP, CAC, CAKE, CHKE, CPKI, CT, DSL, ESE, FACE, FED, GHL, IGT, INSU, ITMN, KB, LEAP, LPNT, LXK, MBI, MBWM, MKL, MSTR, MTB, MWRK, NVR, PJC, PFB, PMI, PSA, PVTB, RAS, RCII, RWT, SEPR, SHLD, SHLM, SLG, STU, UCBI, VNO, VTAL, WSC, WY