A LOT OF WAITING FOR THE FOMC TO MAKE AN ANNOUNCEMENT

There was a fair amount of selling today ahead of the "Fed's" announcement tomorrow. The FOMC is going to announce whether or not interest rates will stay the same or if they are going to move it up or down. The consensus is that they will cut interest rates again which is what I am hoping for. Sure it will weaken the US dollar, but it will allow stocks to rise in price.

I was scouting stocks again since I am looking for buys after BLUD and AMZN knocked me out of a couple of positions. I got in on GPOR and I am hoping it finds "support" at the current price of $21.00. Currently it is sitting at an 8% loss from where I bought it. So if it drops only 2% more, I am getting knocked out of another stock.

RIG is hitting $120 and is acting as "resistance" currently. I pray that it it going to breakout since oil prices continue to rise. I guess oil & gas drilling is really not a good industry to invest in currently.

I am going to put ABAX on a target to buy. Click on this chart to see where I believe the proper buy point and maximum buy point is. Once could say that the proper buy point is lower than $27.10 since there is a "cup with handle," but the breakout was so big I am willing to move my buy point up a little bit.

Pray that the Fed cuts interest rates.

Good luck trading.

JD

ACTU IS UPGRADED TO MARKET OUTPERFORM

ACTU has broken out this morning and is currently up 13% based upon the fact that is was upgraded to market outperform. When I made the suggestion to buy this stock, I said that it was risky to buy stocks priced under $20. Well this one paid off. It could turn out to be like BOOM three years ago where I garnered 400% within a year. Can I do it again? We will just have to see.

PDE still is sitting just below a buy point so I will keep my eye on this one.

As far as the negative trades, GPOR turned the opposite direction yesterday after buying it and is currently down 6% from where I bought it. If it breaks down and I lose 10%, I'm out. See, I don't win on every trade.

If you are following forex, both the GBP/USD and the NZD/USD are both doing well and have continued their positive upward movement.

Here is a picture of the model portfolio that I am using as my performance standard. In June, 2007 it had $20,000 in it and currently sits at $46,383.

Good luck trading.
JD

TWO STRIKES WITHIN A WEEK

BLUD took a digger on the news that their acquisitions in the late 90's are going to be investigated. So I took my 10% loss and walked away.

So I am on the prowl for new buys. Hunted down HURN and GPOR. HURN is sitting at support and by clicking on the chart you can see the proper buy point and maximum price that I would be willing to pay.

GPOR is sitting at support. Click on the chart to look for the $23.48 buy point.

Good luck trading.

JD

GIVE CMED A LOOK

CMED is looking even better. Right now it is sitting near a 1 1/2 year high and appears to be ready to break out. I am setting my sights on $43.23 which is today's closing price for my buy point.


If PDE breaks above $37.31 on higher than average trading volume, consider this one to buy during a base-building episode. This is only for those who are willing to risk it a little more than those who wish to play it conservatively.

As for Forex traders, click on this chart to see my recent buy/sell signals for NZD/USD and notice that today there is a buy signal. Don't look at the chart and expect it to show you UP versus DOWN days as I have changed the candlestick colors to suit my buy and sell signals with a confirmation signal at the bottom. I am not going to give away my secret as to what my indicators are so this is how to read this chart.

1. If either the candle or the trend bar at the bottom of the chart turn green, wait for the trend bar or the candle to turn green respectively to confirm a BUY signal.

2. If either the candle or the trend bar at the bottom of the chart turn red, wait for the trend bar or the candle to turn red respectively to confirm a SELL signal.

GOOD LUCK TRADING.

JD

I need this as a personal note. Watch GSF. Group #73 same as RIG

DAMN AMZN!!! THIS JUST SHOWS THAT EPS REPORTS CAN HURT A STOCK

I was basking in the glow on Tuesday when AMZN broke out and gained 10%. I was then burned by the fire when I checked on the market to see that it was down 15% due to warnings on future earnings. In light of that, I sold out for a loss of 5% since I originally bought at $90.

See, I don't win on every trade, but I do cut my losses quickly.

I do get to brag about my warning about the Dow Jones Industrials, DIA, turning down in the October 16th blog. I mentioned that one of the indicators called the MACD was turning down and I didn't like the feel of the market. In my personal account, I placed a trade in options called a bear call spread. The "bear" means that is I expect the market to be "bearish" or to move downward. The "call" means that is the type of stock option I bought and sold. (I know it may be confusing but this is for those who have learned how to trade stocks first. Be confident with stocks first, then you can investigate how to trade options) The spread means that I bought on "call" and sold another "call." My spread was a December 142 call that I sold, and I bought the Dec 145 call for $1.27. As of today, the spread is worth $0.90 which is a 30% gain in one week. My target is a 50% gain so I am waiting for this move.

Good luck trading.
JD

MONEY MANAGEMENT - FOREX AND STOCKS

This segment is more applicable to forex trading due to the high amount of risk versus trading stocks. The same can be applied to stocks, but I am willing to risk a lot more in stocks so I don't use this 2% rule in stocks.

The most common formula that investors use is risking no more than 2 percent of the total portfolio value in any given trade. If you have an account with $100,000 in it and by applying the 2 percent formula, you would be willing to risk up to $2,000 in a single trade. Then you must determine the number of forex contracts you can buy without risking more than $2,000.

If you set a stop loss of 100 pips on a trade, you are willing to risking is $1,000 per contract since each pip is worth $10. (100 pip loss x $10 = $1,000). Knowing this, you can now calculate how many contracts you can purchase by dividing $2,000 by $1,000 per contract. Meaning you can trade 2 contracts. This formula determines how much you are willing to invest from your total portfolio in any single trade.

In light of this, I am going to go long GBP/USD due to one of my trading signals being triggered. Let's see how this trade transpires. Remember, if you can't trade forex you can trade FXB which is the stock version so you will want to BUY the stock symbol FXB.

Good luck trading.
JD

ARTICLE ON REAL ESTATE INVESTING

The quickest path to finding true foreclosure bargains
Following the facts on discounts can help you find the real deals

NEW YORK (MarketWatch) -- You've heard a lot (probably too much!) about real estate market problems and especially the rapid rise in foreclosures. But as a real estate investor you're picking up big-time "bargain" signals on your antennae.

The headlines are ominous: some 243,000 foreclosures in August, up 36% from July and 115% from August 2006. There's blood in the streets.

So how do you get from "there must be bargains out there" to "how much will I save, and where are the best bargains?" I like to guide any buying decision as much as possible with the facts. But while lots of foreclosures are out there, how good an opportunity they might be was hard to know. Until now.

For sale and on sale

RealtyTrac, the same real estate portal and analysis group that supplies monthly national foreclosure statistics, also calculates the average discount-to-value by market -- that is, how much foreclosed homes actually sold for vs. their estimated market value in their markets. So -- bingo -- you've got a good indicator of how good an opportunity you're looking at.
Search on "foreclosures by state," and then click "view (state) foreclosure trends," and you'll get a nice snapshot of foreclosure filings, actual sales, average sales price and -- most of all -- the discount-to-value.

National trends

Nationwide, in the three months June through August, some 68,426 foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales price dropped from $271,000 to just over $239,000.

The discount-to-market ratio increased slightly from 76.42% to 77.68%. How do you read this ratio? It is the actual foreclosure sales price compared to the perceived market value of the home. So 77.68% means, on average, you'd get just over a 22% savings or "discount" on your foreclosure purchase. That's down from just over 23% a year ago.

The best (and worst) around the country

So, now the fun part: a state by state look at where the best deals and biggest changes are happening:

From June-August 2006 to June-August 2007, California, Nevada, Michigan, Massachusetts and Arizona showed the greatest increase in the number of foreclosure sales, while New York, New Jersey and North Carolina posted the biggest decreases among states that had 1,000 or more foreclosure sales.

But while California heads the list in sales, the discount is relatively small -- one of the five smallest in the country at only 17%. The best deals are in troubled Rust Belt or manufacturing-centric states -- Alabama, Pennsylvania, Indiana and Ohio.
States with largest discounts
Average foreclosure sale price
Average % of market value
Alabama
$133,834
59.95
Pennsylvania
110,936
61.68
Indiana
99,255
63.50
Ohio
90,300
64.70
Missouri
144,768
67.25

States with smallest discounts
Average foreclosure sale price
Average % of market value
Hawaii
$657,211
85.41
Washington
288,397
83.68
Virginia
338,912
83.48
Massachusetts
290,835
83.03
California
437,813
83.00

Finally, trends are interesting: Discounts are increasing in Midwestern states and in New Mexico, while decreasing some in Alaska, Iowa and Texas. This may be a sign of strengthening real estate markets in those states -- or weak market values to begin with.

State
Average % of market value
Discount increase (decrease)
Louisiana
74.04
15.88%
New Mexico
72.59
12.01
Minnesota
72.79
10.50
Indiana
73.52
9.82
Alabama
63.50
7.48
Alaska
82.02
(8.03)
Iowa
77.32
(5.34)
Texas
78.75
(4.82)
Kansas
74.03
(4.56)
Hawaii
85.41
(3.47)

These facts will help you know how much to pay -- and to know if foreclosures are right for you in the first place. They may also say something about which way the market in your area is likely to go. Either way, they will help you find the "real" deal.

www.usatoday.foreclosure.com

WHAT A CRAPPY FRIDAY

As I said a few days ago, I was concerned about the overall markets. Today really confirmed that feeling. Even though it was no where near the Black Monday back in 1987, it still hurt emotionally.

There are still ways to protect your portfolio in this market:

1. Sell all stock and move into cash.

2. Sell your losing stocks, hold onto your winners and be partially in cash.

3. Hedge your losses by investing in other investment vehicles.

I am going to highlight one of those other "investment vehicles" right now. I have been watching the foreign exchange a.k.a. Forex. One currency is catching my eye and that is the British Pound. Why? If you click on the chart to the left to enlarge it you will see a couple of things. 1. It appears to be breaking out of a cup with handle formation as it broke past $205.00. 2. There has been a lot of buying of the ETF as seen by the high spikes in black as seen as "trading volume" at the bottom of the chart. 3. There is talk that the US dollar is going to drop in value and this benefits the Pound. I'll bet you are probably now asking, how can I buy currency? Well, you don't have to buy it. You can buy the ETF (exchange traded fund) going by the symbol of FXB which stands for Foreign Exchange British Pound. Yeah, I see the one drawback - it is at $205, but this one is to hedge, or "diversify" your portfolio. I know I am going to be buying the Pound on Monday.

One stock that looks very promising is WBD. I am going to attach a picture and see if you can spot the pattern similar to FXB.

Good luck trading.

JD

For more advanced traders:

Bear Call Spread ARD 70/75, HURC 60/65, OMCL 30/35, SII 70/75, SRCL 55/60, WFT 70/75

SOLD OFF JASO AT $50, BUYING AMZN

Why am I getting out of JASO? I have gained my usual 20% profit and am willing to take that. I'll just leave my reason for selling at that.

I am going to buy AMZN, however. The reason why - it is in oversold territory and near "support" which was the late-July breakout to $89.00. Since that breakout, there has not been a lot of selling and I enjoy buying near support levels. AMZN is also in an industry that has a lot of money flowing into it so that is another reason to buy. If an industry is moving up in price, it usually pulls up the stock too.

Good luck trading.

JD

PERSONAL INFO

Info for me:
38631529 FM, 38623275 FM, 38627642 FM
38628670 FW, 38630224 FW,
57696261
24491775, 24491790
mta.org Mike Carr, CMT (CO)

http://bigmoneyoptions.investorplace.com/about_big_money_options.html

WFRewards: 1221 Orig Name then Mccain4pres
WFRewards busline: 4550 wrpmllc Nobama2008

http://www.forexcalc.com/ forex position calculator
http://www.cboe.com/LearnCenter/OptionCalculator.aspx Options calculator
www.gurufocus.com
www.stockpickr.com
www.themillionairezone.com
http://www.traderslibrary.com/
www.streetinsider.com

Forex transactions
86% invovle USD
37% involve EUR
16% JPY
15% GBP

27% of volume is EUR/USD
13% USD/JPY
12% GBP/USD

The most common pairs traded bases upon volume are: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD.
The most common time periods used in forex are 10, 20, 50, 100 and 200 days.

BEST OPTION PLAYS FOR CURRENCIES
ETFs used to match forex pairs:
FXA
FXB
FXC
FXF
FXM

USD index. If you want to USD to rise, buy the UUP which stands for USD UP. If you want to dollar to decline, BUY the UDN which stands for USD DowN.
DBV

Other ETFs
QID - the inverse fund of the Nasdaq.
SH, SDS - inverse of the SP-500.
DOG, DXD - inverse of the DJ-30.
TWM - 2x inverse of the Russell 2000.
MYY, MVV - inverse of the MidCap 400.
INP - India
FXI - China
EWZ - Brazil
EWM - Malaysia
EWW - Mexico
EWT - Taiwan
ILF - Latin American
FXP - Ultra short China
EEV - Ultra short Emerging Markets
EWV - Ultrashort Japan
GLD - Gold
OIL - Oil
SLV - Silver

13F Filing
Warren Buffet
Carl Icahn
Kirk Kerkorian
Eddie Lampert
George Soros

Strategies:

A system:
ADX cross D- => Calendar spread using ATM call with greater than one year expiration for long, and ATM call with near month expiration for short.

MH system:
MACD Histo crosses above zero line => buy up to $0.10 above that day's close. Goal is 5% profit.
MACD Histo crosses below zero line => short down to $0.10 below that day's close. Goal is aldo 5%.

Oops Trade:

If the market opens below the previous day's close, buy at yesterday's low. If the market opens above yesterday's high, sell at yesterday's high.

5/20/50 system:
Buy when 5 DEMA crosses above 20 DEMA, if both are above 50 DEMA. Goal is 5%.
Short when 5 DEMA crosses below 20 DEMA, if both are below 50 DEMA. Goal is 5%.

0.5/-0.5 MH OPTIONS SYSTEM:
Buy call when stock closes above -0.5 after being below it within the past 5 days.
Buy put/sell covered call when stock crosses below 0.5 within the past 5 days.

See 9/22/07 posting.



Moving Average Crossovers in Forex
The key to use moving average crossovers is to first identify the trend of the market and then to only trade in that same direction. If you find a strong uptrend, then using a moving average crossover as a buy signal has more value. If you find a strong downtrend, then using a moving average crossover as a sell signal also has more value. Since moving averages can help identify the trend of the market, we can develop a simple trading approach using three different moving averages. Use the 200 day exponential moving average (EMA) for long term trend determination. When the market is above this moving average we can consider the trend as up and only take the buys. When the market is below this moving average, we can consider the trend as down and only take the sells. We are also using a 3 day exponential moving average and a 7 day simple moving average. When the 3 dayEMA crosses above the 7-day EMA and the price is above the 200 day EMA, a buy signal is given. A sell signal is given when the pair is below its 200 day SMA and the 3 day EMA crosses below the 7 day EMA. Buy first contract 10 pips to the opposite side of the trade of the close (if there is a buy signal, buy 10 pips below the close of the prior day) Buy a second lot at the current price of the 7 day EMA. If there is a sell signal, sell 10 pips higher than the prior days close for the first contract. Then set a second lot at the current 7 day EMA price. Set a stop loss at 10 pips ABOVE/BELOW the previous 3 day high.

Then, 7 days after the entry, start setting the first stop loss at the 10 day EMA. Take 1/2 of the number of lots bought. Use this as a trend line determination and extend the line out to take profits when this trend line is violated again.

Here are the exact steps

1. Search Metastock in forex pairs for 3/7/200 cross. There is probably only 1 trade every 3 months per pair.

2. Set buy/sell limit at 10 pips below/above the previous day's close. Set second lot at the 7 day MA of the previous day that is good for 3 days.

3. Set stop loss at 10 pips below/above the low/high of the previous three days.

4. Set first target at 100 pips. Set second target (buy stop/sell stop) at previous 3 day low/high.

Simple Forex Strategy

Strategy requirements:Time frame: 1 dayIndicators: 5 EMA, 12 EMA, RSI 21 Currency: ANY
Entry rules: Buy when 5 EMA crosses up and over 12 EMA and RSI is above 50. Sell when 5 EMA crosses down and below 12 EMA and RSI is below 50.
Exit rules: exit when 5 and 12 EMA cross again or when RSI crosses back through 50.

SHORT TERM FX STRATEGY:

Daily Stoch is moving up - move to hourly chart and buy when moves out of Oversold area and sell when crosses back down out of Overbought area. The reverse is true too.

Long Term Strategy: Use Slow Stochastic on weekly indices to determine trend. Use trend lines on weekly to determine up or down trend. If stoch is up on weekly, look for DAILY stoch cross-up. If WEEKLY stoch is down, look for DAILY cross down on stoch.

3 DAY STRATEGY: Determine trend by looking at pair in comparison to 200 day MA. If pair is ABOVE 200 day MA, then BUY when the high from the previous 3 days has been breeched to the upside. Set a sell limit at 100 pips above this price for one contract and a sell stop at the low of the past 3 days. Each day move the stop loss up to the lowest low of the past 3 days.

If the pair is below the 200 day MA, SHORT when the low of the previous 3 days has been breeched to the downside. One the first contract, set a buy limit at 100 pips then set a buy stop at the highest high of the past 3 days. Move the buy stop down every day to the highest high in the past 3 days.

TAKING 50% OF MY JASO SHARES OFF THE TABLE

I am not liking the feel of the market and these past few days have seen bouts of selling (also look at DJIA at http://www.stockcharts.com/ and you will see that the MACD has crossed down which means it is a sell signal.) I have gained a target of 20% on JASO and I should take all of my JASO off the counter based upon my rules of stock trading. However, JASO ran up 20% in less than 3 weeks from my proper buy point. This means that I should hold onto the stock for at least 8 weeks. So, I am going to take a 20% profit on 50% of my JASO stock and let the other 50% run for at least 8 more weeks. Let's see if I have the fortitude to do just that.

As for the model portfolio, here is the latest picture as of 10/16/2007. The picture below it is from 9/20/2007. Yes, it still continues to rise.

Good luck trading.

JD

DSX SOLD OUT AT 20% GAIN AND JASO FINALLY CONTINUES TO MOVE UP

DSX hit my 20% sell rule on Thursday when it surpassed $35.00 so I took my 20% gain off the table. I know that my rules say to hold onto a stock for at least 8 weeks if it rises more than 20% in a 3 week span, but I had to leave town and I placed an order called a SELL LIMIT order. Basically what that order says is to SELL my stock then it hits a LIMIT. Use this example: You are in a car entering a highway at 50 mph. Putting your foot on the gas you accelerate. But when you accelerate to your goal of 80 mph, your car shuts the engine off and you immediately find yourself at your destination. You won! Same same with the stock - once your stock accelerates to a certain dollar amount, the stock is sold and profits are secured. I bought DSX at $29.10 and $29.60. I set my 20% target at $35 by placing a SELL LIMIT ORDER and walk away from the computer knowing that if the $35 target is hit, I have made my 20%. In my instance, I go to Las Vegas, win $2K playing craps, come back home, look to see I am at my destination - a 20% profit on DSX. Won at Vegas and in my stocks!!!

I was finally happy to see JASO took off too. Let's see how far this one can go.

So I was running back through my old trades and was checking out MR. I bought MR near $37.90 and my 20% target was $44.85. If you look at the attached chart, you will see that the stock topped out at $45.19 and has turned tail back down to near my original purchase price. This of course is the optimal set up where I got out near the top. Does this happen all the time? No, but more often than not this situation occurs. Notice on the chart however that the 50 day moving average (blue line) is acting as "support" and may allow the stock to take back off to the upside.

OMCL was sold out near $28 and it rose to $31. It is back down to near the original point where I took my 20% profit. I would wait until this stock retraced a little bit more closer to its 50 day moving average before considering buying it again.

Good luck trading.

JD

ACTU IS LOOKING PRETTY BUT ONLY IF YOU WANT TO TRADE LOW PRICED STOCKS

ACTU at $7.25 looks mighty nice, but remember that lower priced stocks are usually not as strong as higher priced stocks.

JASO is also bothering me. It broke out really well, but there appears to be a lot of selling going on as seen by the high trading volume on down days. That does not bode well for the stock. The solar industry group has not done well here lately and JASO is feeling the effects of that. I may be bailing on this one soon if it doesn't make any headway.

ADDING SOME STOCKS TO THE BUY LIST AND SHORT LIST

Since buying more JASO stock yesterday, the stock is up 5% today. Not bad for a day's work. DSX is also up 5% from where I purchased it, too.

For those of you new to investing, you should create a "BUY" list which are stocks that you are willing to buy when the opportunity arises. As you become more adept at buying stocks, you can create a "SHORT" list which means you borrow a stock from a broker, then go to the market and sell it, aka "short" it, and hope to buy it back at a later date for a cheaper price. It is an extremely difficult concept to grasp so it is not for the novice investor.

I am going to add some stocks to my buy list:
VMW, TRAK, SID, TISI, LGTY, EXLS, LIMC

Short list:
JCG, UPM, BHE, NTRI

Good luck trading.
JD

Updated buy list
AAPL, ACH, ARD, BAP, BHP, BIDU, BOOM, CAE, CAM, CLB, CMED, CRNT, DECK, DRYS, DSX, EDU, ELP, ESV, EXLS, FLIR, FMCN, FSRV, FSTR, FTI, FTK, GRMN, GSF, GSOL, HAL, HURC, HURN, ICE, IEX, ISRG, KMGB, LAYN, LGTY, LIMC, MICC, NILE, NOV, NVDA, NVEC, NVT, OMCL, OYOG, PCLN, PCR, PDE, RDC, RIG, RIMM, RIO, SID, SII, SQM, SRCL, TBSI, TISI, TNH, TRAK, TWIN, VDSI, VIP, VMI, VMW, VSEA, VSEC, WBD, WFT, WOOF, WHQ

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

DITCHED AIRM AND BOUGHT MORE DSX AND JASO

AIRM is very well overextended and I expect the $50 mark to be a fair amount of resistance for the stock so I took my profits of AIRM at $50.47 giving me a nice 17% return.

I then took that money and bought more JASO and DSX shares today. Why would I add more shares? Click on the chart to the left and see that JASO has retraced back to near the original buy point of $40.75. The yellow arrows at the bottom of the screen show the high trading volume days and these show good signs of buying. Since trading volume has not picked up higher than those two days, this retracement in price is OK.

Same situation with DSX. Again, click on the chart to find out why. DSX was bought between $29.10 and $29.60.

Also noticed that BLUD had an excellent day today by rising 10%. That is one that fueled my overall portfolio today.

Good luck trading.

JD

DSX BOUGHT AT $30.10

I was able to buy DSX today at $30.10 which is 1.1% above my proper buy point. Let's continue to watch what will happen with the stock.

MR AND OMCL HIT 20% RULE

MR and OMCL HAVE made a good run and both gave up their 20% so I am now out of MR and OMCL.. What is the 20% rule? If a stock runs up 20%, it is time to get out. Search "trading rules" in this blog to find out what my rules are.

I am looking at stocks to buy into now that MR and OMCL are out of the portfolio. DSX looks hot to me. I would peg $29.78 as the proper buy point. The maximum price I will pay is $31.26. It was a short 9 week cup and I believe it is putting out a "high handle."

As for the model portfolio that had $20K in it in June, 2007, MR was taken out and NBG was added at @ $12.89. It still holds JASO in it, but I am not too confident in its recent movement. My confidence is overshadowed by the fact that JASO still has potential upward movement despite its recent downturn. The recent downturn is partially due to the falling trading volume. Price movement down with declining trading volume is an OK sign. When trading volume rises and price drops dramatically, that is a warning signal to get out.

Good luck trading.

JD