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
Saturday, July 28, 2007
Thursday, July 19, 2007
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
Wednesday, July 11, 2007
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
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
Tuesday, July 10, 2007
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
Friday, July 06, 2007
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.
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
Thursday, June 28, 2007
EQIX DID IT. RIMM COMING OUT OF OVERSOLD AREA
EQIX broke above the level I discussed before and is well within a buying area of the breakout at $89.42. Buying up to $93.90 is up to the 5% limit as described in "How to Make Money in Stocks."
Look at RIMM by clicking on the chart to your left and it will enlarge it. Notice that RIMM broke out in May and has had a good run-up since. In the past week or so, the stock has retraced a little bit and notice the yellow elipse on the Stochastic signal at the top of the chart. Inside that circle is the signal to "go long" or buy shares. The other positive factor is that trading volume was higher than average.
NTGR looks as if it is using the 50 day moving average as support and potentially in a buy area since it too is in an oversold area on the stochastic indicator.
Good luck trading.
JD
Tuesday, June 26, 2007
WATCHING EQIX FOR BREAKOUT
Watch to see if EQIX breaks out above $89.42. That's about all I have to say.
Wednesday, June 20, 2007
EUR/USD DAY TRADING SYSTEM IS NOW 2 FOR 2
Let's look to see if the day trading forex system that was described earlier worked again. Click on the chart to the left and you will notice that it has. So this system is so far 2 for 2 on wins.In order to see the system rules, click in the white box in the upper left hand corner of the blog, type in FOREX SYSTEM and then click on search blog. This will take you to the system rules.
I was also looking at an interesting strategy just by looking at the charts. What if you took a Stochastic signal (15,5,0) and bought when a signal was given and set a target of 100 pips? and the reverse where you sell when a Stoch signal is given and set the same 100 pip goal? This looks like a once a month trade, however.
GBP/AUD just gave a Stoch signal today on a daily chart. Since I can't trade the pair with my forex.com account, I guess I will paper trade it. I am buying at 2.3550 and setting a goal of 2.3650. Stop loss of 2.3400 since that is below previous support. Also it is not too smart to have a goal of 100 pips profit and a stop loss of 150 pips. We'll just have to see how this pans out. I went back and looked at a chart and noticed that the USD/CAD pair put out a stochastic buy signal a few days ago at $1.0666. Currently, the pair is at $1.0665. So I tried it. I bought at $1.0655 and set a goal for $1.0755. This is a risky trade but the $TNX is heading up again which means that the USD is going to gain a little strength.
As for the overall stock market, IBD quipped this:
Stocks Close Sharply Lower On Higher Volume
Not a good sign for the current rally. It is also not a good sign for the $TNX to be heading back up again. The best plan of action is to take some $$$ off the table or sell some covered calls.
There are some stocks that are bucking the downtrend and are good candidates for buying when the stocks make their move. These include: CMI near $100, FWLT above $110, SPWR -well, now.
GOOD LUCK TRADING
JD
Saturday, June 16, 2007
HERE ARE SOME MORE CHARTS TO PONDER
I want to teach some technical analysis since I am a technical trader after I use http://www.investors.com/ to analyze some stocks that I am interested in buying or selling.
The first one is FLIR. This chart does not show it, but FLIR broke out a 52 week high in early April near $37. I have waited for a rest and it just presented itself. FLIR traded up near $44 and has retraced down to $41. As you can see on the chart this set up a symmetrical triangle formation. (click on the link to see a definition of a triangle). The triangle was broken to the upside and buying up to $43.35 is OK. The reason why I say $43.35 is that this is 5% above the breakout point of $41.25. http://www.investors.com/ does not recommend buying at any point beyond 5% from the breakout. So there is the logic. I am going to set an initial target price of $45.25 since the ascending triangle has a price range of $4.00 and I added that to the breakout price of $41.25. A second target would be at $8 above $41.25. Why? Well, the old 52 week high was $36.36 and the most recent high was $44.14. That is near $8 ($44 - $36) and I am going to set a second target at $49.25 (breakout of $41.25 + $8).
The next stock is FMCN - a Chinese company. As you can see on the chart, FMCN has just broken out of a cup with handle formation. This is a good formation to show that the price of the stock may take off again. The pivot point is $45.55 and FMCN is right there. Again, don't buy more than 5% above the pivot point of $45.55 which means buy up to $47.85, but no further.
HURN is pitching an ascending triangle, but I don't know which way it is going to go. If a trader was to look at the price action from Friday, it might scare you away since trading volume was high and the price went down. If HURN breaks ABOVE $69.50 on HIGH TRADING VOLUME, then it would be a buy. However, if the stock falls BELOW $66.25 on HIGH TRADING VOLUME, shorting the stock would be the plan of attack. To make things simplistic:
The first one is FLIR. This chart does not show it, but FLIR broke out a 52 week high in early April near $37. I have waited for a rest and it just presented itself. FLIR traded up near $44 and has retraced down to $41. As you can see on the chart this set up a symmetrical triangle formation. (click on the link to see a definition of a triangle). The triangle was broken to the upside and buying up to $43.35 is OK. The reason why I say $43.35 is that this is 5% above the breakout point of $41.25. http://www.investors.com/ does not recommend buying at any point beyond 5% from the breakout. So there is the logic. I am going to set an initial target price of $45.25 since the ascending triangle has a price range of $4.00 and I added that to the breakout price of $41.25. A second target would be at $8 above $41.25. Why? Well, the old 52 week high was $36.36 and the most recent high was $44.14. That is near $8 ($44 - $36) and I am going to set a second target at $49.25 (breakout of $41.25 + $8).
The next stock is FMCN - a Chinese company. As you can see on the chart, FMCN has just broken out of a cup with handle formation. This is a good formation to show that the price of the stock may take off again. The pivot point is $45.55 and FMCN is right there. Again, don't buy more than 5% above the pivot point of $45.55 which means buy up to $47.85, but no further.
HURN is pitching an ascending triangle, but I don't know which way it is going to go. If a trader was to look at the price action from Friday, it might scare you away since trading volume was high and the price went down. If HURN breaks ABOVE $69.50 on HIGH TRADING VOLUME, then it would be a buy. However, if the stock falls BELOW $66.25 on HIGH TRADING VOLUME, shorting the stock would be the plan of attack. To make things simplistic:
BUY if the stock moves ABOVE the top red line. SELL if the stock falls below the diagonal lower red line.
Drawing trend lines on a chart that covers a year time span will really help a trader out in determining entry/exit points.
Drawing trend lines on a chart that covers a year time span will really help a trader out in determining entry/exit points.
GOOD LUCK TRADING.
JD
Friday, June 15, 2007
NEED TO GET BACK TO BEING A CHARTIST AND QUIT WORRYING ABOUT WHAT THE "NEWS" SAYS
I realized after looking back at my recent blogs that I am looking at the news more than I am looking at my charts. Darvas had the benefit of being blinded from financial news and did very well for himself.
Here are the stocks I currently own. Click on the chart to get a better view of what is going on.
ALJ: Currently $42.86. Target $45 which is the upper trend line. Stop loss at $40 since that was previous resistance for 4 tries when it was broken on the 4th try. Usually, resistance becomes support. So now $40 resistance should be $40 support.
I bought at $41.22 due to breakout above previous resistance of $39.91. 10% target is $43.91.
IFOX: Currently 17.97 which is around the area of previous "resistance" in February. The breakout above $17 from a Cup with Handle happened in late May and the stock advanced only to come back and use that same spot as "support" at $17 just a few days ago. I added a few shares at $17.80.
ICE: just brokeout above "resistance" at $155. This stock was originally purchased in September, 2006 by me near $78. Yes, 100% return in 9 months. I'll take it. Plan on adding more shares near $155 if you can afford it. The chart may look as if the stock is in the middle of the red channels, but realize that $155 was resistance for a solid month.
ICON: Broke out of a Cup with Handle today. The reason why is the huge volume see on May 21 helped propel ICON higher, but it then retraced and the huge trading volume today allowed it to break the handle. This stock too has been a long time holder and I added more shared today at $22.35. Buying up to $22.94 is OK. That is the limit of the "don't buy beyond 5% of the breakout price" as described in How to Make Money in Stocks. Since $21.75 was the previous high, the breakout price is $0.10 higher than the previous high. The buy point is thus $21.85 and $22.94 is 5% higher.
MA: Currently $157.65 and at the top of a trendline. Bought at $143.53. I bought this one when it was a little overextended and probably shouldn't have, but I have lucked out. I am going to take my profits as near to $160 as possible.
NTGR: This one has been held onto for many months after an original breakout on an earnings release. It still continues to rise and I am holding on. Hopefully it will pass the most recent resistance at $38 and move higher. I am going to set my target near $39.50 which is near a 20% profit. Original purchase was $33.3247.
RBN: Currently $47.89. Since this one just broke out of a cup with handle, there is no trend line set yet. I expect the stock to retrace back down to between $46 and $47. I intend to add more shares if it does. Stop loss at 8% below breakout price of $46.78 is $43.03.
RIMM: has been a nice mover. Current price is $173.75. Original buy at $149.5749. The amazing part is that my target price is near $190.00 with a stop loss $167.50.
RATE: This stock is hitting the upper channel in a trendline. Why am I not selling? Well, this stock broke out of a Cup with Handle at $43.64, rested and then took off again. With the stock currently 13% higher than the buy point, it is off limits for buying. Paring off some shares in the name of profit is good. Think. 13% in one month is better than most brokerage houses.
Hope this helps.
Good luck trading.
JD
Here are the stocks I currently own. Click on the chart to get a better view of what is going on.
ALJ: Currently $42.86. Target $45 which is the upper trend line. Stop loss at $40 since that was previous resistance for 4 tries when it was broken on the 4th try. Usually, resistance becomes support. So now $40 resistance should be $40 support.I bought at $41.22 due to breakout above previous resistance of $39.91. 10% target is $43.91.
BIDU: Current price $143.07. Target $149.50. Stop loss currently at $134.00. My original purchase price was $131.15 due to closing above the "handle" in a cup with handle which happened in Mid-May. Notice the stock is bouncing between a rising channel. If one wishes to take short-term trades, buy when the bottom trendline is touched and sell when the upper line is touched. Any break down below the trend line is a sell signal.
IFOX: Currently 17.97 which is around the area of previous "resistance" in February. The breakout above $17 from a Cup with Handle happened in late May and the stock advanced only to come back and use that same spot as "support" at $17 just a few days ago. I added a few shares at $17.80.
ICE: just brokeout above "resistance" at $155. This stock was originally purchased in September, 2006 by me near $78. Yes, 100% return in 9 months. I'll take it. Plan on adding more shares near $155 if you can afford it. The chart may look as if the stock is in the middle of the red channels, but realize that $155 was resistance for a solid month.
ICON: Broke out of a Cup with Handle today. The reason why is the huge volume see on May 21 helped propel ICON higher, but it then retraced and the huge trading volume today allowed it to break the handle. This stock too has been a long time holder and I added more shared today at $22.35. Buying up to $22.94 is OK. That is the limit of the "don't buy beyond 5% of the breakout price" as described in How to Make Money in Stocks. Since $21.75 was the previous high, the breakout price is $0.10 higher than the previous high. The buy point is thus $21.85 and $22.94 is 5% higher.
MA: Currently $157.65 and at the top of a trendline. Bought at $143.53. I bought this one when it was a little overextended and probably shouldn't have, but I have lucked out. I am going to take my profits as near to $160 as possible.
NTGR: This one has been held onto for many months after an original breakout on an earnings release. It still continues to rise and I am holding on. Hopefully it will pass the most recent resistance at $38 and move higher. I am going to set my target near $39.50 which is near a 20% profit. Original purchase was $33.3247.
RBN: Currently $47.89. Since this one just broke out of a cup with handle, there is no trend line set yet. I expect the stock to retrace back down to between $46 and $47. I intend to add more shares if it does. Stop loss at 8% below breakout price of $46.78 is $43.03.
RIMM: has been a nice mover. Current price is $173.75. Original buy at $149.5749. The amazing part is that my target price is near $190.00 with a stop loss $167.50.
RATE: This stock is hitting the upper channel in a trendline. Why am I not selling? Well, this stock broke out of a Cup with Handle at $43.64, rested and then took off again. With the stock currently 13% higher than the buy point, it is off limits for buying. Paring off some shares in the name of profit is good. Think. 13% in one month is better than most brokerage houses.Hope this helps.
Good luck trading.
JD
Wednesday, June 13, 2007
MARKET IS BIPOLAR
My inclination is that the market is not doing too well. Sure buying occurred today, but it wasn't near the level of selling yesterday. Sure, the market is bouncing off the 50 day moving average, but volume is still lacluster. The 10 year treasury note is still at 5 year highs which means the dollar will get stronger, but interest rates will probably still rise.
The above note was brought to you by we-confuse-ya.com. The above note is garbage since I am primarily a technical trader. If I try to cloud all of my reasoning to buy and sell with the above garbage, I become a deer in the headlights and cannot make a move.
Despite that, RBN is in the middle of a cup and handle and broke the handle yesterday. It is still within a buy point so I am gonna sell a laggard and get in on RBN. FCSX also cleared resistance in high trading volume, so that one is on the buy list, too.
The AUD/JPY trade is finally starting to make its move, but the AUD/USD has traded down due to the USD getting stronger. Let's see what is going to happen. I am currently in the middle of the EUR/USD day-trade scenario that I previously described and it has yet to trigger the limit order or the stop loss order. I hate to carry it overnight, but I have to let it hit one of the triggers.
Good luck trading.
JD
The above note was brought to you by we-confuse-ya.com. The above note is garbage since I am primarily a technical trader. If I try to cloud all of my reasoning to buy and sell with the above garbage, I become a deer in the headlights and cannot make a move.
Despite that, RBN is in the middle of a cup and handle and broke the handle yesterday. It is still within a buy point so I am gonna sell a laggard and get in on RBN. FCSX also cleared resistance in high trading volume, so that one is on the buy list, too.
The AUD/JPY trade is finally starting to make its move, but the AUD/USD has traded down due to the USD getting stronger. Let's see what is going to happen. I am currently in the middle of the EUR/USD day-trade scenario that I previously described and it has yet to trigger the limit order or the stop loss order. I hate to carry it overnight, but I have to let it hit one of the triggers.
Good luck trading.
JD
Tuesday, June 12, 2007
Saturday, June 09, 2007
STILL NOT EXCITED ABOUT FRIDAY'S MOVE
Sure the markets may have gone up on Friday, but trading volume trailed off. So, to me the market is still not on good footing and I am not trusting it.
This is now more of a journal entry. I was looking at the IBD TIMESAVER TABLE in the B section and noticing that the stocks in the list are definitely making a move. Vector Vest has a trading philosophy of being long one stock and being short another stock at the same time. If I look at the list, choose one stock to be long and one to be short, that could be another option for a trading system.
I need to set out some rules for looking at which stocks to buy.
1. Smart Select Composite Rating must be greater than 98 or 99
2. EPS must be higher than 95
3. Relative Price Strength must be higher than 90
4. Industry Group Relative Strength must be A or B
5. Sales/Profit/ROE A or B
6. A/D must be A or B
7. Must be a new 6 month high
8. Must have higher than average trading volume
BCSI is on the buy list along with GSOL. DECK would have been the most perfect candidate had it been caught earlier.
Rules for stocks to short:
1. Smart Select Composite Rating must be less than 60
2. EPS must be less than 60
3. Relative Price Strength must be less than 60
4. Industry Group Relative Strength must be C or D
5. Sales/Profit/ROE C or D
6. A/D must be C or D
7. Must be at 3 month low
FLML is on the short list.
Goal:
Cut losses at 8%
Take 1/2 profit at 10%
Take 2nd half of profits at 25%
If original investment was $10,000:
1/2 profit is $5,000. And 10% of $5,000 would be a $500 profit.
Then resto of 25% profit of $5,000 would be $1,250 profit.
If cut losses at 8%, that would be a loss of $800 for the full $10,000.
I am willing to take a $1,750 profit and an $800 loss. That if greater than a 2:1 win-loss ratio. So I could lose 2 times, win 1 and still be ahead of the game.
Hmmm. Sounds good. I just need the market to determine which was it is going to go with other systems, but if I am long one stock and short another, it would temper the loss.
FYI - watch SAY. It may be getting ready to breakout.
This is now more of a journal entry. I was looking at the IBD TIMESAVER TABLE in the B section and noticing that the stocks in the list are definitely making a move. Vector Vest has a trading philosophy of being long one stock and being short another stock at the same time. If I look at the list, choose one stock to be long and one to be short, that could be another option for a trading system.
I need to set out some rules for looking at which stocks to buy.
1. Smart Select Composite Rating must be greater than 98 or 99
2. EPS must be higher than 95
3. Relative Price Strength must be higher than 90
4. Industry Group Relative Strength must be A or B
5. Sales/Profit/ROE A or B
6. A/D must be A or B
7. Must be a new 6 month high
8. Must have higher than average trading volume
BCSI is on the buy list along with GSOL. DECK would have been the most perfect candidate had it been caught earlier.
Rules for stocks to short:
1. Smart Select Composite Rating must be less than 60
2. EPS must be less than 60
3. Relative Price Strength must be less than 60
4. Industry Group Relative Strength must be C or D
5. Sales/Profit/ROE C or D
6. A/D must be C or D
7. Must be at 3 month low
FLML is on the short list.
Goal:
Cut losses at 8%
Take 1/2 profit at 10%
Take 2nd half of profits at 25%
If original investment was $10,000:
1/2 profit is $5,000. And 10% of $5,000 would be a $500 profit.
Then resto of 25% profit of $5,000 would be $1,250 profit.
If cut losses at 8%, that would be a loss of $800 for the full $10,000.
I am willing to take a $1,750 profit and an $800 loss. That if greater than a 2:1 win-loss ratio. So I could lose 2 times, win 1 and still be ahead of the game.
Hmmm. Sounds good. I just need the market to determine which was it is going to go with other systems, but if I am long one stock and short another, it would temper the loss.
FYI - watch SAY. It may be getting ready to breakout.
Thursday, June 07, 2007
MOVING INTO CASH IN THE STOCK MARKET, LONG AUD
The markets to me have finally set the tone. If you look at a chart of the SPY, you will see that the MACD has not made an upward movement in the past few weeks eventhough the price of the stock has continued to rise. That is called negative divergence. The sell-off was accentuated by higher trading volume. If you prefer seeing stock charts that move up, look at the symbol SDS. It is the inverse of the SPY and will rise if the SPY falls. Today it really broke the downtrend line and I suppose it will move sideways for a few days in order to consolidate and move up. Also, just to put the theory out there - are we creating the "head" in a "head and shoulders?"
I have been looking at my currency and if I use the "intermarket analysis" looking at FXA on the stock charts and looking at the AUD/USD pair and the AUD/JPY pair both breaking resistance lines, I would say I am long both. I am already in on the AUD/JPY pair at $101.693 since I have received interest payments and I bought in tonight at $0.8431 on the AUD/USD pair. Also noted in other blogs: The strength in the commodity currencies (AUD, CAD, NZD) is inline with consensus expectations of generally higher inflation across the world which could be positive for commodities.
I also tried this forex system that I will call the DAILY EURO that supposedly has a 70% success rate if applied correctly.
The rules are:
1. EUR/USD pair only
2. Use 0600-0700 Mountain Standard time since I live in this time zone (apply it to your respective time zone)
3. Mark a horizontal line at 0600 opening on 5 minute chart
4. Mark the highest point from 0600-0700 with a horizontal line
5. Mark the lowest point from 0600-0700 with a horizontal line
6. IF:
A. Pair is above opening line more than below, go long when EUR/USD closes ABOVE the resistance".
B. Pair is below opening line more than above, short the pair when is closes BELOW the "support".
7. Set target equal to the high-low pip spread from 0600-0700. i.e. If high was $1.3425 and low was $1.3400, goal is 25 pips.
8. Set stop loss 5 pips above "resistance" or below "support".
Today, the goal was 15 pips due to the range and I was successful. Profit $150.
STATS: W/L = 1/0 (100%))
Good luck trading.
JD
I have been looking at my currency and if I use the "intermarket analysis" looking at FXA on the stock charts and looking at the AUD/USD pair and the AUD/JPY pair both breaking resistance lines, I would say I am long both. I am already in on the AUD/JPY pair at $101.693 since I have received interest payments and I bought in tonight at $0.8431 on the AUD/USD pair. Also noted in other blogs: The strength in the commodity currencies (AUD, CAD, NZD) is inline with consensus expectations of generally higher inflation across the world which could be positive for commodities.
I also tried this forex system that I will call the DAILY EURO that supposedly has a 70% success rate if applied correctly.
The rules are:
1. EUR/USD pair only
2. Use 0600-0700 Mountain Standard time since I live in this time zone (apply it to your respective time zone)
3. Mark a horizontal line at 0600 opening on 5 minute chart
4. Mark the highest point from 0600-0700 with a horizontal line
5. Mark the lowest point from 0600-0700 with a horizontal line
6. IF:
A. Pair is above opening line more than below, go long when EUR/USD closes ABOVE the resistance".
B. Pair is below opening line more than above, short the pair when is closes BELOW the "support".
7. Set target equal to the high-low pip spread from 0600-0700. i.e. If high was $1.3425 and low was $1.3400, goal is 25 pips.
8. Set stop loss 5 pips above "resistance" or below "support".
Today, the goal was 15 pips due to the range and I was successful. Profit $150.
STATS: W/L = 1/0 (100%))
Click on the chart and look at the explanation.
One thing I noticed while looking at the chart.
1. It did come up to and meet resistance near the 0600-0700 high.
2. The overall trend prior to 0600 was DOWN, so my inclination was for further decline
3. Sell signals popped up before the move down that were consistent with the overall trend and these included a combination of A. A close below the 30 day SMA, B. The MACD cross below the zero line, and C. In a different stochastic indicator, an OVERBOUGHT signal was given. These would have afforded another 5 pips, or $50. Food for thought.
Good luck trading.
JD
Tuesday, June 05, 2007
USD/CHF NOT DOING SO WELL, BUT BOUGHT IN ON AUD/JPY
Talk about getting a hit on USD/CHF. The day after I bought in at $1.2296 on the pair due to a MACD crossover the zero line, the pair took a nose dive and I am currently down 111 pips. So here is the battle in my mind: I bought based upon the MACD crossover AND the fact that the number of contracts wanting the pair to rise in price doubled AND that I can gather interest $$ since the USD has a higher interest rate than the Swissie. So, do I take a loss and sell the pair now or do I wait it out? I am still going to hold on for now even though my MACD is now below zero.
The trending indicator I used showed that the AUD/JPY pair will probably begin trending higher so I bought the AUD/JPY pair today at $101.76.
CRM is really showing good positive signs of accumulation. A breakout above $50 would be good.
Good luck trading.
JD
The trending indicator I used showed that the AUD/JPY pair will probably begin trending higher so I bought the AUD/JPY pair today at $101.76.
CRM is really showing good positive signs of accumulation. A breakout above $50 would be good.
Good luck trading.
JD
Sunday, June 03, 2007
BUYING IN ON USD/CHF
I was looking at the chart of USD/CHF and trying to create a position that would protect my only open position of a logn GBP/USD. "Long" means that I have bought the GBP (British Pound) and am selling the USD. It is very counterintuitive to be selling the USD in one pair and buying the USD in another pair, but that is currently what I did today. I am long the USD/CHF as of today at $1.2293. Here is my reasoning: 1. Institutions piled into the USD/CHF in a big way during the past week. The net long position doubled when it came to buying the USD as well as USD calls in options! 2. DMI was below 20 and it had a large move denoting the beginning of a trend to the upside. 3. THe MACD crossed above the zero line.
Good luck trading.
JD
Good luck trading.
JD
Friday, June 01, 2007
STILL AMAZED WITH THIS RUN
I have to admit, after February, I didn't think that this market would continue in this fashion. Oh well. It is still making me $$$. Have you seen WNR?
Some more breakouts occurred today. Those stocks include: WBD, PCU, MICC, MR, CYNO and possibly GEF. GEF is only at a 3 month high and Darvas recommended a 12 month/52 week high to enter a trade. With today's volatile market compared to back then, a 3 month high is just as feasible. All of the other stocks are now hitting 52 week highs and are thus buys by Darvas standards. ALJ is hitting a 10 month high and I bought in today as it has broken out of the handle in a "cup and handle."
RATE really appears to be consolidating after meeting resistance around $45. Accumulation has been occuring. It is just going to be a while to see if it can break through.
Looking back, I should have stuck with TAM and bought into IFOX. Arrrrgghhh. There is a rule in the Investors Business Daily circle: Don't sell a rising stock!!!!
Some more breakouts occurred today. Those stocks include: WBD, PCU, MICC, MR, CYNO and possibly GEF. GEF is only at a 3 month high and Darvas recommended a 12 month/52 week high to enter a trade. With today's volatile market compared to back then, a 3 month high is just as feasible. All of the other stocks are now hitting 52 week highs and are thus buys by Darvas standards. ALJ is hitting a 10 month high and I bought in today as it has broken out of the handle in a "cup and handle."
RATE really appears to be consolidating after meeting resistance around $45. Accumulation has been occuring. It is just going to be a while to see if it can break through.
Looking back, I should have stuck with TAM and bought into IFOX. Arrrrgghhh. There is a rule in the Investors Business Daily circle: Don't sell a rising stock!!!!
Thursday, May 31, 2007
BOOKS TO READ
Here is a selection of books that are important in getting a trader started.
1. How to Make Money in Stocks by Wm. O'Neill
2. How I Made $2,000,000 in the Stock Market by Nicolas Darvas
3. Reminiscences of a Stock Operator by Edwin Lefvre
4. Secrets for profiting in Bull and Bear Markets by Stan Weinstein
5. CMT books
A. Technical Analysis The Complete Resource for Financial Market Technicians
B. Technical Analysis Explained
C. Technical Analysis of Stocks Trends 9th Ed.
D. MTA Code of Ethics
So far things are going well in the markets so I am not making any changes in the portfolio as of yet. Did you catch on the WNR? Are you watching the handle being formed in CRM? or MR? Did you catch RIMM or MA?
Good luck trading.
JD
1. How to Make Money in Stocks by Wm. O'Neill
2. How I Made $2,000,000 in the Stock Market by Nicolas Darvas
3. Reminiscences of a Stock Operator by Edwin Lefvre
4. Secrets for profiting in Bull and Bear Markets by Stan Weinstein
5. CMT books
A. Technical Analysis The Complete Resource for Financial Market Technicians
B. Technical Analysis Explained
C. Technical Analysis of Stocks Trends 9th Ed.
D. MTA Code of Ethics
So far things are going well in the markets so I am not making any changes in the portfolio as of yet. Did you catch on the WNR? Are you watching the handle being formed in CRM? or MR? Did you catch RIMM or MA?
Good luck trading.
JD
Thursday, May 24, 2007
FOREX
For 6/1/2007
Tomorrow’s US Employment report could be the catalyst to spark the USD out of this trading range. As most economists are forecasting approximately a gain of 138 thousand jobs, a number greater than 138k would be viewed as USD positive. Coupled with the new yearly high in the 10 year yield (4.91%) and subsiding speculation of any interest rate cuts in the near future by the Fed, the USD could catapult out of this narrow band.
The RESULT: EUR/USD and GBP/USD actually rose despite the prediction above. The non-farm payroll measures the number of jobs created in the last month and this number came in strong at 157,000 versus the expected 135,000. Looking underneath this raw number into the multiple dimensions of the report, it suggests so-so growth will continue. Just a slow, steady grind upward. This report is important because it influences policy decisions made over the next several weeks; therefore, it removed any lingering possibility of a rate cut in the foreseeable future.
On the other hand, the core PCE deflator came in low at .1 percent versus .2 percent. The deflator measures consumer inflation, excluding energy and food. This is important because energy has seen a huge run-up, which greatly impacts inflation. The dollar dipped on this data but without the energy component, it's not a full story.
The ISM index simply measures manufacturing strength and came in strong at 55 versus the expected 54. Some of this strength was anticipated after yesterday's strong showing in the Purchasing Managers' Index (PMI), which is very similar in nature.
Higher oil prices are typically dollar negative, since petro dollars typically flow out of the greenback. Thus, higher oil prices = long GBP/JPY, GBP/USD
Higher oil prices are good for the GBP/JPY pair since Japan has to import their oil and the UK has strong oil interests.
Tomorrow’s US Employment report could be the catalyst to spark the USD out of this trading range. As most economists are forecasting approximately a gain of 138 thousand jobs, a number greater than 138k would be viewed as USD positive. Coupled with the new yearly high in the 10 year yield (4.91%) and subsiding speculation of any interest rate cuts in the near future by the Fed, the USD could catapult out of this narrow band.
The RESULT: EUR/USD and GBP/USD actually rose despite the prediction above. The non-farm payroll measures the number of jobs created in the last month and this number came in strong at 157,000 versus the expected 135,000. Looking underneath this raw number into the multiple dimensions of the report, it suggests so-so growth will continue. Just a slow, steady grind upward. This report is important because it influences policy decisions made over the next several weeks; therefore, it removed any lingering possibility of a rate cut in the foreseeable future.
On the other hand, the core PCE deflator came in low at .1 percent versus .2 percent. The deflator measures consumer inflation, excluding energy and food. This is important because energy has seen a huge run-up, which greatly impacts inflation. The dollar dipped on this data but without the energy component, it's not a full story.
The ISM index simply measures manufacturing strength and came in strong at 55 versus the expected 54. Some of this strength was anticipated after yesterday's strong showing in the Purchasing Managers' Index (PMI), which is very similar in nature.
Higher oil prices are typically dollar negative, since petro dollars typically flow out of the greenback. Thus, higher oil prices = long GBP/JPY, GBP/USD
Higher oil prices are good for the GBP/JPY pair since Japan has to import their oil and the UK has strong oil interests.
Wednesday, May 23, 2007
MARKETS HAVE MADE A NICE RUN
If you look at the overall markets, they have had an amazing run in the past few months since the February downturn. The slope of this ascent is rather steep and there may be need for some rest. Despite this potential resting point, some stocks appear to still have wind in their sails, but be prepared for a downturn by protecting your portfolios with tight stop losses or by selling covered calls.
RATE has officially broken out of a cup and handle with the close today above $43.64. MCO is also a current buy as it has done the same thing. MR has filled its breakout gap and is within buying range, too. Watch OMCL to start, this stock is bouncing off its 50 day moving average and may offer more returns. Even better yet, NVEC has appeared to have made some great gains in the past few months and may be shaping a cup and handle. Watch MGM to see if it will come back down to near "support" at $75.50 after it broke out in huge trading volume 2 days ago. Look at the post from 5/22/07 re: the article in the magazine TASC. ICON is bucking the downtrend and may be near a buy point soon.
On the downside, AZO is an excellent short candidate. i.e. you want the stock to go down.
Good luck trading.
JD
RATE has officially broken out of a cup and handle with the close today above $43.64. MCO is also a current buy as it has done the same thing. MR has filled its breakout gap and is within buying range, too. Watch OMCL to start, this stock is bouncing off its 50 day moving average and may offer more returns. Even better yet, NVEC has appeared to have made some great gains in the past few months and may be shaping a cup and handle. Watch MGM to see if it will come back down to near "support" at $75.50 after it broke out in huge trading volume 2 days ago. Look at the post from 5/22/07 re: the article in the magazine TASC. ICON is bucking the downtrend and may be near a buy point soon.
On the downside, AZO is an excellent short candidate. i.e. you want the stock to go down.
Good luck trading.
JD
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