NICE BOUNCE TODAY AND I THINK THIS ONE WILL HOLD

Look at ADLR. It has bucked the downtrend of the overall market at the MACD has just crossed the zero line.

What about CCC, too. It has just bounced off its 50 day moving average, still above its 200 day moving average and didn't sell off. What more could you want?

Large fund companies are also snapping up financial shares. Check out WM, FBP, FIF, JPM, MER. Home builders are also being bought. Check out PHM, RYL, HOV.

GOOD LUCK BUYING.
JD

For those who day trade: GAP OPEN STRATEGY

The Gap-Open Stock Trading Strategy

What is a Gap Open?
A gap open is when the opening price of a stock is above (gap up) or below (gap down) the previous evening's closing price.

Gap Up at the Open Trading Strategy

Like any system, method, tactic or strategy, its not 100% reliable, but applying the following criteria significantly reduces the risk of playing gap opens.

Ideally, the stock should gap above the previous day's high. It is better if it has gapped 5% one direction or the other. The stock should be a relatively strong stock that is in an up trend and/or rebounding off significant price support or a major moving average (like the 50-DMA or the 200-DMA).

Once the stock has gapped open to the upside in the morning, short the stock down to the previous days' close. You can then set your stop loss above the opening price. If the stock tumbles, the ideal situation occurs when the break above the 1st half-hour's high happens several hours after the 1st half-hour of trading (mid to latter day). The opposite is true when the stock gaps down. You would BUY the stock and close out the position when it reaches the previous days' closing price and set the stop loss below the low of the gap-down price.

Even better, should the "gap open" take the stock from below to above a significant moving average like the 50-DMA or 200-DMA, consider it a very bullish sign and therefore an extremely compelling play.


Here's another link: http://www.tradingday.com/c/tatuto/morninggapstrategies.html

GOOD LUCK TRADING.
JD

STILL HOLDING NEAR SUPPORT, BUT IT MAY BE WEAKENING

The market is most likely in a bear phase and there is going to be nothing but downward movement.  Even though the $125 mark on the DIA has held, there is more selling than buying.  So the little bounce I expected may not materialize.  

I have taken a bearish stance on some stocks.  ARO is one that I am taking a bearish tone.  In my personal account, I have created a calendar put spread.  What I am expecting is that the stock will drop over the next year since it is a retail stock.  I bought a Jan 2009 $25 put and sold a Feb 2008 $25 put.  The total cost to me was $3.00 per contract since I put in a limit order.  My intent is to recoup the $3 within the next 4 months and begin making a profit for the next 8 months.  I can best achieve this by buying back the Feb 2008 $25 put when the MACDH nears 0.25.  I would then wait a while and then move to the next month expiration and sell the March 2008 $25 when the MACDH nears -0.25.  It is even better to look for swing signals when the MACDH nears these values.  

That last paragraph may be totally confusing to someone who is not into technical analysis, but hopefully someone can figure it out.

So as for now, I am very bearish on the market and for the year, I am expecting it to be in the crapper.  That said, I hate trying to predict the market.

GOOD LUCK NOT TRADING.

JD

I AM EXPECTING A SMALL BOUNCE

I see the market using $125 on the DIA as support.  How long it will last is still questionable, but the $125 mark has been support twice in the past year.  Here is an option play that I am doing.  Buying the March 125 calls and setting a price target of $134.  If you look at the delta of the option, it is $0.61.  This means for every dollar rise in the stock, the option  rises 61 cents.  

Despite all that, some "defensive" stocks are peaking their heads out.  The pharmaceutical ETF has shown signs of life as well as AGN.  You will see that this one is in the banner to the right as a buy.  

CG has also made a nice bounce and I am putting in a buy for that one.  

I have shorted quite a few stocks and HB is one of them.  

GOOD LUCK TRADING.  (I still think this is a bear market so trade carefully)

JD

MARKET BACK INTO CORRECTION

I have to admit, I have not been doing too hot lately on hitting the stocks. Oh, Yeah. It's the market. Despite my best attempts, I still cannot predict the market 100%.

In light of that, AAPL, AMZN, LIFC, ININ have all hit the crapper. There are those that are still hanging on, but I don't know for how long so I am protecting my portfolio by getting 60% into cash. Yes, I am still hanging on to a few stocks, but I am going to protect them with covered calls. I am slapping covered calls on HITT, AMZN, WFT,

In some accounts, a trader has the capability of selling a covered call (click on this link to learn more about covered calls). I use them when a stock has made a nice run and I expect the stock to stay neutral meaning I don't see much upside or downside movement. I will gain a lot of money if the stock trades in this neutral fashion. WHY? Well, a covered call loses value over time. WAIT, if a covered call loses value over time, how does that make me money? Simple math, two negatives make a positive right? I SOLD a covered call and the covered call will LOSE VALUE over time. Those two negatives make me positive money. It takes a little getting used to to realize that you can make money if a stock stays neutral so click on this link for covered call strategies.

So needless to say, I am mostly in cash and covering my butt with covered calls.

GOOD LUCK NOT TRADING.
JD

LOGI gives me 5% in 25 days

LOGI triggered my MH system on Dec. 4th with a buy price of $34.84 and my target was $36.58. It took a while to gain that 5%, but I did it in less than a month.

CRZO has slid sideways during the downturn in late December. Now that the price of oil per barrel is back on the rise, so is CRZO. Remember, the target is just over $61.00.

ATW is still too pretty to let go. Still have not found a resistance point yet.

Today, I added a couple of stocks that hit my "A system." Those are HITT and AMZN. The trigger for HITT was actually triggered on Dec. 26th and I see the stock creating a bull flag and potentially creating a handle in a cup-with-handle formation.

AMZN to passed a resistance point near $95 in strong volume yesterday (Jan. 2, 2008) and bucked the downtrend in the general market. Got in today at$94.82. This one triggered my MH system and so I am setting a 5% profit target.

GOOD LUCK TRADING.
JD

I AM BUYING AAPL AND WFT

I know it there has been a hiatus in my blogs, but my trading has continued despite me not blogging. I just haven't had the time to post my trades.

Since time is still and issue, I am going to suggest two stocks to investigate that I am buying tomorrow, Monday.

AAPL and WFT.

Basically, I watched AAPL consolidate for two months and I believe it will head up due to the strong industry it is in. I am putting in a buy price near $198.00. This was bought based upon my "A system" triggered on Dec. 27th, 2007.

I do, however, have more confidence in WFT as it appears to be breaking out of a cup with handle. My buy point is going to be around $70.40. This was bought based upon my "A system" triggered on Dec. 27th, 2007.

Good luck trading.
JD

JUST WANTED TO LOOK AT THIS - USD/JPY Forex Pair Trading Strategy

I got an email and I wanted to see how this works. I am just going to put this picture up for my info and if you can figure it out, go for it. You could also tell me what you think.

My key points are 4 day EMA and 10 day SMA on Fx.

MARKET HAS BOUNCED AND I THINK IT IS A BUYING OPPORTUNITY

I have been waiting for a bounce and I finally think it is here. Bought in on ATW a few days ago based upon my A system. It did retract 5% today. I know that is a lot, but it was in below average trading volume. Still good news and I am holding on.

CRZO just hit a buy signal based upon my A system. Buying as close to $50.66 is the best. Target is $61.20.

LOGI has hit a buy price of $34.84 based upon my MH system. My target price to sell is $36.58 which is only 5% gain, but it still allows a trader to move in and out of stocks and make quick gains.

Good luck trading.
JD

BEGINNING TO THINK MARKET MAY TAKE A BOUNCE (at least for a little while)

I like the looks of ATW. It sat sideways during this whole downturn in the overall market and today it took a large influx of cash and rose tall.

ALDN also strikes a cord for buying. HOLX is bouncing off support. I see buying opportunities coming us so let's see what will happen.

Good luck trading

JD

BUYING THE BRITISH POUND

Since I am waiting for the stock market to find a bottom and begin to turn up, I am going to trade ETFs (exchange traded funds) that correlate to the price of foreign currencies. One that is showing a buy signal is the British Pound and goes by the symbol FXB. My intent is to get in around $207.50. I know that price is high, but it meets my trading rule that I am going to call 3/22 PDI/MDI. Yes, that is in code so when I take my capitalist attitude and create the website I want to create this will be one of my systems that I will trade. So here it how it goes. Once the candlesticks and the trend bars at the bottom of the screen are both green, that is a buy signal. Also, the opposite it true - once the candlesticks are red and the trend bar at the bottom are both red, sell.

So for the model portfolio that I have set up, I am finally going to buy something after being in cash for the past month or so.

Good luck trading only FXB.

JD

ARE WE GOING TO BOUNCE OR FALL?

The markets are beginning to test the lows back in August and I am wondering if this is going to be support or not. The $127 mark on DIA is going to be a major key point for support. This is equal to 12,700 in the DJIA. If that mark is broken to the downside, get ready for a big fall to 11,700. The number of puts continues to rise and this is a signal for a "contrarian" that we are ready for a bounce. I am still going to short stocks or buy puts in this market until it proves to me it is ready to rise.

Stocks that are hitting signals to short:
OYOG
MTL

The GBP/USD is getting close to the target price of 2.032. Hopefully it will hit the target for another profit.

GOOD LUCK SHORTING.
JD

For those who wish to walk on the wild side:
OSIP
TDG

ICAHN BOUGHT INTO GENZ, SHORT GBP/USD AND CLB

GENZ is bouncing off its 50 day moving average after breaking out from a huge consolidation. This is an opportune time to buy. Another reason is that the investor Carl Icahn announced he has bought into GENZ. Follow the leaders.

If you trade forex, my signals just alerted me to sell GBP/USD as near to 2.0517 as possible. Goal is 2.0320 which is only a 197 pip move.

CLB is showing signs of breaking down and creating a diagonal put spread may be feasible based upon the overall negative tone of the market.

GOOD LUCK TRADING.
JD

OPTIONS : Long-term Diagonal Call Spreads or Put Spreads

Options come with risk so this is for those who are willing to accept risk and try to make more money than just buying stocks alone.

Here is the set up for a DIAGONAL CALL SPREAD:
Outlook - Bullish
Options -
1. Long ITM 12 month call (10% ITM)*
2. Short ATM** or OTM*** 3 month call
*ITM = In The Money
**ATM = At The Money
***OTM = Out of The Money
Reasoning - Profit from rally in market when IV is higher than SV. If market rallies strongly, roll the short call out 3 more months at the same strike. If market closes below short call, resell new 3 month at the same strike as the first short call.
Set up - ADX cross MDI. Better if breaking out from a base and market in a rally.
Trade - SPY, DIA, QQQQ, or growth stocks.

Now for the opposite.

Here is the set up for a DIAGONAL PUT SPREAD:
Outlook - Bearish
Options -
1. Long ITM 12 month put (10% ITM)*
2. Short ATM** or OTM*** 3 month put
*ITM = In The Money **ATM = At The Money ***OTM = Out of The Money
Reasoning - Profit from a falling market when IV is lower than SV. If market falls rapidly, roll the short put out 3 more months at the same strike. If market closes above short put, resell new 3 month at the same strike as the first short put.
Set up - ADX cross PDI. Better if breaking out from a base and market in a rally.
Trade - SPY, DIA, QQQQ, or growth stocks.

DESPITE TODAY'S NICE RISE, JUST TAKE AIM AND WAIT TO PULL THE TRIGGER

I know that today was nice, buy just be patient for this may only be a small blip. I am still nearly 90% in cash. Haven't found any real signficant buys.

I am still going to sit on the sidelines.

Good luck trading.
JD

Personal note: 10/20/50 LIFC. SNHY to FSTR (ADX cross) GPOR to SCHW (MACD cross) or FCSX.

COGN IS BUCKING THE DOWNWARD SPIRAL, PCR IS SHOWING A "CANDLESTICK KICKER"

So here is the update on my model account. Yes, it does go down, but in limited amounts.

I dislike buying in a downward market, but I was playing around and watching COGN. Just using this as a study.

Check out this article for candlestick kicker on PCR.

Article from www.workingmoney.com

The Candlestick Kicker
by Stephen W. Bigalow

Do you chase a stock that is already up 12% on the day? What do you do when one of the companies you own stock in announces an earnings warning? What do you do when one of your stocks, previously uptrending, turns around and plummets after announcing an SEC investigation? Or the Federal Reserve Board announces a surprise rate hike, and bond prices gap down from one minute to the next and move in the opposite direction of the previous trend?

Not surprisingly, these situations paralyze most investors. Fortunately, candlestick charting can keep you from falling into traps. When such a price action takes place, you will usually find a kicker signal on a candlestick chart. The kicker signal has powerful implications.

The one basic factor built into candlestick signals is that they are formed by the cumulative knowledge of all the investor input, the buying and selling, of a trading entity or trading entities during a certain time period. The candlestick signals tell you exactly what investor sentiment is doing. The kicker signal illustrates a dramatic change in investor sentiment.

Candlestick analysis allows investors to project trend reversals with a relatively high degree of accuracy. One misconception about candlesticks signals is that there are too many of them to learn. But of the 50 or 60 candlestick signals, there are only about 12 signals that occur most of the time — the doji, the bullish and bearish engulfing signals, the hanging man, shooting star, hammer, the inverted hammer, the bullish and bearish harami, the dark cloud, the piercing pattern, and the kicker signal. Knowing these few signals will sharply improve your analysis of trend reversals and make learning candlestick analysis much easier.

Having this analysis capability in your trading arsenal allows candlestick investors to have their portfolios positioned in the correct direction when a move occurs. Understanding the psychology of how signals are formed provides investors with better foresight in where to have positions placed.

Big dramatic moves! What do you do? Many investors act like deer frozen in headlights, but candlestick analysis tells you instantly what to do. An announcement can completely reverse a trend direction. If a trend has been in progress, whether strong or mild, and a surprise announcement is made, how that formation rolls out will tell the investor what to do. One possibility is observing the previous day's candle formation with the open price, then the closing price continuing in the direction of the existing trend. After the announcement, the price alters its direction, opening at the same level as the previous day, a gap open, and proceeding to close in the direction opposite of the previous day. This is known as the kicker signal, and it is a high-powered candlestick signal. This signal should never be ignored. It can create huge profits. Candlestick signals are fractal. They can occur on a daily, weekly, or monthly chart just as well as on a one-, five-, or 15-minute chart. The Japanese rice traders identified approximately 50 reversal and continuation signals through centuries of developing candlestick signals. Of these, the 12 major signals will provide more trades than most investors will ever need.

THE KICKER
The kicker signal, which may be the most powerful signal of all, works equally well in both directions. Its relevance is magnified when occurring in the overbought or oversold area but is effective no matter where it appears in a price trend.

Consider the investment sentiment that built this pattern. It is formed by two candles. The first candle opens and moves in the direction of the current trend. Investors are continuing with the established trend, closing the price further in the existing direction. Then something occurs to change the direction of the price; usually, surprise news causes this type of move. The signal illustrates such a dramatic change from the current price direction that the new direction will persist for a good while. (One caveat to this signal — if prices gap back the other way in the next time frame, liquidate the trade immediately. This does not happen often, but when it does, get out.)

The second candle opens at the same open as the previous day, a gap open, and heads in the opposite direction of the previous day's candle. The bodies of the candles are opposite colors. This formation is indicative of a dramatic change in investor sentiment. The candlesticks visually depict the magnitude of the change.

Understanding what forms a kicker signal produces a strong trading discipline for investors. If you own a position that has had a nice steady uptrend and one morning you see an announcement that causes the price to open below the open of the previous day's bullish candle, a trade decision can be made immediately: Get out on the open. Candlestick analysis makes it simple. If an announcement alters the direction of the current price trend with such magnitude that it is gapping the price down below the previous day's open, you can make one assumption. The investor sentiment of the current uptrend has been dramatically altered. A gap down below a previous day's bullish candle now has the strong potential of forming a bearish kicker signal. With the understanding that the kicker signal is one of the strongest reversal signals identified, logic dictates that you do not want to remain in a long position with strong downside indications. This is common sense investment practice depicted by candlestick signals. The probabilities indicate that a negative announcement, causing the price to gap down, would not be opening lower and immediately continuing back up.


Figure 1. Bearish kicker in Amily Pharm.













AMILY PHARMACEUTICALS. A gap below the previous day's open clearly demonstrates a strong change of investor sentiment. If long, it would be in your best interest to close the position.

If an announcement creates a gap up in price above the previous day's open, in a stock downtrend, an investor should take advantage of a large profit potential in the earliest stage. A gap up above the previous day's open signifies that whatever was announced has now dramatically changed the investor perception of that price. If you wake up and see an announcement that is gapping the price up above the previous day's open, you can assume that the strength of the announcement is now going to create a bullish kicker signal. Even though the price has moved a good percentage from the previous day's close, a potential formation of a kicker signal is usually the prelude to a strong uptrend. This allows an investor to act immediately versus worrying about how much the price is already moved from yesterday's close.
FIGURE 2: BULLISH KICKER SIGNAL
As illustrated in the RadioShack chart in Figure 2, whatever announcement created the kicker signal produced new investor sentiment that developed into a strong uptrend. The strength of the uptrend was immediately apparent, with the price gapping up well above the previous day's open.

Announcements can dramatically change the prospects of a company. Do all kicker signals create strong price moves? Not always! However, based upon the circumstances that create the signal, the results expected will occur with such a high percentage of positive results that executing trades upon seeing the formation or the completion of a kicker signal would dramatically improve the returns of a portfolio.

SUGGESTED READING Bigalow, Stephen W.Profitable Candlestick Investing, John Wiley & Sons. [2005]. High Profit Candlestick Patterns, Profit Publishing.

Short SBAC based upon this "kicker."

MORE THAN 65% OF ACCOUNTS NOW IN CASH

Wow!!! The markets are taking a hit and I have been knocked out of positions on the past 3 times that I have bought (BLUD, SNHY,CMED). That puts the majority of my accounts into cash. So the best option for me at this time is to ride out this down turn and wait until the market corrects itself.

GOOD LUCK NOT TRADING.
JD

CHECK OUT CMED, AGAIN

I just wanted to show a chart that I really like, CMED. Granted the overall market is not really in good shape right now, but I like this chart for many reasons and I will explain. If you pan back and look at a 2 year chart you will see that 2 years ago the stock reached a high of $43.51.






Now the stock is sitting near that previous high after breaking abovce it a few days ago. If you click on the second chart and look at the top blue line, you will see that was the previous high 2 years ago and we have zoomed in on the most recent months. The lower blue line is a "trend line" that looks as if the stock is getting "support." I have held this stock waiting for a further breakout so hopefully it will do so in the next week. I am buying shares near $43 to $44.

Good Luck Trading.
JD

PROTECT YOURSELF

Did those California fires have you scared about your assets? I'll bet you think that you are safe telling the insurance company all of the items that you own. Don't fool yourself. Insurers will try to get out of paying for anything.

My solution: http://knowyourstuff.org/

'Nuff said.

OUT OF NBG, BUYING SNHY

So I have to admit I got out of NBG right before the close yesterday because I saw $14 as a point where the stock may take a rest because it was near the top of a trend line. (Click on the chart to the left to see what I am talking about) I was happy with the return that I had so I decided to take profits. I am glad I did. Today it opened down and sometimes it pays to draw these trend lines.

Here are the transactions for NBG in my retirement account.

10/31/2007 NBG SOLD 100 SHARES OF NBG AT $13.81 $1,380.97
10/31/2007 NBG SOLD 1000 SHARES OF NBG AT $13.83 $13,829.78
10/31/2007 NBG SOLD 433 SHARES OF NBG AT $14.00 $6,054.90
10/31/2007 NBG SOLD 292 SHARES OF NBG AT $13.81 $4,032.45
10/31/2007 NBG SOLD 100 SHARES OF NBG AT $13.83 $1,382.97
10/31/2007 NBG SOLD 275 SHARES OF NBG AT $13.83 $3,796.19
10/31/2007 NBG SOLD 100 SHARES OF NBG AT $13.83 $1,382.97
10/31/2007 NBG SOLD 100 SHARES OF NBG AT $13.83 $1,382.97

10/18/2007 NBG BOUGHT 105 SHARES OF NBG AT $12.4499 ($1,314.24)
10/1/2007 NBG BOUGHT 95 SHARES OF NBG AT $12.81 ($1,223.95)
9/27/2007 NBG BOUGHT 1100 SHARES OF NBG AT $12.9199 ($14,211.89)
9/27/2007 NBG BOUGHT 100 SHARES OF NBG AT $12.9199 ($1,298.99)
9/27/2007 NBG BOUGHT 1000 SHARES OF NBG AT $12.93 ($12,937.00)

I did buy more GPOR since I see it sitting at more "support" and added more shares at $21.74. Let's see if this one pans out. I am also interested in this stock since oil prices continue to climb.

I am also buying SNHY since it is near "SUPPORT" after what I believe is to be a "cup with handle." If you click on the chart you will see that a cup with handle is forming and a support trend line drawn on this chart confirms this. Remember, this is MY presumption that it is at support. The market may prove me wrong, but I am a believer.

Good luck trading.
JD