Friday, November 30, 2007

Video Webcast: Analyzing Focus List Stocks

In today's video webcast, I analyze the following stocks from my focus list: FSLR, SLT, FCX, DE, RIO, MOS, RIG and TOL.

Thursday, November 29, 2007

Housekeeping

Some housekeeping is in order:

I'd like to give a big thanks to everybody who has e-mailed with messages of support since my last post. It's nice to know my work here is appreciated. Don't worry guys. I realize that the negative e-mails only represent a small, yet vocal, minority. I haven't had the chance to respond to any e-mail this week, and plan to set aside two or three hours tomorrow for that purpose.

I'm working hard on the Q&A questions. I hope to have the post ready by Monday.

A few people have asked if I have posted my stats. I have not. Almost every trade is documented on the site (although a few do slip through the cracks), so they are here. This weekend I plan to start posting monthly win/loss and profit stats.

I also plan to take past trades and analyze them as I do in my personal trading journal. This will become a regular feature on the site.

I have yet to start today's market analysis, but hope to have a video posted tomorrow morning.

Wednesday, November 28, 2007

Ain't No Glass Chin Here

I'm taking it on the chin today. Not only from the market, but readers as well. It's comforting to know that I can bring so much joy to so many of you. It seems some of you derive a lot of pleasure from my pain. I guess that comes with the territory, especially with the profits and win rate I've enjoyed this year. Yeah, that is a jab at the petty bastards that bombarded my inbox. May you rot in 10 feet of bull dung!

I haven't covered any of my shorts just yet. As I constantly preach, it's important to let your stops work for you. As of yet, no major S/R points have busted, so I remain in bear mode. However, we are getting close. For instance, my stop for AAPL is a tad above $181, and the stock closed at $180.22. My QID stop is around $37.60, PGJ at $34.50 and MER above $60.

While I'm not concerned about any losses I may suffer from the above trades, I am ticked off about not entering MA at $181 (it's currently at $195.60). I outlined it in Monday's video, and pointed out that it is a better bounce play than bearish looking setups like AAPL and GOOG. Note that MA was up 6.30 percent today , while GOOG moved only 2.77 and AAPL 3.09 percent.

My mistake with MA was waiting for too perfect of an entry. I've talked about this before. I am not usually all that precise with entry points, as long as risk/reward is good. What was I thinking!!!

My AAPL Stop

I've been asked by a few people what my thoughts are on my AAPL short. Of course, I wish I had covered when I had a 5 point gain. I entered short at $176.08 and it is currently at $179. My stop is set at $181.

Quick Trade Note

Today I went short PGJ and MER. I'll post more later today.

Tuesday, November 27, 2007

Trade Analysis via Video Webcast

Last night I created a video highlighting a few of my trades (MA, AAPL, GOOG, NOV). I had problems uploading, so the post is a little late. I have already taken profits in the NOV short.



Yesterday's trades:
As noted in yesterday's video, I went into the week with my bear hat on. I don't trust this market. Price action has been horrid of late. It's not just the distribution days, but the nature of the subsequent consolidation. Every attempt at a bounce has been met by quick profit taking.

That's why today's opening strength was so appealing to me, both for profit taking and to initiate shorts. There was no underlying strength by way of volume and breadth, which lead me to believe their would be no upward momentum.

I sold my remaining 300 shares of MA at $187.55 (entry at $181.04) for a $1953 gain (+3.6%).

I exited my TOL short late in the day. On the 14th I went short 200 shares at $22.44 and 300 at $21.46 on the 13th. I covered today at $18.22 for a $1812 gain (+18.1%).

A bounce in the housing sector would likely to again short TOL or other builders. MA is setting up again for a bounce, as it closed around $181.

I bought 600 shares of QID at $40.26. In the video analysis, I stated I would enter in the $38-40 range, but today's open was too good to pass up.

I went short 500 shares of NOV at $69.44. This is a classic reaction back up the breakout bar. The stock closed at $66.91 and my target is in the $63-64 range.

I went short 300 shares of AAPL at $176.08 later in the day. The stock had climbed above $176 early in the day, pulled back and mounted this level in the afternoon. I went short when the bulls failed to hold the high, on the break of the morning high. The small position size reflects the fact that this stock will likely enjoy a big bounce if the market stabilizes.

Monday, November 26, 2007

Today's Trades: QID, NOV, AAPL, MA,TOL

As noted in yesterday's video, I went into the week with my bear hat on. I don't trust this market. Price action has been horrid of late. It's not just the distribution days, but the nature of the subsequent consolidation. Every attempt at a bounce has been met by quick profit taking.

That's why today's opening strength was so appealing to me, both for profit taking and to initiate shorts. There was no underlying strength by way of volume and breadth, which lead me to believe their would be no upward momentum.

I sold my remaining 300 shares of MA at $187.55 (entry at $181.04) for a $1953 gain (+3.6%).

I exited my TOL short late in the day. On the 14th I went short 200 shares at $22.44 and 300 at $21.46 on the 13th. I covered today at $18.22 for a $1812 gain (+18.1%).

A bounce in the housing sector would likely to again short TOL or other builders. MA is setting up again for a bounce, as it closed around $181.

I bought 600 shares of QID at $40.26. In the video analysis, I stated I would enter in the $38-40 range, but today's open was too good to pass up.

I went short 500 shares of NOV at $69.44. This is a classic reaction back up the breakout bar. The stock closed at $66.91 and my target is in the $63-64 range.

I went short 300 shares of AAPL at $176.08 later in the day. The stock had climbed above $176 early in the day, pulled back and mounted this level in the afternoon. I went short when the bulls failed to hold the high, on the break of the morning high. The small position size reflects the fact that this stock will likely enjoy a big bounce if the market stabilizes.

Sunday, November 25, 2007

Focus List Video: QID

At the top of my focus list is QID, which is an ETF that is a leveraged Nasdaq short. Take a look at today's video to see how I plan to trade it.



http://revver.com/watch/498261/flv/affiliate/93676/qid-stock-trade-setup-11-25-07/

Invest Like a Shark

I am currently reading Invest Like a Shark by James DePorre. For those who don't know, Deporre, otherwise know as Rev Shark, lost his hearing, job and wife before starting to trade with a $30,000 stake and turning it into millions.

Thus far there isn't much that I already don't know. However, from time to time it's worthwhile to review what you know to get the mind focused on what's important. For example, DePorre likens successful small investors to sharks, who patiently wait for an opportune time before striking aggressively. I like the analogy and I am already waiting for better setups.



Click on the picture below to view Rev Shark speaking with Jim Cramer about current market conditions.

Friday, November 23, 2007

Thin Trading Makes for a Slow Day



As expected, we are seeing light post holiday volume and a small bounce. I used the bounce to exit the remaining shares of XOM at $88.25 (entry at $84.20). If we continue to bounce on low volume next week, it might be an opportune time to unleash a few shorts that have good setups.

I'm done posting for the day and have some time to relax as the rest of my family battle the Black Friday crowds. Here are some popular posts from 2006.

John Tudor Jones and Rocky Balboa
Intuition, risk and trading

Picking tops at the office

Part time trading: it can be done!

Falling off the hill short setups

Jesse Livermore quote

Non-technical trading

Trading psychology and sports

A hilarious clip: Bear on Wall Street

Wednesday, November 21, 2007

Odds and Ins

I am not doing much trading today. Just managing my positions. BCSI was on my radar after the breakout, but the gap down today concerned me.

Don't forget, I'll be posting answers to your questions later this week. Ask me anything. Send your questions to: SinghJD1@aol.com

I'm going to spend the rest of the day doing some light reading and catching up on a few TV shows and movies. I am currently reading two books.

Against the Gods: The Remarkable Story of Risk by Peter Bernstein, takes a fascinating look at the history of probabilty theory and risk. While it may sound boring, it's a page turner.

House of Leaves by Mark Z. Danielewski is the freakiest book I've read in quite some time. Smart, scarey, hip, spooky, funny, romantic, sexy and sadistic are a few adjectives that still can't quite do the book justice.

Take a look at this link from Lifehack.org on self-teaching. I have taught myself much of what I know, and this article does a wonderful job of outlining how to teach yourself anything.

Currently my five favorite televison shows are Curb Your Enthusiasm, Heroes, Smallville, Ultimate Fighter and Friday Night Lights.

As I posted after the season finale, Curb ended with a great episode. I am now watching reruns. I've seen them all, but they still are hysterically funny. Hereos and Smallville are great if you are into conspiracy, comics, sci-fi, intricate plots and good acting. Friday Night Lights takes a look at a small high school football town in Texas and Ultimate Fighter is a reality competition that gives a fight contract to the best fighter.

Movies on my que are Reign Over Me, Children of Men and Sicko.

Tuesday, November 20, 2007

Market Notes: Indecision

Talk about your emotional swings. I laughed, I cried, and in the end I am merely content. Both the S & P 500 and the Naz closed up slightly after a wild day that saw both bulls and bears doing the profit dance.

Take a look at this chart of the Nasdaq. What jumps out at you? Of course there is today's "doji" candle. What's more frustrating is the fact that it printed on increased volume. A down or up day on increased volume would be pretty easy to game. However, today's candle marks indecison, which is not what anybody wants to see, whether in the bull, bear or agnostic camp.



I am still holding my partial positions, in effect, letting them "ride". The gave me no buy or sell signals today, so I'll have to be content with managing them until we see a better signal.

Current Positions

Market Outlook


Sector Review

Taking Partial Profits

I've spent most of my day off today managing my positions and doing some light reading.

I sold half my MA postition at $186.77 (entry at $181.04) and am holding the rest, wich is currently around $179--yikes!. I sold half of QLD at $102.06 (entry at $99.63) and half of XOM at $87.46 (entry at $84.20).

With this bounce play I was quick to take partial profits considering how shaky the atmosphere is right now. Stops for the remaining positions have been moved up from their original levels.

Monday, November 19, 2007

Panic Overwhelms the Market

Well my friends, panic seems to have set in. I sense there is something different about today's decline. Over the past couple of weeks, dips have been met by underlying strength, and the general mood was that they were to be bought. No fear whatsoever. That's not the case today. Buyers were not willing to stop the pain. There were a few feeble attempts, but they were easily thwarted by sellers.

We all know panic is the best time to buy. However, it's tough to allow the brain to overcome emotion. Not to mention it's tough to time a bottom or bounce. Buying during a panic not only requires courage to place the trade, but also the patience to stick with it (note that to make the trade you must measure risk, positions size and set a logical stop).

Panic is just one of the current bounce signals. The second is seasonality. The week before Thanksgiving tends to be positive, as does the entire holiday season in general.

Another positive is the T2108 indicator, which measures stocks above their 40 day moving average. It is back in oversold territory. Last week, when the indicator first reached oversold levels, I talked of playing for the second bounce. As I predicted, the first bounce failed and we are back at about the same levels as the time of the post. It looks like a nice spot to play some longs.



I placed three long trades today. As noted earlier, I bought MA at $181.04. The stock has one of the better looking charts you'll find. A nice breakout after earnings that has held up well during recent market turmoil.

I also bought QLD at $99.63 and XOM at $84.20.

Quicke Trade Update

Quick note that I am long MA ($181.04) and QLD, leveraged long Nasdaq ($99.63) and closed out QID, leveraged short Nasdaq ($40.80). I am using weakness today in anticipation of a bounce based on oversold conditions and the holiday tendencies. I picked MA because it has held up well at the earnings breakout level and has some room to bounce when considering the high.

If we do get the bounce, I will likely add some more short plays in the coming days.

Sunday, November 18, 2007

Sector Review: Where Have the Momentum Sectors Gone?

As usual, I went over the this past week's top and bottom peforming sectors. Most of the sectors that performed well do not look good as longs. This is not a good sign for the market. At best, it signals new leaders are emerging. Worst case scenario is that most sectors, along with the market, are rolling over and ready to make another leg down.

Regional Airlines is an example of a sector that performed well last week, but is not a long candidate. Not much to look at, eh? It actually looks good as a short, with price pulling back up to resistance in the nidst of a downtrend.



Here are the top performing sectors for the week:



And the worst, which features many of the year's best performers:



Don't forget, I'll be posting answers to your questions later this week. Ask me anything. Send your questions to: SinghJD1@aol.com

Friday, November 16, 2007

Q & A Session

Taking a que from Charles Kirk, I am going to entertain questions on any topic that is stock, trading psychology, time management, sports or entertainment related. Basically, stuff I've blogged about or that is on your mind. You can send your questions to SinghJD1@aol.com.

The best question will receive a free, trading related gift :)

Another Long Setup: IVGN

Another one of the few longs on my watchlist. IVGN is a biotech company that has held it's breakout point and acted well during market weakness.



This is not a buy recommendation and I have yet to take a position.

Thursday, November 15, 2007

Shorts Outnumber Longs on the Watchlist

My shorts list outnumbers my long list 3:1 right now. I am only considering longs that recently broke out on high volume (usually due to earnings), and have held the breakout point. WFR is a good example:

Wednesday, November 14, 2007

Trade Notes

I exited DCO at 42 (entry at$38.10) for a $1170 gain (+10.1%) . The setup was an earnings breakout-pullback. I will re-enter on a pullback to $40.

I exited 200 shares of NOV at $67.35 (entry at $63.74) for a $722 gain (+5.7%) . This was an oversold bounce play that now looks like a good deat cat bounce short. I may short it later today.

I exited OII at $67.04 (entry at $62.50) for a $908 gain (+7.5%). Same setup as NOV.

I covered my VMW short at $94.46 (short at $89.10) for a 1072 loss (-6.1%). I still like this as a short. Volume on upmove is low. It's just bouncing more than I expected.

I am short another 200 shares of QID at $38.75.

I am short another 200 shares of TOL at $22.44.

Tuesday, November 13, 2007

Quick Hit Market Thoughts

In Sunday's post, I talked about not trying to game the first bounce and playing the second bounce. The first bounce is underway. I expect that we will see a retest of the recent lows shortly. Assuming they hold, that is the bounce to play.

Volume was not good today. Volume is what fuels the market, so don't expect the market to rocket from here.

If the August lows eventually breakdown, that's a sign of a full fledged bear market.

Stocks that mounted resistance, like AAPL, are off the "shorts" watchlist. Stocks that have not, like VMW, are still on it.

I'm sticking with stocks that held up through the decline, like DCO.

If we correct and a new bull run emerges, expect some new leaders. I'm betting aerospace/defense will be among them. This sector includes stocks like DCO, ATK and BEAV. All had great earnings and nice breakouts.

I am licking my chops at the housing stock bounce. Another opportunity to short this sick group.

If Sunday's episode of Curb Your Enthusiasm was its swan song, it sure went out on a high note. Definately one of my top 5 favorite comedies of all time.

Trade Notes

Today's bounce may present a good short entry. I just went short VMW (89.10) as it nears resistance (former support), TOL (21.46), and took small positions in ultrashorts QID (40.85) and SDS (55.56).

On the long side, oil stocks are extremely oversold. I took small long positions in NOV (63.74) and OII (62.50).

Note that all of my plays are with small positions sizes. I will not allow for big losses in this environment.

This post is for entertainment and educational purposes only. Do not use for any other purpose. Do not buy or sell based on what's in this post or site. Please read to the bottom of this post.

Monday, November 12, 2007

High Flyers Have Lost Their Wings

My focus list, which is mostly comprised of momentum stocks, looked ugly today. Not only was there a lot of red, but many stocks have broken major support levels. Because of this, I cannot play a bounce in these stocks. I never play bounces when support has broken. Many of my favorites have now made it to my short term shorts list.

For example, LFC, BHP, FXI, AAPL, RIMM, DE, RIO, FLR, VMW, FCX, DRYS and many others now look like short candidates on a near term bounce towards old support levels. Only a few stocks are on my long list. These stocks are mostly recent breakouts that are still acting strong, such as DCO and HMSY.

Looking at today's sector action, the bottom performing sectors have been the darlings of the market the past few months (and in some cases, much longer). Industrial Metals, Gold, Silver, Copper, Tech, Ag, Chemicals, Energy, Industrials, they all got hit hard. What does that mean? There are two theories. The first is we had our capitulation move and can expect a resumption of trend. The second is that now that the high flyers have also broke down, we can officially expect a bear market.

I can't make a prediction, other than to say I am now more inclined to add a few shorts. I added a few today, and may add more if we get a weak bounce.

Sunday, November 11, 2007

Better to Play the Second Bounce



It's easier to play the second bounce, as opposed to trying to time the first. If you take a look at the chart above (SPY vs T2108), it is obvious that there is no sure fire method in timing the bottom of a correction.

The T2108 indicator (via telechart) measures stocks above the 40 day moving average. While it can be used in many ways, the most popular is to use it as an overbought/oversold indicator. When it reaches 70/80 or higher, the market is in overbought territory. When 20/30 or lower, and the market is oversold.

Notice that going back to 2006, major bounces and trend resumptions have occurred anywhere from 40 to almost 0. Therefore, it's tough to say one should jump in because the indicator is at 20 and is oversold.

However, I have more confidence in picking entry after the first major bounce. Almost every bounce has pulled back in both price and indicator reading. Assuming history repeats itself, that is when I will take on larger long side positions.

Sector Review

This was not a great week for the market. We still don't know if the character of this bull market has changed or it was just a natural correction. Either way, after a negative week, it pays to make note of what is working.

During a week where every major index was significantly down, lead by the Nasdaq at -6.5 percent, only 24 of 239 Industry groups were positive. My current favorites are Internet Providers, Oil and Gas, Industrial Equipment, Dairy Products, Silver, Gold and Ag Chemicals.

Friday, November 09, 2007

Trades

At the end of this post, there is a note that I want all of my readers to view.

Yesterday, I was stopped out of 300 shares of AAPL at $179.85 (entry at $185.09) for a $1572 loss (-2.9%).

Yesterday, my trailing stop on RIMM was hit at $125 (entry at $118.91) for a $2436 gain (+5.1%).

I sold 300 shares of CTRP at $60.44 (entry at $55.08) for a $1608 gain (+9.4%).

On Monday I bought 300 shares of MEE at $30.10. It is currently just under $32. This is an earnings breakout-pullback play.

On Monday, I bought 400 shares of NOV at $72.60 and was stopped out today at $71.50 for a $440 loss (-1.5%). I had bought at 50 day moving average support and sold on failure.

On Tuesday I bought 300 shares of RIG at $126.10. It is currently trading at $127.90. This is a breakout play.

On Wednesday, I bought 300 shares of BPHX at $19.88. I was stopped out yesterday at $18.75 for a $339 loss (-5.6%). This was a breakout-pullback play and I was stopped out just below the breakout point.

On Tuesday I bought 300 shares of DCO at $38.10. It is currently trading at $39.24. This is a breakout-pullback play in a strong sector (aerospace-defense).

I bought 200 shares of DE at $156.22. It is currently trading at $154.20. This was a breakout play in a strong sector (ag).

I went short 300 shares of TBSI at $55.26 on Tuesday's breakdown. I covered yesterday, when it hit my target at $50, for a $1578 gain (+9.5%). I may short this one again.

I went short 300 shares of LEH at $59.73 Monday on the 50 day MA failure. I am still holding at $57.59. This one kills me because I decided not to cover at my target yesterday when it hit $53.50.

Yesterday, I bought 300 shares of QID (2 X short Naz) at $38.45, which was the breakout of the 50 day moving average. QID is currently at $39.73.

I'll have analysis later today or over the weekend.

Quick note on my trades: I am considering no longer posting trades and only posting market analysis, trading strategies and watchlists. Over the past few days I've received a number of e-mails and two comments with complaints about the fact that I had not posted my trades this week. I work full-time, trade, have a family, am a sports nut, read a book/week and have numerous hobbies and interests. I can't always post trades same-day, although somehow I do manage to post most of them in timely fashion.

Some attack the validity of my postings, which doesn't concern me. If you choose not to believe the trades that I don't post same day, I could care less. Nobody is hurt.

What does concern me is the readers who wait to see what I trade, when I enter and when I exit. They are trading based on my trades. If that is what you are doing, I want you to stop reading this blog, stop trading, and start from ground zero with your trading education. You should only trade if you have a solid background in your trading methods and can formulate your own opinions.

I post my trades as a tool for learning and as a measure of my methods. With careful analysis of my winning and losing trades, over time both you and I can become better traders. Please do not use my trades for any other purpose.

Thursday, November 08, 2007

Hectic Week

Sorry for the lack of posts, guys and gals. I've had a hectic week. Either later today, or early tomorrow, I'll have a details on all my trades and market thoughts.

Wednesday, November 07, 2007

Quickie Trade Update

I've been very busy the this week, and haven't had a chance to post trades. I am long RIMM, CTRP, AAPL, MEE, NOV, RIG, BPHX, DCO, and DE. I am short TBSI, LEH and USO.

I plan to lighten up today.

Tuesday, November 06, 2007

Trading Tips for the Part-Time Trader

Like many of you, I trade around my full-time job. Sometimes it feels at though I have two full-time jobs. Trading successfully requires a smart, detailed approach.

I wrote a guest post over at Blain Reinkensmeyer's site, detailing five smart tips for the part-time trader. Head on over there and if you have any questions or comments, leave some feedback on his site.

Monday, November 05, 2007

Sectors that are Working in this Volatile Market

Two sectors that have withstood current volatility and selling pressure are Education Services and Aerospace/Defense. A few stocks from these sectors of particular interest are CPLA, EDU, BEAV and ATK.

CPLA Chart:



BEAV Chart:

Sunday, November 04, 2007

Friday's Breakouts

I am looking for orderly pullbacks in the following breakout stocks:

Thursday, November 01, 2007

10 Rapid Fire Trading Thoughts

1. Trading earnings breakouts has been a highly effective strategy during the 4th quarter thus far.

2. In the financial area, stick with Goldman Sachs and forget the rest.

3. I've been holding trades longer than usual over the past few months. This is the best way to play a momentum market.

4. With all the focus on China, do not forget about India. My parent's homeland isn't getting much press, but has been a force.

5. Sky is falling perma-bears like Doug Kass have been crying about this rally for quite some time. Eventually they will be right (a broken clock is right twice a day), and let you know when they are. Don't forget that they entirely missed the boat during this huge bull rally.

6.. The bears are correct in their economic analysis. Things do suck right now. I am worried about this country. But that doesn't mean squat when it comes to trading. Follow price action and volume, and forget the rest.

7. Be patient with homebuilder shorts. Use strength to add to short positions.

8. Keep playing the momo stocks until their ain't no momo left.

9. Do not let yourself become a bull or bear. While this bull ride has been fun, be ready to short when the time is right.

10. I will only go back to the dryshippers if they clear their old highs.


Non-trading thought: The New England Patriots will destroy the Colts this weekend. I'm taking the Pats plus the points.