Thinking Out Loud (both on and off topic)

1. The overall market looks good, but resistance is looming.

2. A few more points down and I will start letting go of my short positions (already got rid of RTP).

3. I will likely enter SPY around $87-88

4. Most stocks are pulling back with bullish undertones (low volume, orderly price movement).

5. Lots of good looking breakout stocks have emerged over the past few weeks.

6. I am extremely short term bearish (though this condition is being worked off), intermediate term bullish, but longer term we are still in a bear market.

7. Point 6 is a good example of how important time frames are to trading.

8. To actually call a bottom, I'd need to see more volume

9. However, the price pattern looks good for bottoms, especially if SPY mounts the 200 day moving average.

10. New leaders are emerging. Get those relative strength scans and filters going.

11. Lebron is the best since Jordan

12. Manny Pacquiao is the best since Ali. He will destroy Mayweather.

13. This Minnesota Vikings fan to Favre: Please go away.

14. Why do so many poker players go all in pre-flop with AK? Against any pocket pair you will lose money over time (55/45 with QQ or lower, dominated by KK and AA). And who is going all in against you with AQ or lower?

15. Smallville, yes Smallville, is the best show in television. If you are even slightly a comic or comic movie fan, get the DVDs and watch all 8 seasons.

16. What was the big deal about Wanda Sykes Limbaugh jokes? Rush has said far worse, and nobody says boo.

Some Good Readin'

Here's some good stuff I have recently read"

The best and worst of the first quarter.

What to look for next week. Here's more.

Blue Blood and Mutiny book review.

Malcolm Gladwell on a topic I have studied extensively over the past two years, race and IQ.

More Gladwell on race and IQ.

Bill Maher on biofuels and socializing medicine.

The amazing Potash, a stock that continues to confound me.

Gang Leader For a Day - the best book I have read in a long time, and I read a lot of books.

Notihng to read here, but if you haven't seen it already, check out the trailer to the new Hulk movie. One word: Damn!

My Favorite Trading Setups and More (Q & A Part 3)

Since the market is closed today, I took some time to answer some more reader questions:

Thomas asks: What chart service do you use?

Market Speculator answers: I use Telechart. Every evening, I run my scans (breakout, pullback, etc) and flip through charts from my watchlists. Over the weekend, I analyze the best and worst performing sectors, then drill down to the individual stocks within those sectors.

Thomas asks: What are your typical plays--setups that you trade?

Market Speculator answers: I have a variety of setups that I use according to market conditions and time frames. There are too many to name here. For long term positions (an account I don't detail on this blog), I like to trade long term trend pullbacks and buffet-esque value plays. The few days a year I daytrade, I like to use pullbacks and breakouts combined with sentiment and breadth indicators.

The bulk of my trading comes from the swing trading setups. I trade many different setups. I dont' subscribe to the theory that you should have one methodolgy and follow it religiously. I believe you have to adapt to the market environment. Some of my favorite setups are: earnings breakout, breakout-pullback, trend-pullback, momentum breakdowns, distribution setups, bull and bear flags, bearish topping patterns and simple rangebound setups.

Thomas asks: What indicators do you follow closely?

Market Speculator answers: I don't focus a lot on indicators. I mainly look at price, volume patterns, and support and resistnace levels. However, I do like to look at OBV to help with volume pattern identification and strength. I also use stochastics.

Off topic questions:

Brian asks: You used to post heavily about the television shows you are watching. What are your current favorites?

Market Speculator: Yes, I don't post off topic as much as I used to.

I recently got hooked on the HBO series The Wire. Best cop show I have ever seen. What I love about it is its not black and white, good versus evil. At certain points in the series, I've felt more of a connection with the gangsters than cops and politicians. One of my all-time favs.

Lost is also one of my all-time faves. Love the blend of sci-fi, philosophy, human psychology, mystery and drama. The show keeps getting better.

I watch How I Met Your Mother simply for one character, Barney played perfectly by Neil Patrick Harris. The character is "legend-ary".

Okay, I have to admit, I watch American Idol. I don't know why.

The only other reality show I watch is The Ultimate Fighter. Some great fighters have come from that competition.

Other favorites that are either not out right now or I watch via DVD: Friday Night Lights, Curb Your Enthusiasm, Heroes, Smallville (out but I watch the DVD and Prison Break.

Odds and Ins

Sorry guys, didn't have time to post yesterday and have not had the chance to update my trades. I hope to catch up this weekend.

A number of stocks on my bullish watchlist are pulling back, which is great. However, some of them has gapped down to their buypoints, which is not so great. I may take a few low risk pilot positions, but I won't do much more today.

Off Topic:
One of my new year resolutions is to research and ultimately trade currencies via the forex market. The main reason is I would like to put on short term day trades, but cannot in stocks since I work full-time during the day. The forex market is open 24 hours, which would allow me to carve out an hour or two on my off time to apply some short term strategies I have been working on.

I've done some research and will now start demo trading. If anybody knows of any good demo and trading platforms, please e-mail me. My e-mail is SinghJD1@aol.com

I am not sure who to believe in the Roger Clemens steroid saga. However, there is one thing I am sure of: Congress should not be involved. What a waste of time and money.

The NBA's Western Conference keeps getting stronger. I am going to stick with the defending champ Spurs as my top pick, but the Lakers sure look good with the addition of Gasol. I have no idea how the Shaq deal will effect Phoenix. Even if the trade works out, I still have not idea why Kerr did not pull the trigger on the KG deal this summer. I'd rather have Nash, Marion and KG than Nash, Amare and Shaq.

Lost keeps getting better.

Why don't more people watch Friday Night Lights? It's the second best show on television, after Lost.

In Defense of Jim Cramer

Is there anybody more loved and hated in the stock trading community than Jim Cramer?

I doubt it. The guy is a lightening rod, and deservedly so. He's opinionated and isn't afraid to speak his mind. Anybody who takes that approach is going to make some great and not so great predictions. If he's wrong, I've got no problem with bloggers pointing it out.

Not surprising, there has been some intense Cramer bashing in the blogging community. What concerns me is not just the seething commentary, but the misrepresentation of his commentary. For example, Chris Perruna and Tate Dwinnell (bloggers I respect and enjoy reading) both point to Cramer's bullish October market calls, after the Fed had cut rates, and use it to put down Cramer and pat themselves on the back. This does seem a bit hypocrital since Perruna admits he did not follow his own advice, while Tate's model portfolio is down big this month. Anyway, I digress.

How bad were Jim's market calls? If you actually listen to what he was saying, they were fantastic. In fact, if you read my blog, you'll see that I made a boatload of money using a similar approach. In October, Cramer was talking about what to do *going into the end of the year.* He also said, once you get gains, *take some off the top* to lock in profits. Some specific stocks he mentioned were GOOG, BIDU, AAPL, DE, RIG, along with hot stocks from agriculture and energy sectors. You know what? He was RIGHT. Everyone of these stocks could have yielded nice gains if you bought, took profits as the stocks and sectors went up and sold at the end of December.

I am not saying Cramer is perfect. Nobody is. I can go back and find a lot of bad calls he's made. In fact, I could do that to just about anybody, including the bloggers that criticize Cramer (usually for self serving purposes), and myself. Criticism of public opinions is fine. What's not cool is misrepresenting those opinions and not giving credit where credit is due.

Holiday Postings

It's been a great holiday season so far. Besides the December profits, I've been able to enjoy some of my favorite past times, reading and sports. I've read 11 books this month, which is probably the most I've read in one month since the summer before law school. On top of that, I've played basketball twice a week and ping pong almost every day. To make this holiday even better, we got a nice dusting of snow today, the family went out sledding, and I finally joined the ranks of iPod owners.

I will likely spend the rest of 2007 reflecting on this past year, going over my 2008 resolution and loading the Ipod full of cool songs, shows and videos. My postings may be a little more sporadic than normal, but I do plan to post and do some light trading. Keep an eye out for updates.

Those of you who haven't already, check out the new Dark Knight (Batman) trailer. I was skeptical when Heath Ledger was named to play Joker, but looks like he nailed it. His portrayal of Joker is off the chain.

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.

A Blast From the Past: Criminal Minds

A little over a year ago, I posted quotes from the hit TV show Criminal Minds that related to trading. Surprisingly, it's been one of the site's most popular posts. It seems a lot of civilians (aka non-traders) search Criminal Minds quotes on google. Here is the post in it's entirety:

One of my favorite shows on television is Criminal Minds, which I feel is the smartest show on television. The quotes alone are worth the price of admission. Here are a few that could be applied to trading. Take a read and think about how each quote relates to trading. You can learn more about each author by clicking on the name.

Emerson said, "All is riddle, and the key to a riddle is another riddle."

Faulkner once said, "Don't bother just to be better than your contemporaries or predecessors. Try to be better than yourself."

Einstein once said, "Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world."

Samuel Johnson wrote, "Almost all absurdity of conduct arises from the imitation of those who we cannot resemble."

Shakespeare wrote, "Nothing is so common as the wish to be remarkable." "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

Robert Oxton Bolton once wrote, "A belief is not merely an idea the mind possesses; it is an idea that possesses the mind."

Nietzsche wrote, "The individual has always had to struggle to keep from being overwhelmed by the tribe."

Albert Einstein said, "Whoever undertakes to set himself up as judge in the field of truth and knowledge is shipwrecked by the laughter of the gods."

"The defects and faults of the mind are like wounds in the body; after all imaginable care has been taken to heal them up, still the will be a scar left behind." French writer François de la Rochefoucauld. "

"It has been said, 'time heals all wounds.' I do not agree. The wounds remain. In time, the mind, protecting its sanity, covers them with scar tissue and the pain lessens. But it is never gone." Rose Kennedy

Philosopher Kahlil Gibran wrote "Out of suffering have emerged the strongest souls; the most massive characters are seared with scars."

Gideon (character on show): "Try again. Fail again. Fail better."

Links that Get the Market Speculator's Seal of Approval

Trading Links
Charles Kirk does a good job of pointing out the developing double top in the S&P 500. While it's important to watch developing patterns, it's dangerous to make predictions before the pattern fully reveals itself. When everybody is looking at the same thing, patterns have a tendency to do the opposite of what is expected.

Ugly has been on fire, posting over a 100% gain over the past two months.

The Trading Radar for next week, courtesy of Minyanville. I'll be paying attention to the energy sector. I'm waiting for a pullback so I can get into a few of my favorites, like NOV, OII and CAM.

Index overview from Afraid to Trade. We've got to pullback at some point. If we keep moving higher, I'm going to have a tough time finding attractive entries.

I avoid market related shows like the plague. The worst thing that can happen as a trader is to have your trading effected by the garbage that comes from CNBC. That being said, the one show I do tune in to from time to time is Fast Money, a show that features actual traders. It's moving from 7 pm to 5 pm in a move that may be good for many traders, but not for me. I get home at 5:30! Thank goodness for DVR.

The Fly spotlights the networkers. Not too many have made my Focus List.

10 Trading Commandments. Number 10 is crucial: Don't let your bad trades turn into investments. Others will say "cut your losses early." My recent NILE trade is an example of respecting this rule. I still like the stock, but got out once my stop was hit.

Beware of the low volume breakout. Volume is what turns a breakout into a prolonged trend. I rarely trade trends without volume.

I've missed the China trade, even with many Chinese stocks in my Focus List. Is it too late to join the party?

Sports and Entertainment

I sampled a few new shows this week. I thought Bionic Woman was great, despite the negative reviews I had read. Big Bang Theory was hilarious, and Chuck was A level entertainment, featuring comedy, action and good acting.

The only returning show I've watched is Heroes. The season opener was good, but not great. The new character introduced in this episode, Maya, was intriguing. I was hoping for more about the Company and Peter's "amnesia". As usual, Hiro's antics were the best part of the show.

CNNSI's list of the 10 most clutch quarterback's of all-time. I have no idea how Troy Aikman made it on the list, and Brett Favre did not.

The idiot's guide to the Isiah Thomas trial. How does this guy still have a job as a GM? I could understand if he was as good of a GM as his former teammate, Joe Dumars. But a guy who has single handedly run a franchise into the ground does not deserve this long of a leash.

Kelly Pavlik knocked out Jermaine Taylor to become middleweight champion. This one might go down as fight of the year. Pavlik showed great heart in getting back up off the canvas after getting brutally beaten by Taylor, and then knocking Taylor out in the seventh.

Links that Get the Market Speculator's Seal of Approval

Here is a list of posts and articles that are worthy of the Market Speculator's highly sought after seal of approval.

Trading Links:
Dr. Steenbarger shows that strength begets more strength. Maybe my pullback strategy won't work . . .

The gold ETF looks golden. I'm a buyer on a pullback.

The market in a minute. Dave Landry's presentations provide quick and insightful market analysis.

Dummyspots "fade the fed trade" did not work this time, but I have used a similar approach successfully in the past.

I'm watching most of the same charts as the guys over at highchartpatterns.

Chris Perrunna highlights a book Victor Sperandeo published that I did not know about. I subscribe to the theory that the fed is a tool to manipulate the masses (and that governments are controlled by powers beyond our knowledge), so you can bet I'm going to get my hands on the book.

Nobody is better than TraderJamie at diagramming day trades. I don't do a lot of daytrading, but you can bet that when I do I'll be using the knowledge I've gained at his site.

The meaninglessness of alpha.

Babak points out that the Dow is high relative to it's moving average. That's part of the reason I'm waiting for a pullback.

The people behind Bespoke are the best market researchers on the planet.

Sports and Entertainment Links:
I agree with Bill Simmons. Friday Night Lights is one of the best shows and television, and the best sports show ever, yet sports fans aren't watching it.

Why is nobody up in arms over the racist and sexist comments made by Isiah Thomas? During his sexual harassment testimony, he says he has no problem with a black man calling a black woman a derogatory term (rhymes with witch), but has a problem with a white man doing the same thing.

I agree with Chris Collinsworth. The Texans might have made the right choice taking Mario Williams. I've always felt Reggie Bush is overrated.

You heard it here first: The Boston Celtics will win the Eastern Conference. As a die hard Timberwolves and KG fan, I'm now pulling for Boston. Anybody else thing Timberwolves GM and ex-Celtic great Kevin McHale is secretly working for Boston?

Today was a sad day for Chuck Liddell fans (for those who have no idea who I'm talking about, we're talking UFC-mixed martial arts). He lost for the second straight fight, this time to the dean of mean, Keith Jardine.

With the new fall season coming, here are my favorite shows, in no particular order: Lost, Heroes, Entourage, Curb Your Enthusiasm, Friday Night Lights, Smallville, Office, Prison Break, Monk, Psyche and 4400.

I just finished reading The Smart Money: How the World's Best Sports Bettors Beat the Bookies Out of Millions by Michael Kronik. It's a fascinating look at high stakes sports betting and the corruption that goes on at Las Vegas gambling establishments.