Sit on your hands

Here here here, I agree with Cramer again.


By chinltong at 2008-09-29

This is not a time to pick the best of the breed nor to find a hidden jewel. Market is very sensitive to any news. In Bull market, bad news is being discounted; and vice versa in Bear market. Now it is not a trending market. Volatility is too high, any news come out would drive the market up or down.

Market neutral option spreads sounds pretty good, but be watchful because the options are sensitive to first and foremost price, then time and lastly volatility.
Since the price moves up or down pretty big, P/L moves too much. Also volatility in any give time can collapse or sky-rocketed.

shorts: trading for the sensation
longs: money under my mattress

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Update my Trading Rules

By now, I think it is time to update my rules in Sideway/volatile/not-tradable Markets instead of trail the stop everyday, I need to let the stock to fluctuate.

shorts: politics not passing the bill
longs: XLF, once they pass the bill

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so long Wamu

I am working late, just saw the news about Washington Mutual, WaMu, taken by JPM.


By chinltong at 2008-09-25

So the consequence: Bank of America and JP Morgan Chase will be the next Giants.

shorts: WM (duh)
longs: BAC, JPM (not a technical entry)

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Utilities XLU watchlist

Couple more stocks shown entry signals:
GAS:


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ED


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Best of success everyone. And hope they put politics aside and pass -a- bill to settle the market.

As for Gold and Oil

1. OIL: plenty of reasons for it to continue down trend and plenty of reasons otherwise, I will wait for the chart to tell me.
   
2. GOLD: well if the bill does get passed, it should drive down USD against other currencies and drive down interest rate too. So Gold is still bullish. Waiting for the chart on the next bounce.
   

Well, I am first technician second structural. So my macro reasons will always be additional evidence to the charts.

Utilities bullish fits, because as the rate goes down, utilities usually goes up because it give hefty dividends.

shorts: weekend
longs:GAS, ED

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How do I find a trade?

I did not have any ideas for a few days, but today it was obvious.

from http://finance.google.com, each sector is shown:





Obviously utilities outperformed everyone else by a margin.

Then enter:


XLU
stop at: 32.82
target 1: 36.8, it I see a doji there in that area, I sell half, and set the stop below that doji.


BTW: I watched the Today show this morning and I saw Cramer!
I never care much about "Mad Money" because of his showmanship. But today he was all dressed and composed today on the Today show. He recommended everyone to sell off at least 20% of their equity holdings. I agree.

Anyway, still not a big Mad Money fan, because it does not promote independent stock selections.


shorts: politics
longs: XLU

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Mange your risk, PNR, PRGO

To me risk management is the big thing, before I enter any trade I need to know where to stop and how much trade risk.

Trading stock could result in bigger loses, because stocks can gap down and triggered stop. Long options actually have limited risk, which is the cost one's pay to buy the option.

Here is my trades for today:
PRGO, if closes above $37.63 (today's high) once again Fib's does the magic for me.
Stop at $36.43, target 200% projection: $42.43 which also is the last major high.



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PNR, again waiting for confirmation that it closes above 39.18 (today's high) tomorrow by close.
Stop: $34.40
Target: $5 from the swing, $42.50



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shorts: empty
longs: PNR and PRGO

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Pre-mature Bragging

well the celebration was pre-mature, the oil stocks were not able to hold against the market trend, went down as well.

We will see tomorrow, no new entries today. Future is up slightly, at least it means no big news yet.

We all are holding our breaths, let's see what happen on the 700 billion bail out plan.

shorts: nothing :|
longs: nothing :|

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Oil and Gold

By chinltong

Don't need any reasons, just the charts.

Brag time: I am glad that I got into some oil stocks (RRC and XTO) Friday and today. Well disappointed that I could not get a fill on AEM today.

shorts: over thinking
longs: OIL and GOLD

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Bullish on XLE and Gold Stocks

It is interesting to see a few stocks with double bottoms or bottoming in the energy sector while oil continue to make lower lows:

mini double bottoms broke out already: PBR, MUR, CXO, ANW and FTI.
wider double bottoms: APA, DVN, both XTO and RRC already broken out.

Double bottoms are measured from the top to the bottom and add the height to the break out point to project the target. I like using the Fibonacci Retracement, start at the break out point of $53, drag down to the bottom of the "W" at $43, the target is 200% of the projection at $63.



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Similar observations made also on the Gold stocks, AEM. Employing the same measuring technique, the target is $74.


shorts: still nothing caught my eyes
longs: Energy and Gold

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take profit, tales of three dollars

BWLD, took profit today!!! only $1 away from the original target almost 20% in three days on stocks? Not bad


Still holding on to my plan with AIG, I actually would add to my positions when it makes a higher low.

AIG: a $3/$4 stock. as previously mentioned a couple days ago, still going, thanks to the US Gov't

RRC, broke out from the "W" Bottom,
Target 60, Stop at 48.12



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shorts: Short shorts
longs: RRC

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4 Schools of Trading

The majority of professional traders use one or more of the following four schools of trading:

1. Fundamental Analysis: reading the books, P/E ratios, dividends, etc
   
2. Technology Analysis: charts, higher highs and higher lows.
   
3. Structural Analysis: Macro conditions, global demands, local demands, law and regulations.
   
4. Psychological Analysis: emotions
   

there is no sure way to be profitable in trading, because if everyone figure out the way to make money in every trade, the market will figured it out and collapse on its own.

What happened this week is emotion plus fundamentals. The sell off could not be just because of the short-sellers, those are real sell off as the big money figured out the new target of each financial stocks when things unfold. On top of that emotions overcome many small investors.

My favorite school of thoughts is technically analysis. I am always late to the party, but I go for high probability. I only need to make the middle 60%. "Professional Gamblers go in when the odds are on THEIR side".

So which is the chart telling me, nothing, except the extreme volatility, usually at the extremes of the market.

I will watch the financial, GS, MS, BAC, WFC, and such, I want to see a higher low formed and then enter the trade with a reasonable stop. Remember my motto is getting the middle 60%.

shorts: waiting
longs: licking my chops, waiting for the opportunity

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The hottest woman in town

After dinner, my wife went to Wal-Mart to re-stock some baby food. The boys were fine when she left. I gave big D a bath, and big M was watching Curious George. Things were nice and dandy. Until my wife returned, as she opened the door, big M started to cry, I mean big time crying, he wanted to go out with Mommy. Then big D started to cry, big time also, because mommy gave all of her attention to big brother.

A nice and quiet evening has turned into a crying contest. Well the fact that big M chose to watch Curious George instead of going out with Mommy does not play any part of this onslaught of noises ignited by insane amount of jealousy. That went on for 15 minutes, the only thing in the my mind was....how funny.

Finally Mommy took big M for a ride as they left the house, I fed big D with 3 oz of milk and big D went to sleep after that.

Wow

Mommy was very happy that she plays an important, indispensable part of our 2 sons. I supposed this was actually a testimony to the fact that both boys love their Mommy so much....at least until they become teenagers.



shorts: happy days are too short
longs: a Happy Family

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Good vs Bad

Depending one's trading style today can be Good or Bad.

To me, it is only good when the Market trends and trends strongly.

Besides FDX, BKE bounced really good too.
Check out the candle on MTH,

BKE: stop at 58.12, along the diagonal Trend line
MTH: stop at 22.82, just an amazing candle.


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shorts: man this is hard to find one
longs: FDX, BKE, MTH

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FDX

Well, another big swing day. Hard to get used to it.



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FDX, entered at the end of day, stop 3% below 30 day Moving Average (the blue dotted curve)Stock used it as support a few times on this uptrend, and I will use it too.
Move the stop up weekly, never move the stop down. It is going to take some time.

shorts:Nothing yet
longs:FDX

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AIG out of the Dow 30

AIG, position size to the max loss, i.e. stock goes to zero (0). No target, collect the earnings in one year. If your risk per trade is $250, then get 100 shares.

shorts: nothing, not even any financials
longs: Trends, come back please

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Transport price action

Get ready to watch for entry points on LUV, FDX, UPS.....why because they are on a uptrend and pulling back.

As for entry, BWLD and Support and Resistance target at $46, initial stop at 36.12


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shorts: why?
longs: Strong stocks in IYT

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two sided sword

days or weeks like this today, is getting very scary. Last I checked GS down 30, MS down 10. During the financial crisis in 2000, Asian stock markets were depressed. Hong Kong Gov't went out to buy stocks when "hedge funds" trying to short and short. I was visiting Hong Kong then and I was a spectacular events. It turned out we all got through fine. Except the rumors for some Hedge Funds made a lot of money.

Because of other obligations, like work, I can't trade intraday. But there are very few entry points for me with long candles everyday. I guess sitting on my hands is not a bad idea these days.

shorts: greed (again)
longs: waiting

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Trend me!

2nd principle of Technical Analysis: Prices move in trends

Uptrending Sectors: HomeBuilders

Here is my entry today:


MTH,
stop: 23.52
move stop up daily, 0.20 below the diagonal trenline.



Early today SMN and DUG moved $2.00 in my favor and I moved my stop up then later got stopped out break even (commission included).
Remember: I can trade forever if I am "break even" on each trade.

They said don't short rockets, don't catch a falling knife. Shorting a falling knife is no less dangerous.
An old man told me once "Peaches smell the best right before they rot"

Yesterday I posted in another forum for my short on CNX, it hit my target out of the gate this morning and make 75% on my OTM option. Yeah!!! No, I don't know the future. Just being very conservative in my trades.

I am still long CLX stock.

shorts: Greed
longs: MTH

By chinltong

Now what? Bank(c) of America is becoming Bank America.

shorts: no idea
longs: no idea

Scan for stocks

To Scan for Stocks

1. On a up day, focus on uptrending stocks in uptrendng sectors
   
   • pull out the watchlist thumbnails.
     
   • Each Sector watchlist contains the 10 most active stocks, and from the results of a relative performance search see below.
     
   
   
   


2. Sort the stocks by % and by $change in the watchlist
   
   • UNchecked the "Show Chart Only" box under Thumbnails. to allow sorting them by clicking on the "% change" or "$ change", then scan for uptrending stocks.
     Always buy the strengths and sell the weakness, stronger stocks bounced the first and the most
     
   • Found a stock moved pretty well relative to the sector then go into Prophet Chart. If the stock does not look good on thumbnails, it is not worth doing the analysis on Prophet Chart.
     
   
   
   
3. Extra scan, sort the stocks
   
   • Bullish and Bearhish, the appellations do not apply any more since I just can't keep up with the changes, but nontheless they are active stocks, same process applied as in 2)
     
   • S&P100, NASDAQ 100
     
   
   
   
4. Don’t do any search when I can’t concentrate, maybe the lost of a love one or being exhausted
   
   

Relative Performance Search on each sector:
Based on stock’s relative performance of 4-week (70%), 1-week (100%), > $25 and > 500,000 volume, then select the sector at the bottom of the Power ProSearch to add to my watchlists.

Entries and Exits

Entries:

• confirmed bounced, close higher than the high of the low day, can be hollow or filled candle, full position size
  
• unconfirmed bounced:
  
  • uptrending stocks,
    
  • low of the day falls between 33% and 66% retracement of the last upswing.
    
  • must be a up day with hollow candle, enter on Bullish Engulfing, Bullish Piercing Line, Bullish Belt Hold.
    
  • half position size, add the next half on the confirmed bounce (sometimes on the confirmed bounce, the risk is too high to enter the next half).
    
  
  
• Note: position sizes are determined first by risk, then relative to my overall portfolio.
  
• breakouts: volume confirmation on 1 mil or less issues.
  

Stops:

• $0.20 below support, if it is on the dollar, move to 0.92
  
• move the stop up to break even when the stock move $2.00 in my favor intraday
  
• in a sideway market, trail the stop at the end of day everyday relative to the low of the day.
  
• move stop relative to the higher low in trending market on a daily chart.
  

Exists:
1) sell 80% at 90% of the target and tighten the stop