Although the three inside up candlestick formation did not occur today, and we therefore still have not gotten a BUY signal RIMM did give us a positive sign. Despite closing slightly down today, RIMM for a third straight day has hit a higher low and higher high. I did take a long position today with RIMM at $68.36, judging that it had enough support to stand above $65.00, even though it may be a little preemptive. For now, to get a clear BUY signal from RIMM, it needs to close over $72.00. Seeing RIMM hitting a higher lows and higher high would be bullish. Even though I opened a position with RIMM today, I only invested 50.00% of the maximum amount of cash I may be willing to contribute to RIMM if it continues higher. I have also set a Stop BUY trigger at $70.41, 3.00% over my entry price to add another 32.00% of cash to my position, thus applying my trading strategy Y-SWING 2.0. Of course I have also set a Stop Loss order at -7.00% at $63.57.
Long RIMM @ $68.36 - Stop Loss @ $63.57 - Stop Buy @ $70.41
Wednesday, September 30, 2009
Tuesday, September 29, 2009
GRMN, RIMM - Awaiting Buying Opportunnities
The market has been relatively quiet lately, and there doesn't seem to be too many opportunities on both the upside or downside. However, I currently have 3 stocks on my radar who may give us BUY or SELL signals soon:
GRMN - WAIT
GRMN is currently in a strong uptrend and just below some key resistance below $38.00. The moment GRMN closes strongly over $38.00 ($38.25-$38.50), this would be a BUY signal, and I'm currently looking to go long GRMN if that happens. The stochastic has already given us a BUY signal today, which may be an indication of what's to come, possibly as soon as tomorrow. Some people may argue that seeing GRMN bouncing up over its support trendline around $35.00 is already a BUY signal, but I would rather wait to see GRMN go over $38.00 to play it safer.
RIMM - WAIT
DAILY CHART
RIMM has been battered last week, and according to the stochastic it's oversold, and I agree. I think the market overreacted by selling off heavily RIMM, and I think could possibly very soon see a bounce back up The stochastic is now standing at a strong support level below 20, and so is the RSI at 30. Finally RIMM seems to have bottomed at around $66.00, and this may be confirmed as soon as tomorrow if we have a long up gap. We currently have the possibility of seeing a Three Inside Up formation, which indicates a bottom. This would require RIMM to have a white-bodied candlestick closing well within range of the last red candlestick, while hitting a higher low than the previous two days. If this occurs tomorrow, it will be a confirmation that RIMM has bottomed. The three inside up formation is said to be the best tested patterns, according to Schwager's research tests. It is ranked among the top performing patterns formation in terms of net profits achieved after going long, has some of the least drawdowns, and is first in percentage of winning trades. It would be best to see RIMM go over and possibly close higher than its last long down gap, which occurred on Friday. Although, it would be preferable to go long RIMM after it goes over its closest resistance level at $72.00, you may consider to start entering part of your position when you have the three inside up formation confirmation, and then add more to it once it goes over $72.00. This is probably what I will be looking to do tomorrow if we get a confirmation, going along with my latest trading strategy Y-SWING 2.0. Please note that if RIMM closes down tomorrow, the three inside up formation will no longer be valid.
WEEKLY CHART
Looking at the weekly chart, we can see that RIMM has been trading in a rather wide range for approximately the last 6 month between $65.00-$90.00. Despite this trend, the range is so wide that seeing RIMM bounce back at its current strong support level at $65.00 still gives us a lot of upside potential even if RIMM continues to move along this trend. Buying RIMM at its potential bottom at $65.00, to see it go as high as $90.00, gives us a potential return of +38.50% if it stays within this trend, and a higher return if it breaks above this trend, over $90.00. Another factor giving strong support for RIMM, is the fact that its standing strong above its weekly 200 day MA at around $65.00. RIMM looks to be at the verge of giving us a BUY signal as soon as tomorrow. A break below $65.00, could send RIMM back to $60.00, and below $60.00 RIMM could fall much lower. But I really don't see RIMM go below $60.00.
GRMN - WAIT
GRMN is currently in a strong uptrend and just below some key resistance below $38.00. The moment GRMN closes strongly over $38.00 ($38.25-$38.50), this would be a BUY signal, and I'm currently looking to go long GRMN if that happens. The stochastic has already given us a BUY signal today, which may be an indication of what's to come, possibly as soon as tomorrow. Some people may argue that seeing GRMN bouncing up over its support trendline around $35.00 is already a BUY signal, but I would rather wait to see GRMN go over $38.00 to play it safer.
RIMM - WAIT
DAILY CHART
RIMM has been battered last week, and according to the stochastic it's oversold, and I agree. I think the market overreacted by selling off heavily RIMM, and I think could possibly very soon see a bounce back up The stochastic is now standing at a strong support level below 20, and so is the RSI at 30. Finally RIMM seems to have bottomed at around $66.00, and this may be confirmed as soon as tomorrow if we have a long up gap. We currently have the possibility of seeing a Three Inside Up formation, which indicates a bottom. This would require RIMM to have a white-bodied candlestick closing well within range of the last red candlestick, while hitting a higher low than the previous two days. If this occurs tomorrow, it will be a confirmation that RIMM has bottomed. The three inside up formation is said to be the best tested patterns, according to Schwager's research tests. It is ranked among the top performing patterns formation in terms of net profits achieved after going long, has some of the least drawdowns, and is first in percentage of winning trades. It would be best to see RIMM go over and possibly close higher than its last long down gap, which occurred on Friday. Although, it would be preferable to go long RIMM after it goes over its closest resistance level at $72.00, you may consider to start entering part of your position when you have the three inside up formation confirmation, and then add more to it once it goes over $72.00. This is probably what I will be looking to do tomorrow if we get a confirmation, going along with my latest trading strategy Y-SWING 2.0. Please note that if RIMM closes down tomorrow, the three inside up formation will no longer be valid.WEEKLY CHART
Looking at the weekly chart, we can see that RIMM has been trading in a rather wide range for approximately the last 6 month between $65.00-$90.00. Despite this trend, the range is so wide that seeing RIMM bounce back at its current strong support level at $65.00 still gives us a lot of upside potential even if RIMM continues to move along this trend. Buying RIMM at its potential bottom at $65.00, to see it go as high as $90.00, gives us a potential return of +38.50% if it stays within this trend, and a higher return if it breaks above this trend, over $90.00. Another factor giving strong support for RIMM, is the fact that its standing strong above its weekly 200 day MA at around $65.00. RIMM looks to be at the verge of giving us a BUY signal as soon as tomorrow. A break below $65.00, could send RIMM back to $60.00, and below $60.00 RIMM could fall much lower. But I really don't see RIMM go below $60.00.
Monday, September 28, 2009
My Updated Trading Strategy "Y-SWING 2.0"
Hi everyone, I have just finished developing an updated version of my trading strategy Y-SWING, now Y-SWING 2.0. The main addition to my strategy is averaging up. Please note that this strategy has twice more steps and may seem more complicated than before. It will require more calculations, and that is why I strongly suggest you use an Excel file to make all the calculations for you (doing everything manually every time is too much work). This updated version of my strategy should be used by more advanced traders, and I don't suggest newbies to use it, it would be best to start with the first version of my strategy which is simpler. The main benefit of this updated strategy is of not investing all the money you intended to invest in one stock at once, and to give you the chance of being wrong and hit by smaller losses if the trade goes against you. At the same time this should help you maximize your gains, by adding to your position when the stock moves in your favor. Please note that I have yet to implement and experiment with this updated trading strategy myself, and will do so starting today. I will try to see if there is way where I could upload my Excel file online, so you could simply download it and not worry about building one yourself.
This trading strategy revolves around having a discipline. I have tweaked this strategy from time to time to perfect it, and this is the latest version of it. Please note that I use a virtual trailing stop order in this strategy, that I know many people do not have access to. You may use stop orders instead, but it would be preferable to adjust it up gradually as the share price continues higher.
Y-SWING 2.0 Trading Strategy:
STEP 1 Determine the total value of your portfolio
STEP 2 Determine the maximum number of stocks you can hold in your portfolio
Note 1: If you have: less than $5000 = 2 stocks; $5001-$10000= 3 stocks; $10001-$25000= 4 stocks; $25000-$50000= 5 stocks; $50000-$100000= 6 stocks; >$100000= 6 stocks.
Note 2: If the total value of your portfolio is of $5000, you should have up to $2500 invested per stock ($5000/2=$2500 per stock); $20000 ($20000/4=$5000 per stock), and so on.
STEP 3 Buy stock ABC with 50.00% of cash, for your intended maximum position
Note 1: If the total value of your portfolio is $5000, meaning that you may hold up to 2 stocks with a maximum of $2500 for each stock, start by investing $1250.00 to open your position on your first stock. For example if the share price of stock ABC is $10.00, buy 125 shares @ $10.00= $1250.00.
Note 2: When your stock's share price fluctuates between -6.99% & +2.99% for 28 days (20 business days), you should sell the stock no matter what the price and move on to another (Unless you strongly believe that the stock is about to make its move and move in the direction you desire, whether you are long or short)
STEP 4 Set -7.00% Stop Loss order
Note 1: If your stop loss gets triggered, take your loss and move on to another stock.
STEP 5 Set a Stop BUY order at +3.00% over your purchase price with 32.50% of your remaining cash for that stock
Note 1: If you bought 125 shares of stock ABC at $10.00 (for $1250), you should have a stop buy order at $10.30 ($10.00 x 1.03= $10.30) with 32.50% of the remaining cash you intend to invest in that one stock. So if you have $2500 as a maximum intended position, and have already invested $1250, you should add $2500x0.325= $812.50/$10.30 =78.88 ~ 79 shares ($813.70). You would now hold a total 204 shares, for a total of $2063.70 . The purpose of doing this (averaging up) is if the stock's share price starts moving your way it will be safer to add more money to your position and reap in more gains, while limiting your losses if you were to immediately invest all your intended position for that stock at once. If you were to invest everything at once you wouldn't give yourself the chance of being wrong, and despite having a -7.00% stop loss order, you would still lose more money.
Note 2: The risk when this order gets filled is to see your stock pullback below -7.00% before you get the chance to place a new stop loss order, in case you are not present when the order gets filled. This could and should only happen if you invest in very volatile stock, and is therefore better to set it manually if you invest in such stocks.
STEP 6 Cancel your Old Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price
Note 1:Your average purchased price can easily be calculated: If your first trade represented an investment of $1250 for 125 shares, and your 2nd trade $813.70 for 79 shares. Simply do the sum of your investments and divide it by your total number of shares ($1250+$813.70= $2063.70; 125+79= 204 shares) $2063.70/204= $10.116 average purchase price. Now that you have your average purchased price, simply do $10.116-7.00%= $9.407 stop loss order.
STEP 7 Set a Stop BUY order at +3.00% over your last purchase price with the remaining 17.50% of your cash for that stock
Note 1: Still using our last example, your last purchase price would be $10.30. Therefore you would set a stop buy order at $10.30+3.00%= $10.609 with $2500x0.175= $437.50 for 41.23 shares~ 41 shares x $10.609= $434.969. You would now have a total of 204+41= 245 shares for $2498.669 ($434.969+$2063.70).
STEP 8 Cancel your Last Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price.
Note 1: Your average purchased price would now be $10.198=($2498.669/245). Your new stop loss order $10.198-7.00%= $9.484.
STEP 9 Set -7.00% VTSO (Virtual Trailing Stop Order)
Note 1: The moment your stock increases +8.00% over your average purchased price, set an average -7.00% VTSO (based on the average purchased price -7.00%, and the current price -7.00%). You will now be guaranteed to exit your position without any losses.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 10 Cancel VTSO and Sell portion of shares representing gain
Note 1: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain. You may choose to start selling before or after you achieve a +20.00% gain, it's up to you.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 11 Set new VTSO for remaining shares
Note 1: For your remaining shares set an average -7.00% VTSO,based on the average initial purchased price -7.00%, and your last sell point -7.00% (Step 4).
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 12 Repeat Steps 10 & 11
Note 1: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
If you have a more or less risk tolerance you can adjust your stop loss to your liking. What is extremely hard when you start trading, it's the inability to take losses, and set your stops in advance. When I first started trying to apply this strategy, I found myself either canceling my stop orders before they would get triggered or wait till it hit my stop loss target and tell myself I would just place a market sell order then. It took me about 2-3 years to be able to accept the fact that I had to take some losses. The most successful traders have more losing trades than winners. The reason is because, those traders cut and limit their losses while when they start making gains they try to ride those trends as long as possible and will make huge gains. If out of 3 trades, 2 represent losses of -7.00% each, while your winner made you 40.00%, you are profitable, and that's the goal of this strategy. Most people will hold on to losses and hope they bounce back, while they quickly sell their winners because they're scared of losing it when they have it. Think of it like this, if you are making gains it means that you are doing something right, and probably made the right call, and you should hold on to it as long as you can or as trend persists. The beauty of this strategy, is that even if you're not good at picking stocks, by limiting your losses, the chances are that you may be profitable in the end. You may get frustrated, if you get stopped out several times consecutively. If this occurs, you should set back and stop trading for a little while, and try to figure what is it that you're doing wrong.
With this strategy, each stock you buy should be from a unique sector.Some people may argue, that this strategy implies not having a well diversified portfolio. That is partially true, but the reason is because you have to be able to follow your stocks, and if you have a portfolio of 15 stocks, it will be hard to keep track of where each stock is heading. On top of that you will be diluting your gains.
This strategy allows you to be disciplined and well diversified, and to cut your losses @ -7.00%, while cashing in gains as they come along. You may need to follow the price moves of your stocks almost everyday, while paying close attention the technical charts when the price gets close to one of your buy or sell points If there is a crash, despite having stop losses, the stop losses are not active during pre-market and after-hours, you would need to place a separate live order, and even if the stops were active during these periods you still won't be completely protected. If a crash occurs the first opening trades during the pre-market for example may be much lower than the previous day's closing price and may be much lower than your stop. For example assume you bought stock ABC @ $10 with a stop @ $8, and the price closes for the day @ $8.25. If a crash occurs the next day, when the pre-market opens the bid and asks could be $6.00 and $6.50. However, if you trade in the stock market this is a risk you have to assume; Only the careless would invest all their money that they have earned over the past years, it is important to cash in gains each year. For example when you first started trading you started with $10,000 and over the years you accumulated $5000 of gains. You would be stupid to invest your $15000 and risk all everyday, you should continue to invest $10000 and cash in the $5000, or just each year increase a little bit your investments if you can afford it to maybe $11,000 or $12,000. The whole point of this strategy is to cash in gains when you have them while continuing to investing the same amount of money without risking more, so that in the future your $10,000 investment may only represent a portion of gains you have accumulated over the years that you would otherwise never have had to begin with.During accumulation periods when the market moves sideways it may be harder to successfully use this strategy either way, you would need to be more precise in your buys and sells; and you may need to lower the profit point where you decide to take some profits or sell your position completely (for example selling portion or all shares of gain @ 10%-15% rather than 20%).
This trading strategy revolves around having a discipline. I have tweaked this strategy from time to time to perfect it, and this is the latest version of it. Please note that I use a virtual trailing stop order in this strategy, that I know many people do not have access to. You may use stop orders instead, but it would be preferable to adjust it up gradually as the share price continues higher.
Y-SWING 2.0 Trading Strategy:
STEP 1 Determine the total value of your portfolio
STEP 2 Determine the maximum number of stocks you can hold in your portfolio
Note 1: If you have: less than $5000 = 2 stocks; $5001-$10000= 3 stocks; $10001-$25000= 4 stocks; $25000-$50000= 5 stocks; $50000-$100000= 6 stocks; >$100000= 6 stocks.
Note 2: If the total value of your portfolio is of $5000, you should have up to $2500 invested per stock ($5000/2=$2500 per stock); $20000 ($20000/4=$5000 per stock), and so on.
STEP 3 Buy stock ABC with 50.00% of cash, for your intended maximum position
Note 1: If the total value of your portfolio is $5000, meaning that you may hold up to 2 stocks with a maximum of $2500 for each stock, start by investing $1250.00 to open your position on your first stock. For example if the share price of stock ABC is $10.00, buy 125 shares @ $10.00= $1250.00.
Note 2: When your stock's share price fluctuates between -6.99% & +2.99% for 28 days (20 business days), you should sell the stock no matter what the price and move on to another (Unless you strongly believe that the stock is about to make its move and move in the direction you desire, whether you are long or short)
STEP 4 Set -7.00% Stop Loss order
Note 1: If your stop loss gets triggered, take your loss and move on to another stock.
STEP 5 Set a Stop BUY order at +3.00% over your purchase price with 32.50% of your remaining cash for that stock
Note 1: If you bought 125 shares of stock ABC at $10.00 (for $1250), you should have a stop buy order at $10.30 ($10.00 x 1.03= $10.30) with 32.50% of the remaining cash you intend to invest in that one stock. So if you have $2500 as a maximum intended position, and have already invested $1250, you should add $2500x0.325= $812.50/$10.30 =78.88 ~ 79 shares ($813.70). You would now hold a total 204 shares, for a total of $2063.70 . The purpose of doing this (averaging up) is if the stock's share price starts moving your way it will be safer to add more money to your position and reap in more gains, while limiting your losses if you were to immediately invest all your intended position for that stock at once. If you were to invest everything at once you wouldn't give yourself the chance of being wrong, and despite having a -7.00% stop loss order, you would still lose more money.
Note 2: The risk when this order gets filled is to see your stock pullback below -7.00% before you get the chance to place a new stop loss order, in case you are not present when the order gets filled. This could and should only happen if you invest in very volatile stock, and is therefore better to set it manually if you invest in such stocks.
STEP 6 Cancel your Old Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price
Note 1:Your average purchased price can easily be calculated: If your first trade represented an investment of $1250 for 125 shares, and your 2nd trade $813.70 for 79 shares. Simply do the sum of your investments and divide it by your total number of shares ($1250+$813.70= $2063.70; 125+79= 204 shares) $2063.70/204= $10.116 average purchase price. Now that you have your average purchased price, simply do $10.116-7.00%= $9.407 stop loss order.
STEP 7 Set a Stop BUY order at +3.00% over your last purchase price with the remaining 17.50% of your cash for that stock
Note 1: Still using our last example, your last purchase price would be $10.30. Therefore you would set a stop buy order at $10.30+3.00%= $10.609 with $2500x0.175= $437.50 for 41.23 shares~ 41 shares x $10.609= $434.969. You would now have a total of 204+41= 245 shares for $2498.669 ($434.969+$2063.70).
STEP 8 Cancel your Last Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price.
Note 1: Your average purchased price would now be $10.198=($2498.669/245). Your new stop loss order $10.198-7.00%= $9.484.
STEP 9 Set -7.00% VTSO (Virtual Trailing Stop Order)
Note 1: The moment your stock increases +8.00% over your average purchased price, set an average -7.00% VTSO (based on the average purchased price -7.00%, and the current price -7.00%). You will now be guaranteed to exit your position without any losses.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 10 Cancel VTSO and Sell portion of shares representing gain
Note 1: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain. You may choose to start selling before or after you achieve a +20.00% gain, it's up to you.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 11 Set new VTSO for remaining shares
Note 1: For your remaining shares set an average -7.00% VTSO,based on the average initial purchased price -7.00%, and your last sell point -7.00% (Step 4).
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
STEP 12 Repeat Steps 10 & 11
Note 1: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.
If you have a more or less risk tolerance you can adjust your stop loss to your liking. What is extremely hard when you start trading, it's the inability to take losses, and set your stops in advance. When I first started trying to apply this strategy, I found myself either canceling my stop orders before they would get triggered or wait till it hit my stop loss target and tell myself I would just place a market sell order then. It took me about 2-3 years to be able to accept the fact that I had to take some losses. The most successful traders have more losing trades than winners. The reason is because, those traders cut and limit their losses while when they start making gains they try to ride those trends as long as possible and will make huge gains. If out of 3 trades, 2 represent losses of -7.00% each, while your winner made you 40.00%, you are profitable, and that's the goal of this strategy. Most people will hold on to losses and hope they bounce back, while they quickly sell their winners because they're scared of losing it when they have it. Think of it like this, if you are making gains it means that you are doing something right, and probably made the right call, and you should hold on to it as long as you can or as trend persists. The beauty of this strategy, is that even if you're not good at picking stocks, by limiting your losses, the chances are that you may be profitable in the end. You may get frustrated, if you get stopped out several times consecutively. If this occurs, you should set back and stop trading for a little while, and try to figure what is it that you're doing wrong.
With this strategy, each stock you buy should be from a unique sector.Some people may argue, that this strategy implies not having a well diversified portfolio. That is partially true, but the reason is because you have to be able to follow your stocks, and if you have a portfolio of 15 stocks, it will be hard to keep track of where each stock is heading. On top of that you will be diluting your gains.
This strategy allows you to be disciplined and well diversified, and to cut your losses @ -7.00%, while cashing in gains as they come along. You may need to follow the price moves of your stocks almost everyday, while paying close attention the technical charts when the price gets close to one of your buy or sell points If there is a crash, despite having stop losses, the stop losses are not active during pre-market and after-hours, you would need to place a separate live order, and even if the stops were active during these periods you still won't be completely protected. If a crash occurs the first opening trades during the pre-market for example may be much lower than the previous day's closing price and may be much lower than your stop. For example assume you bought stock ABC @ $10 with a stop @ $8, and the price closes for the day @ $8.25. If a crash occurs the next day, when the pre-market opens the bid and asks could be $6.00 and $6.50. However, if you trade in the stock market this is a risk you have to assume; Only the careless would invest all their money that they have earned over the past years, it is important to cash in gains each year. For example when you first started trading you started with $10,000 and over the years you accumulated $5000 of gains. You would be stupid to invest your $15000 and risk all everyday, you should continue to invest $10000 and cash in the $5000, or just each year increase a little bit your investments if you can afford it to maybe $11,000 or $12,000. The whole point of this strategy is to cash in gains when you have them while continuing to investing the same amount of money without risking more, so that in the future your $10,000 investment may only represent a portion of gains you have accumulated over the years that you would otherwise never have had to begin with.During accumulation periods when the market moves sideways it may be harder to successfully use this strategy either way, you would need to be more precise in your buys and sells; and you may need to lower the profit point where you decide to take some profits or sell your position completely (for example selling portion or all shares of gain @ 10%-15% rather than 20%).
Thursday, September 24, 2009
BIG SIGNAL UPDATES - AIG, AAPL, AUY, BAC, C, ENER, FSLR, LVS, MGM, RF, RIMM
For some reason, even though I'm still long BAC and AAPL, I feel I may get stopped out sooner rather than later. There is so much uncertainty in the market right now, that I would like to be all in cash, and WAIT for some signs of actually where the market could be heading next. This uncertainty is mostly linked to the fact that we have been waiting for a correction for so long that have yet to come, and now that the market has been down for the last couple of days, we are starting to wonder if the correction is starting now or if this is just a small pullback, and that the markets will continue higher.
AIG - WAIT
AIG is currently giving us a lot of mix signals, and that is one reason why I am issuing a WAIT signal. Just 4 days ago, AIG gave us a BUY signal for what I considered to be a pennant formation confirmation after AIG jumped over $40.00, and managed to remain above $45.00 where it has support now. However, like my last post on AIG, it was faced with resistance at $55.00, that it didn't manage to break through. Right now AIG is trending between $45.00 and $55.00, but there isn't strong enough support at $45.00 to issue a BUY signal just yet. AIG bouncing back up from $45.00 would be bullish but not enough to say it's a BUY, I would rather wait for AIG to go and close over $55.00 and remain above this level to get back in AIG. If AIG falls below $45.00, AIG's next support levels are at $40.00, $35.00, and $30.00. If we want to see AIG go higher, volume has to increase, but it has decreased in the last few days. AIG's 50 day MA crossed its 200 day MA a few days ago, which is bullish for the long term and indication this will head higher in the future. On the other hand the stochastic gave us a SELL signal today crossing down its signal line, and may not find support again until the the 25-30 level. In conclusion, AIG is giving a lot of mix signals. For the moment AIG's major trend is still up while its minor trend is down, so for the moment we can only say that AIG is going through a pullback rather than a correction. Basically we have to wait for a bounce back up from current support levels to get back in, and myself would not go back in AIG before it goes over $55.00, due to such high volatility.
AAPL - HOLD
Despite having a big down gap today, AAPL is still in a very strong uptrend, and has managed to stay within its current trading channel. A break below $180.00 may just mean that AAPL may fall back to its last uptrending channel, whose bottom is currently around $175.00. A big down gap below this channel (under $175.00) and/or its 50 day MA would be a major SELL signal. However AAPL has been strongly trending up over its 50 day MA since the month of July, so it would take some very bad news from AAPL to break its trend. I'm currently long AAPL at $185.00, and even if it falls back at the low end of its last channel my stop loss order of -7.00% will not get triggered. AAPL is a very slow moving stock, and in uncertain times damage may be limited if a correction begins, and that is why at least temporarily it is a good idea to shift toward those safer, less volatile stocks.
AUY - WAIT (Updated September 26th)
AUY has been in a very active and wide trading range lately, between $10.00 and $11.25-$11.50. It is currently trading sideways, and we had a sell signal a few days ago from the stochastic. If AUY breaks below $10.25-$10.00, it could find support at $9.75 and $9.25, there is very strong support at $10.00 though. A break over $11.25-$11.50 would give us a BUY signal. For the moment we can do nothing else but WAIT for AUY to give us a clear signal. But like many stocks, it seems to be at the verge of giving us a SELL signal. However despite this it's already near some very strong support levels. Currently both the MACD and Stochastic have given us SELL signals.
BAC - WAIT
BAC a stock for which I'm currently long is a stock I believe that I may get stopped out, possibly as soon as tomorrow and possibly whipsawed. I have a stop loss order currently set around $16.58. BAC currently stands just below $17.00 and is about to give us a SELL signal if it closes below around $16.75-$16.50. However it has strong support at its 50 day MA of $16.00 and $15.00, and a fall below these levels would be major sell signals. Personally I don't see BAC fall lower than $16.00, and it's currently in strong uptrend. What I have to decide tomorrow is if I let my stop loss order get the chance to get triggered or do I sell it before and WAIT, wherever it goes tomorrow and wait for a clear BUY signal? The last option is the most likely, and like I mentioned before I am looking to be more in cash right now, as a lot of stocks are at the verge of getting SELL signals. Basically we seem to be having WAIT signals who are waiting to give us SELL signals rather than BUY signals. The stochastic also gave us a sell signal a couple days ago. September 26th update: Just wanted to point out that as I expected my stop loss order for BAC got triggered and all my shares were sold at $16.55, taking a loss of under -7.00%. I am currently long AAPL only.
C - SELL
C like most other stocks is also giving us some mixed signals, but there the BUY signals seem to be more for the long term rather than the short term. In the short term we are getting SELL signals. Ever since I confirmed the diamond formation for C, it has been trending down, and this is why I'm issuing a SELL signal. After getting this diamond formation confirmation, we got another SELL signal today, with a dark cloud confirmation. C is definitly trending down. C does have support around $4.10-$4.00 above its 50 day MA, but now with the stock trending down, we have to wonder if it will stand above it. C did give us a BUY signal for the long term with its 50 day MA crossing over its 200 day MA, and the stochastic crossing above its signal line. However the stochastic seem like it's about to give us another SELL signal, but only the future will tell. If you are currently long C, you can wait and see if it manages to bounce back up over $4.00, before deciding to sell, but you do risk the chance of getting whipsawed, all depends how down you are. The first SELL signal with the diamond confirmation, is when you should have sold C in the first place, and now we are getting more SELL signals, but you may feel more pain the more you hold and may even be too late to sell, as you risk now the chance of getting whipsawed, it's a difficult situation.
ENER - SELL
ENER is in a strong down trend, despite going above its 50 day MA giving us a BUY signal about a week ago, it crossed down again below it giving us a SELL signal. It has some support at $12.00, but any move below it could make it fall back around $10.00. ENER has been below its 200 day MA for a while, and is in a major down trend. Unfortunately ENER never managed to close above $14.00 and start to break its down trend to turn into an uptrend.
FSLR - SELL
FSLR is in a strong down trend as well, but is looking much closer than ENER to break this trend. For one FSLR is above its 200 day MA, however it may cross below it very soon but it still has support at $147.00 and $141.00. However we did get a second consecutive SELL signal today. We first had a dark cloud formation where FSLR topped by hitting a higher high, closing below its opening price and below the previous day's close, confirmed by another down gap with a lower low and lower high. Today we got another SELL signal wih three black crows formation, with a third consecutive down gap with a lower low and lower high. Only when FSLR goes above $175.00, it will be considered the possible start of a trend up. We also got a sell signal from the stochastic, crossing down below its signal line.
LVS - HOLD
LVS is still in a very strong uptrending channel. However, LVS is at the bottom range of its channel, and we should know tomorrow if it will continue up along this range or cross below and give us a SELL signal. A bounce back up, would be very bullish and could be considered a minor BUY signal. For the moment, LVS is a HOLD, but tomorrow we'll know if this changes.
MGM - WAIT
MGM is currently a HOLD, and there is the possibility of seeing a flag formation confirmation if MGM manages to close above $14.00 and stay above it for two days for a confirmation. For this to occur MGM must not close below $11.50, and the up gap flag formation would then be canceled, and you could instead see a big sell off, where MGM could fall back as low as $9.00 to $7.80. I would then give MGM a price target of $8.30 ($7.80-$12.00=-$3.20+$11.50=$8.30). Most of the time an uptrending flag formation will break up, but on rare occassions it could also break down. Right now, if MGM continues to trade between $11.50 and $14.00, it's a WAIT. If MGM falls below $11.50, it's a SELL, and if it closes above $14.00, it's a BUY.
RF - HOLD
Today we had a dark cloud formation with RF, giving us a SELL signal, with the stochastic also about to give us another SELL signal. However, RF is in a strong uptrend and has big support at $6.00, and until breaks down below $6.00, RF remains a HOLD. RF's next support levels are at $5.75 and $5.25, and if it goes towards these levels and hold up, it may trend in a sideways channel for a while before continuing its trend up. RF's 50 day MA crossed its 200 day MA, a positive sign for the long term. So, if RF crosses below $6.00, RF would be a SELL. As long as it continues up along its trend line, you should HOLD.
RIMM - SELL (Updated September 25th)
Like I said a few days ago, RIMM was a WAIT until after earning report. Today we got a SELL signal with the price moving high to then close down hard. RIMM's next support levels are at $80.00 and $78.00. RIMM did not manage to stay above $85.00 for two consecutive days. Like I said, always wait after the earnings report and never act before it to get some guidance. Update: RIMM just had a huge breakout down, its next support level is now at $65.00. A break below $65.00 or $60.00 would trigger another major sell off, but I don't think it will go much lower than that.
Dow Jones - HOLD
Finally, the Dow Jones Industrial Average. The Dow Jones, despite the recent bearish signals, is till in a very strong uptrend and a HOLD. For the moment the recent moves down, can only be considered a pullback, as the Dow is still trending up. The stochastic did give us a SELL signal, crossing down, but this, for now, may just be a sign of a pullback. It is too early to say if we are heading towards a correction. Right now, the Dow look like it could pullback around 9500-9600, and if it bounces back up the uptrend will continue. A break below its uptrend line would be a major signal, and perhaps the sign of the beginning of a correction. Until that happens, the Dow Jones is a HOLD.
As you may have noticed, we have no BUY signals among these stocks, which indicates that we are at least in a pullback, but you don't need me to tell you this to notice that of course.
AIG - WAIT
AIG is currently giving us a lot of mix signals, and that is one reason why I am issuing a WAIT signal. Just 4 days ago, AIG gave us a BUY signal for what I considered to be a pennant formation confirmation after AIG jumped over $40.00, and managed to remain above $45.00 where it has support now. However, like my last post on AIG, it was faced with resistance at $55.00, that it didn't manage to break through. Right now AIG is trending between $45.00 and $55.00, but there isn't strong enough support at $45.00 to issue a BUY signal just yet. AIG bouncing back up from $45.00 would be bullish but not enough to say it's a BUY, I would rather wait for AIG to go and close over $55.00 and remain above this level to get back in AIG. If AIG falls below $45.00, AIG's next support levels are at $40.00, $35.00, and $30.00. If we want to see AIG go higher, volume has to increase, but it has decreased in the last few days. AIG's 50 day MA crossed its 200 day MA a few days ago, which is bullish for the long term and indication this will head higher in the future. On the other hand the stochastic gave us a SELL signal today crossing down its signal line, and may not find support again until the the 25-30 level. In conclusion, AIG is giving a lot of mix signals. For the moment AIG's major trend is still up while its minor trend is down, so for the moment we can only say that AIG is going through a pullback rather than a correction. Basically we have to wait for a bounce back up from current support levels to get back in, and myself would not go back in AIG before it goes over $55.00, due to such high volatility.AAPL - HOLD
Despite having a big down gap today, AAPL is still in a very strong uptrend, and has managed to stay within its current trading channel. A break below $180.00 may just mean that AAPL may fall back to its last uptrending channel, whose bottom is currently around $175.00. A big down gap below this channel (under $175.00) and/or its 50 day MA would be a major SELL signal. However AAPL has been strongly trending up over its 50 day MA since the month of July, so it would take some very bad news from AAPL to break its trend. I'm currently long AAPL at $185.00, and even if it falls back at the low end of its last channel my stop loss order of -7.00% will not get triggered. AAPL is a very slow moving stock, and in uncertain times damage may be limited if a correction begins, and that is why at least temporarily it is a good idea to shift toward those safer, less volatile stocks.AUY - WAIT (Updated September 26th)
AUY has been in a very active and wide trading range lately, between $10.00 and $11.25-$11.50. It is currently trading sideways, and we had a sell signal a few days ago from the stochastic. If AUY breaks below $10.25-$10.00, it could find support at $9.75 and $9.25, there is very strong support at $10.00 though. A break over $11.25-$11.50 would give us a BUY signal. For the moment we can do nothing else but WAIT for AUY to give us a clear signal. But like many stocks, it seems to be at the verge of giving us a SELL signal. However despite this it's already near some very strong support levels. Currently both the MACD and Stochastic have given us SELL signals.BAC - WAIT
BAC a stock for which I'm currently long is a stock I believe that I may get stopped out, possibly as soon as tomorrow and possibly whipsawed. I have a stop loss order currently set around $16.58. BAC currently stands just below $17.00 and is about to give us a SELL signal if it closes below around $16.75-$16.50. However it has strong support at its 50 day MA of $16.00 and $15.00, and a fall below these levels would be major sell signals. Personally I don't see BAC fall lower than $16.00, and it's currently in strong uptrend. What I have to decide tomorrow is if I let my stop loss order get the chance to get triggered or do I sell it before and WAIT, wherever it goes tomorrow and wait for a clear BUY signal? The last option is the most likely, and like I mentioned before I am looking to be more in cash right now, as a lot of stocks are at the verge of getting SELL signals. Basically we seem to be having WAIT signals who are waiting to give us SELL signals rather than BUY signals. The stochastic also gave us a sell signal a couple days ago. September 26th update: Just wanted to point out that as I expected my stop loss order for BAC got triggered and all my shares were sold at $16.55, taking a loss of under -7.00%. I am currently long AAPL only.
C - SELL
C like most other stocks is also giving us some mixed signals, but there the BUY signals seem to be more for the long term rather than the short term. In the short term we are getting SELL signals. Ever since I confirmed the diamond formation for C, it has been trending down, and this is why I'm issuing a SELL signal. After getting this diamond formation confirmation, we got another SELL signal today, with a dark cloud confirmation. C is definitly trending down. C does have support around $4.10-$4.00 above its 50 day MA, but now with the stock trending down, we have to wonder if it will stand above it. C did give us a BUY signal for the long term with its 50 day MA crossing over its 200 day MA, and the stochastic crossing above its signal line. However the stochastic seem like it's about to give us another SELL signal, but only the future will tell. If you are currently long C, you can wait and see if it manages to bounce back up over $4.00, before deciding to sell, but you do risk the chance of getting whipsawed, all depends how down you are. The first SELL signal with the diamond confirmation, is when you should have sold C in the first place, and now we are getting more SELL signals, but you may feel more pain the more you hold and may even be too late to sell, as you risk now the chance of getting whipsawed, it's a difficult situation.
ENER - SELL
ENER is in a strong down trend, despite going above its 50 day MA giving us a BUY signal about a week ago, it crossed down again below it giving us a SELL signal. It has some support at $12.00, but any move below it could make it fall back around $10.00. ENER has been below its 200 day MA for a while, and is in a major down trend. Unfortunately ENER never managed to close above $14.00 and start to break its down trend to turn into an uptrend.
FSLR - SELL
FSLR is in a strong down trend as well, but is looking much closer than ENER to break this trend. For one FSLR is above its 200 day MA, however it may cross below it very soon but it still has support at $147.00 and $141.00. However we did get a second consecutive SELL signal today. We first had a dark cloud formation where FSLR topped by hitting a higher high, closing below its opening price and below the previous day's close, confirmed by another down gap with a lower low and lower high. Today we got another SELL signal wih three black crows formation, with a third consecutive down gap with a lower low and lower high. Only when FSLR goes above $175.00, it will be considered the possible start of a trend up. We also got a sell signal from the stochastic, crossing down below its signal line.
LVS - HOLD
LVS is still in a very strong uptrending channel. However, LVS is at the bottom range of its channel, and we should know tomorrow if it will continue up along this range or cross below and give us a SELL signal. A bounce back up, would be very bullish and could be considered a minor BUY signal. For the moment, LVS is a HOLD, but tomorrow we'll know if this changes.MGM - WAIT
MGM is currently a HOLD, and there is the possibility of seeing a flag formation confirmation if MGM manages to close above $14.00 and stay above it for two days for a confirmation. For this to occur MGM must not close below $11.50, and the up gap flag formation would then be canceled, and you could instead see a big sell off, where MGM could fall back as low as $9.00 to $7.80. I would then give MGM a price target of $8.30 ($7.80-$12.00=-$3.20+$11.50=$8.30). Most of the time an uptrending flag formation will break up, but on rare occassions it could also break down. Right now, if MGM continues to trade between $11.50 and $14.00, it's a WAIT. If MGM falls below $11.50, it's a SELL, and if it closes above $14.00, it's a BUY.RF - HOLD
Today we had a dark cloud formation with RF, giving us a SELL signal, with the stochastic also about to give us another SELL signal. However, RF is in a strong uptrend and has big support at $6.00, and until breaks down below $6.00, RF remains a HOLD. RF's next support levels are at $5.75 and $5.25, and if it goes towards these levels and hold up, it may trend in a sideways channel for a while before continuing its trend up. RF's 50 day MA crossed its 200 day MA, a positive sign for the long term. So, if RF crosses below $6.00, RF would be a SELL. As long as it continues up along its trend line, you should HOLD.
RIMM - SELL (Updated September 25th)
Like I said a few days ago, RIMM was a WAIT until after earning report. Today we got a SELL signal with the price moving high to then close down hard. RIMM's next support levels are at $80.00 and $78.00. RIMM did not manage to stay above $85.00 for two consecutive days. Like I said, always wait after the earnings report and never act before it to get some guidance. Update: RIMM just had a huge breakout down, its next support level is now at $65.00. A break below $65.00 or $60.00 would trigger another major sell off, but I don't think it will go much lower than that.Dow Jones - HOLD
Finally, the Dow Jones Industrial Average. The Dow Jones, despite the recent bearish signals, is till in a very strong uptrend and a HOLD. For the moment the recent moves down, can only be considered a pullback, as the Dow is still trending up. The stochastic did give us a SELL signal, crossing down, but this, for now, may just be a sign of a pullback. It is too early to say if we are heading towards a correction. Right now, the Dow look like it could pullback around 9500-9600, and if it bounces back up the uptrend will continue. A break below its uptrend line would be a major signal, and perhaps the sign of the beginning of a correction. Until that happens, the Dow Jones is a HOLD.
As you may have noticed, we have no BUY signals among these stocks, which indicates that we are at least in a pullback, but you don't need me to tell you this to notice that of course.
Updates coming later tonight
I haven't had the time to post many updates these past few days as I have been very busy. I will do my best to post updates with charts of MGM, BAC, AIG, AAPL, RF, AUY, Dow Jones. If you have any other requests, just leave a comment in this post.
Tuesday, September 22, 2009
AIG - Crazy Action Today
AIG - WAIT
There was a lot of crazy action today with AIG. First let me tell you about what trades and mistake I made today. First, yesterday I took a long position with AIG at $45.85. This morning in the pre-market I sold the portion of my shares representing my gain at $54.13. Then my trailing stop loss order of $3.45 that I placed after selling those shares got triggered, and therefore the rest of my shares were sold at $51.03. Overall I've made a pretty good gain for the day. However shortly after having sold my shares at $51.03, the share price started to bounce back up a bit around $52.00. I then made the greedy mistake of buying some new shares at $51.58, based solely on the feeling I had towards AIG that it would do like last time and bounce back up higher. This may still happen in the coming days, but it didn't happen today. Finally I got my stop loss order triggered at $48.38 where all my new shares were sold at a loss of just under -7.00%. Despite all this, I still manage to make a small profit in one day, but lost a good portion of it stupidly, and simply due to greed. The lesson to be learned in this, is that when you start making gains, and eventually get stopped out don't jump right back in, and WAIT for the next signal. If you do jump back in on the same day, buy at less than your last selling point. Something that happened today that I should have foreseen is the fact that AIG moves so fast that it does things that other stocks will take a couple days to do, that AIG will do in the same day. What AIG did today was rally in the morning to its resistance level of $55.00 which it didn't manage to break, and fell back to its new support level which was until yesterday its last resistance level at $45.00 where AIG stands now after the after-hours. So, to conclude I'm giving AIG a WAIT signal. If AIG goes over $55.00 and closes above this level, AIG is yet again a BUY. If AIG breaks down below $45.00 and closes below this level, it's a SELL, and it is then possible to see AIG fall back within its narrow trading range around $40.00. A break below $40.00 would be another SELL signal. One negative signal we got today with AIG is the fact that it closed lower than its opening price (possible dark cloud formation). But we also got a positive sign with AIG holding at $45.00, but we'll most likely know tomorrow which way AIG will really go.
Trading Result:
September 21st: Entered AIG Long Position @ $45.85
September 22nd: Sold portion of shares @ $54.13
Approximate return before commissions +18.00%
September 22nd: Closed AIG Long Position @ $51.03
Approximate return before commissions +11.30%
September 21st: Entered New AIG Long Position @ $51.58
September 22nd: Closed AIG Long Position @ $48.38
Approximate loss before commissions -6.20%
There was a lot of crazy action today with AIG. First let me tell you about what trades and mistake I made today. First, yesterday I took a long position with AIG at $45.85. This morning in the pre-market I sold the portion of my shares representing my gain at $54.13. Then my trailing stop loss order of $3.45 that I placed after selling those shares got triggered, and therefore the rest of my shares were sold at $51.03. Overall I've made a pretty good gain for the day. However shortly after having sold my shares at $51.03, the share price started to bounce back up a bit around $52.00. I then made the greedy mistake of buying some new shares at $51.58, based solely on the feeling I had towards AIG that it would do like last time and bounce back up higher. This may still happen in the coming days, but it didn't happen today. Finally I got my stop loss order triggered at $48.38 where all my new shares were sold at a loss of just under -7.00%. Despite all this, I still manage to make a small profit in one day, but lost a good portion of it stupidly, and simply due to greed. The lesson to be learned in this, is that when you start making gains, and eventually get stopped out don't jump right back in, and WAIT for the next signal. If you do jump back in on the same day, buy at less than your last selling point. Something that happened today that I should have foreseen is the fact that AIG moves so fast that it does things that other stocks will take a couple days to do, that AIG will do in the same day. What AIG did today was rally in the morning to its resistance level of $55.00 which it didn't manage to break, and fell back to its new support level which was until yesterday its last resistance level at $45.00 where AIG stands now after the after-hours. So, to conclude I'm giving AIG a WAIT signal. If AIG goes over $55.00 and closes above this level, AIG is yet again a BUY. If AIG breaks down below $45.00 and closes below this level, it's a SELL, and it is then possible to see AIG fall back within its narrow trading range around $40.00. A break below $40.00 would be another SELL signal. One negative signal we got today with AIG is the fact that it closed lower than its opening price (possible dark cloud formation). But we also got a positive sign with AIG holding at $45.00, but we'll most likely know tomorrow which way AIG will really go.
Trading Result:
September 21st: Entered AIG Long Position @ $45.85
September 22nd: Sold portion of shares @ $54.13
Approximate return before commissions +18.00%
September 22nd: Closed AIG Long Position @ $51.03
Approximate return before commissions +11.30%
September 21st: Entered New AIG Long Position @ $51.58
September 22nd: Closed AIG Long Position @ $48.38
Approximate loss before commissions -6.20%
Monday, September 21, 2009
AIG - Pennant Formation Confirmation
AIG - BUY
I took a long position today with AIG at $45.85 after seeing a lot of positive and BUY signals from the chart. I caught this breakout after seeing AIG move upwards today over +15.00% being the top performer today from my watch list. AIG being up while the market is down is bullish, and leads me to believe that when the market will go higher, AIG should move even higher again. Exactly one week ago, I posted the chart below indicating that we could soon have a breakout up soon, after seeing a second consecutive pennant formation.
I posted the following chart last Monday, September 14th, in my "Current BUY, SELL, WAIT & HOLD Indicators" post:
Today we have a lot of positive signals. First we got a breakout upwards, confirming our pennant formation. Ideally we would like to see tomorrow another up gap hitting a higher low and higher high, or at least remain around current level of $45.00-$46.00. I currently have a surprising price target, that myself have a hard time to believe, and will only believe it when it happens of $72.00 in the coming weeks, if the formation does indeed gets confirmed and that the share price continues higher. I believe that with the last pennant formation, I had predicted a price target of at least $40.00 (fair price), while AIG continued to rally to $55.00 to what I consider a positive feedback (exaggerated move due to over excitement, and other traders getting in late). We then had a negative feedback (reversion to the mean, fair price) to $40.00 the price target I had set for AIG. With all that being said, if AIG does reach $72.00 it may go even higher before pulling back around this level. However all this is too premature to talk about, and there is no guarantee this will happen, and I will monitor AIG on a daily basis. Keep in mind that AIG is a very volatile stock, with a Beta of 4.08, which means that if you have a -7.00% stop loss order like myself you could get whipsawed. This means that as the price moves higher, AIG may have big down gaps of over your stop loss before continuing higher. However by no means, do I suggest to anyone to not set a stop loss order, and I have my -7.00% stop loss order set. I just want to make sure you understand risk/reward ratio of owning this stock. The critical point in AIG's pennant formation is when it approaches $55.00 (our last top). If or when it goes over $55.00, going to $72.00 may happen sooner than later. The $55.00 level is the only obstacle right now.
We had a lot of other positive and BUY signals today. First the 50 day MA crossed over its 200 day MA today, a positive sign that the price is going higher in the long term. After todays breakout upwards, we also had an increase in volume which is required for the price to move higher. The volume had been decreasing in the past 2 weeks ever since it had topped at $55.00, and this is common of pennant formations. Finally we are about to have another BUY signal from the MACD crossing upwards if the price continues to move higher. Overall AIG looks very bullish.
Long AIG @ $45.85 - Stop Loss @ $42.93
I took a long position today with AIG at $45.85 after seeing a lot of positive and BUY signals from the chart. I caught this breakout after seeing AIG move upwards today over +15.00% being the top performer today from my watch list. AIG being up while the market is down is bullish, and leads me to believe that when the market will go higher, AIG should move even higher again. Exactly one week ago, I posted the chart below indicating that we could soon have a breakout up soon, after seeing a second consecutive pennant formation.
I posted the following chart last Monday, September 14th, in my "Current BUY, SELL, WAIT & HOLD Indicators" post:
Today we have a lot of positive signals. First we got a breakout upwards, confirming our pennant formation. Ideally we would like to see tomorrow another up gap hitting a higher low and higher high, or at least remain around current level of $45.00-$46.00. I currently have a surprising price target, that myself have a hard time to believe, and will only believe it when it happens of $72.00 in the coming weeks, if the formation does indeed gets confirmed and that the share price continues higher. I believe that with the last pennant formation, I had predicted a price target of at least $40.00 (fair price), while AIG continued to rally to $55.00 to what I consider a positive feedback (exaggerated move due to over excitement, and other traders getting in late). We then had a negative feedback (reversion to the mean, fair price) to $40.00 the price target I had set for AIG. With all that being said, if AIG does reach $72.00 it may go even higher before pulling back around this level. However all this is too premature to talk about, and there is no guarantee this will happen, and I will monitor AIG on a daily basis. Keep in mind that AIG is a very volatile stock, with a Beta of 4.08, which means that if you have a -7.00% stop loss order like myself you could get whipsawed. This means that as the price moves higher, AIG may have big down gaps of over your stop loss before continuing higher. However by no means, do I suggest to anyone to not set a stop loss order, and I have my -7.00% stop loss order set. I just want to make sure you understand risk/reward ratio of owning this stock. The critical point in AIG's pennant formation is when it approaches $55.00 (our last top). If or when it goes over $55.00, going to $72.00 may happen sooner than later. The $55.00 level is the only obstacle right now.
We had a lot of other positive and BUY signals today. First the 50 day MA crossed over its 200 day MA today, a positive sign that the price is going higher in the long term. After todays breakout upwards, we also had an increase in volume which is required for the price to move higher. The volume had been decreasing in the past 2 weeks ever since it had topped at $55.00, and this is common of pennant formations. Finally we are about to have another BUY signal from the MACD crossing upwards if the price continues to move higher. Overall AIG looks very bullish.
Long AIG @ $45.85 - Stop Loss @ $42.93
AUY - Break Down
AUY - SELL/WAIT
AUY had a breakout down today, giving us a SELL signal. It has very strong support though at $10.00-$10.25, and so far today bottomed at $10.30. So if you are still long, I think AUY may hold up over these levels, if it crosses down below this level, this would be a major SELL signal. AUY may just be having a small pullback. However, AUY did break its uptrend today. The Stochastic also gave us a SELL signal today, and if this heads lower the MACD also will. The RSI may bounce back where it stands now around the 50 level. For those looking to go long again I would wait, for those who did not sell already, you should wait to see if holds up over $10.25-$10.00.
AUY had a breakout down today, giving us a SELL signal. It has very strong support though at $10.00-$10.25, and so far today bottomed at $10.30. So if you are still long, I think AUY may hold up over these levels, if it crosses down below this level, this would be a major SELL signal. AUY may just be having a small pullback. However, AUY did break its uptrend today. The Stochastic also gave us a SELL signal today, and if this heads lower the MACD also will. The RSI may bounce back where it stands now around the 50 level. For those looking to go long again I would wait, for those who did not sell already, you should wait to see if holds up over $10.25-$10.00.
MGM - Could and should pop once it closes over $14.00
MGM - WAIT
MGM has cooled down recently, but still remain strong, holding on to its gain and trading in a narrow range ($12.70-$13.70), building support at these levels. I think that in the coming days you could see the price movement become narrower and narrower or stay within this range, giving us a possible pennant or flag formation, however it's still to early to claim this. Once MGM does close above $14.00 remaining above this level for two days, this would be a big BUY signal, where MGM has little resistance to go through before it reaches $17.50 and $22.00-$23.00. MGM's 50 day MA also crossed its 200 day MA, which is very bullish for the long term. A break below $12.00 would be a very bearish signal and therefore a SELL. Right now we have to WAIT, but I feel very confident that the break will happen upwards, and MGM is just taking a pause for now after such a big move up.
MGM has cooled down recently, but still remain strong, holding on to its gain and trading in a narrow range ($12.70-$13.70), building support at these levels. I think that in the coming days you could see the price movement become narrower and narrower or stay within this range, giving us a possible pennant or flag formation, however it's still to early to claim this. Once MGM does close above $14.00 remaining above this level for two days, this would be a big BUY signal, where MGM has little resistance to go through before it reaches $17.50 and $22.00-$23.00. MGM's 50 day MA also crossed its 200 day MA, which is very bullish for the long term. A break below $12.00 would be a very bearish signal and therefore a SELL. Right now we have to WAIT, but I feel very confident that the break will happen upwards, and MGM is just taking a pause for now after such a big move up.
Dow Jones - Where are we headed next?
Dow Jones - HOLD
The DOW is still looking strong, and like many analysts fear the psychological 10,000 level, where we could see some resistance and possible pullback/correction, but this is not based on technicals. The DOW is currently in a broadening uptrend, in which I think that it's just a matter of time before we get a pullback, but probably not going back below 9450-9500.
The DOW is still looking strong, and like many analysts fear the psychological 10,000 level, where we could see some resistance and possible pullback/correction, but this is not based on technicals. The DOW is currently in a broadening uptrend, in which I think that it's just a matter of time before we get a pullback, but probably not going back below 9450-9500.
AIB, IRE - Quick Analysis
AIB - HOLD
AIB is currently in a strong uptrending channel, but is currently at the top range of this channel. I think you could see AIB pullback shortly to $8.25-$8.50, if it starts to go down now (the slower it moves down or stays up, the less it should pullback down). If it actually reaches back down to these levels, wait for stock price to bounce back up, because any move lower would most likely be a SELL signal. If it continues higher and closes strongly above $10.00, ideally remaining at these levels for 2 days, this would be a BUY signal. AIB is a HOLD as long as it holds up.
IRE - HOLD
IRE is pretty much the same story, trading in an uptrending channel, currently at the top, looking for a pullback around $16.00-$16.50, before bouncing back up. A strong break over current levels is a BUY signal, and break below $16.00, is a SELL. IRE is a HOLD as long as it holds up.
AIB is currently in a strong uptrending channel, but is currently at the top range of this channel. I think you could see AIB pullback shortly to $8.25-$8.50, if it starts to go down now (the slower it moves down or stays up, the less it should pullback down). If it actually reaches back down to these levels, wait for stock price to bounce back up, because any move lower would most likely be a SELL signal. If it continues higher and closes strongly above $10.00, ideally remaining at these levels for 2 days, this would be a BUY signal. AIB is a HOLD as long as it holds up.
IRE - HOLD
IRE is pretty much the same story, trading in an uptrending channel, currently at the top, looking for a pullback around $16.00-$16.50, before bouncing back up. A strong break over current levels is a BUY signal, and break below $16.00, is a SELL. IRE is a HOLD as long as it holds up.
Sunday, September 20, 2009
RIMM - Wait After the Earnings Report
RIMM - WAIT
"Do you think RIMM is strong buy before the earnings next week?"
I never suggest to buy any stock prior to earnings report, this is pure gambling, as there is no way to predict if the results will be better or worse than expected. It's better to wait and see how the market reacts after the report. If it's better than expected, the stock price will move up and should go even higher in the near future and vis versa. On a technical point of view, RIMM is at a critical resistance level at $85.00. If RIMM goes over $85.00, possibly after the earnings report if it's better than expected, and closing above this level, say $86.00, this would be a BUY signal. A break below $80.00, would be a SELL signal. Right now RIMM is a WAIT, awaiting to see if it will manage to break it's resistance level at $85.00.
"Do you think RIMM is strong buy before the earnings next week?"
I never suggest to buy any stock prior to earnings report, this is pure gambling, as there is no way to predict if the results will be better or worse than expected. It's better to wait and see how the market reacts after the report. If it's better than expected, the stock price will move up and should go even higher in the near future and vis versa. On a technical point of view, RIMM is at a critical resistance level at $85.00. If RIMM goes over $85.00, possibly after the earnings report if it's better than expected, and closing above this level, say $86.00, this would be a BUY signal. A break below $80.00, would be a SELL signal. Right now RIMM is a WAIT, awaiting to see if it will manage to break it's resistance level at $85.00.
Saturday, September 19, 2009
CSR - Awaiting a Buy Signal
CSR - WAIT
Someone asked me to do an analysis on CSR, so here it is:
CSR is currently standing at its 50 day MA at $7.46. CSR has strong support at around $7.00, and is now looking to break through som key resistance at approximately $7.75-$8.00. If CSR crosses this resistance level and remains above it (closes at these levels), we would get a BUY signal. Currently the stochastic is already giving us a BUY signal, but I don't consider it enough by itself to take a long position yet. The next resistance level is around $8.40, once over this level, CSR could go as high as $9.60 before seeing some resistance again. If you are looking to take a position into CSR, and feel confident of seeing the share price move higher, I would at least wait until it crosses its first resistance level at around $7.75-$7.80. Remember that for the price to move and remain higher, you would want to see an increase in volume. I think CSR has strong support at $7.00, and I think even if CSR has temporary move up, if it pullsback I don't think it will go lower than $7.00. If it does go below $7.00, I would strongly suggest to SELL. Right now CSR is at the middle of small trading channel, and now you have to wait to see which way it will break. I think that if the market continues to move higher you will most likely see a breakout upwards, this is what I see as the most likely scenario right now. However don't act until you get a clear BUY signal, where it would be considered safer to get in. Don't forget to always have a stop loss order set to protect yourself from a move going against you.
Someone asked me to do an analysis on CSR, so here it is:
CSR is currently standing at its 50 day MA at $7.46. CSR has strong support at around $7.00, and is now looking to break through som key resistance at approximately $7.75-$8.00. If CSR crosses this resistance level and remains above it (closes at these levels), we would get a BUY signal. Currently the stochastic is already giving us a BUY signal, but I don't consider it enough by itself to take a long position yet. The next resistance level is around $8.40, once over this level, CSR could go as high as $9.60 before seeing some resistance again. If you are looking to take a position into CSR, and feel confident of seeing the share price move higher, I would at least wait until it crosses its first resistance level at around $7.75-$7.80. Remember that for the price to move and remain higher, you would want to see an increase in volume. I think CSR has strong support at $7.00, and I think even if CSR has temporary move up, if it pullsback I don't think it will go lower than $7.00. If it does go below $7.00, I would strongly suggest to SELL. Right now CSR is at the middle of small trading channel, and now you have to wait to see which way it will break. I think that if the market continues to move higher you will most likely see a breakout upwards, this is what I see as the most likely scenario right now. However don't act until you get a clear BUY signal, where it would be considered safer to get in. Don't forget to always have a stop loss order set to protect yourself from a move going against you.
Friday, September 18, 2009
AUY - Possibly Got Whipsawed
AUY - WAIT
My trailing stop loss order got triggered today at exactly the day's low of $10.73, before bouncing back up, and giving me a small gain. AUY has been a bit unpredictable lately, and I would wait until I get a clear signal to get back in. Keep in mind that I'm still very bullish towards gold, and I'm pretty confident it will go higher. Despite being down AUY looks to be trending up, but its price moves lately have been erratic. A break below $10.75 and $10.50 would be bearish and AUY would not find support until $10.00. A break below $10.00 would be a major SELL signal, but I would really be surprised if that happened. Right now AUY is a WAIT, for which I'm more likely waiting for a BUY signal rather than expecting a SELL signal. Seeing AUY stay above $11.25, for two straight days would be a BUY signal.
Trading Result: Approximate return: +4.3% in 12 business days.
September 3rd: Entered AUY Long Position @ $10.28
September 18th: Closed AUY Long Position @ $10.73
My trailing stop loss order got triggered today at exactly the day's low of $10.73, before bouncing back up, and giving me a small gain. AUY has been a bit unpredictable lately, and I would wait until I get a clear signal to get back in. Keep in mind that I'm still very bullish towards gold, and I'm pretty confident it will go higher. Despite being down AUY looks to be trending up, but its price moves lately have been erratic. A break below $10.75 and $10.50 would be bearish and AUY would not find support until $10.00. A break below $10.00 would be a major SELL signal, but I would really be surprised if that happened. Right now AUY is a WAIT, for which I'm more likely waiting for a BUY signal rather than expecting a SELL signal. Seeing AUY stay above $11.25, for two straight days would be a BUY signal.
Trading Result: Approximate return: +4.3% in 12 business days.
September 3rd: Entered AUY Long Position @ $10.28
September 18th: Closed AUY Long Position @ $10.73
Thursday, September 17, 2009
SVA - Bearish Signal, Failed Pennant Formation
SVA - SELL
Someone asked me to do an analysis on SVA, so here it is (Please note that my analysis is based on technical analysis alone):
If you would have asked me yesterday what I thought about SVA, I would have told you to WAIT as there appeared to be a pennant formation, possibly breaking up. But on rare occasions the price will break down, despite the stock being in an uptrend.
Today, we got a SELL signal, with the price breaking downwards. This is could be just a short term pullback, but there is no way to really know. SVA may have some support at $8.50-$9.00, after these levels there isn't much support until the $6.00-$7.00 levels, but it's hard to really predict where it will bounce back. My best advice right now would be to sell, and wait for the stock price to move back up, at least for 2 days (higher lows and higher highs) before getting back in, if you truly believe that this stock will pop in the future. You want to see SVA go over $10.50 and $12.00 to have a clear BUY signal.
SVA is still in a strong uptrend that has accelerated lately, and it is normal for it to have a pullback to continue even higher in the future. This stocks makes me think a little bit of MGM (not based on the belief that it will outperform the market) based on the fact that the chart is very bullish long term, but is currently going through a pullback after such a big move, which is required for the stock to resume its trend up afterward. It's always better to play it safe and wait for the right opportunity to get in, even if you have to give up some potential gains, and/or take a small loss (it's better than finding yourself stuck with a big loss). For example MGM had started to rally around the $7.75 level, but I hadn't taken a long position until it broke through its narrow trading channel over $9.00, and I still managed to make a very good profit out of it. I'm also getting a bearish signal from the MACD that's about to cross down through the signal line, giving us another SELL indicator. If you look at the RSI, SVA looked to have bounced back from the 50 level the last few times, which may be a hint of when SVA may bounce back up, if indeed it does bounce up when the RSI hits 50.
Someone asked me to do an analysis on SVA, so here it is (Please note that my analysis is based on technical analysis alone):
If you would have asked me yesterday what I thought about SVA, I would have told you to WAIT as there appeared to be a pennant formation, possibly breaking up. But on rare occasions the price will break down, despite the stock being in an uptrend.
Today, we got a SELL signal, with the price breaking downwards. This is could be just a short term pullback, but there is no way to really know. SVA may have some support at $8.50-$9.00, after these levels there isn't much support until the $6.00-$7.00 levels, but it's hard to really predict where it will bounce back. My best advice right now would be to sell, and wait for the stock price to move back up, at least for 2 days (higher lows and higher highs) before getting back in, if you truly believe that this stock will pop in the future. You want to see SVA go over $10.50 and $12.00 to have a clear BUY signal.
SVA is still in a strong uptrend that has accelerated lately, and it is normal for it to have a pullback to continue even higher in the future. This stocks makes me think a little bit of MGM (not based on the belief that it will outperform the market) based on the fact that the chart is very bullish long term, but is currently going through a pullback after such a big move, which is required for the stock to resume its trend up afterward. It's always better to play it safe and wait for the right opportunity to get in, even if you have to give up some potential gains, and/or take a small loss (it's better than finding yourself stuck with a big loss). For example MGM had started to rally around the $7.75 level, but I hadn't taken a long position until it broke through its narrow trading channel over $9.00, and I still managed to make a very good profit out of it. I'm also getting a bearish signal from the MACD that's about to cross down through the signal line, giving us another SELL indicator. If you look at the RSI, SVA looked to have bounced back from the 50 level the last few times, which may be a hint of when SVA may bounce back up, if indeed it does bounce up when the RSI hits 50.
AAPL - Breakout
AAPL - BUY
I have taken a long position with AAPL today, after seeing a breakout yesterday and seeing the price move higher today. AAPL has been a strong uptrend for a while, which had recently slowed down, until yesterday where we got a breakout, which I consider a BUY signal. AAPL a slow but steady moving stock in a strong uptrend.
Long AAPL @ $184.24 - Stop Loss @ $172.51
I have taken a long position with AAPL today, after seeing a breakout yesterday and seeing the price move higher today. AAPL has been a strong uptrend for a while, which had recently slowed down, until yesterday where we got a breakout, which I consider a BUY signal. AAPL a slow but steady moving stock in a strong uptrend.
Long AAPL @ $184.24 - Stop Loss @ $172.51
C & BAC - Looks to have bottomed
C - BUY
If C closes higher again tomorrow, ideally over its next resistance level of $4.50, this would confirm a BUY signal. C has bounced back up, over its support level at around $4.10-$4.15, but still has some resistance levels to get through at $4.50, $5.00, and $5.25.
BAC - BUY
BAC looks also like it may have bottomed, as the price now stands over the left shoulder of what would i have considered a head & shoulders formation if BAC continued lower instead. I have covered my position today at a small loss, after seeing BAC cross $17.50. Also, even if BAC heads back lower, I no longer see much opportunnity to make a decent gain on the downside as it has great support at its 50 day MA at $15.50 (heading higher). I have now taken a long position with BAC, expecting to see it hold over $17.50. The safest time to get in BAC would be when it crosses $18.00.
Trading Result: Approximate loss (excluding commissions): -4.00% in 17 days.
September 1st: Entered BAC Short Position @ $16.96
September 17th: Closed BAC Short Position @ $17.64
Long BAC @ $17.6574 - Stop Loss @ $16.54
If C closes higher again tomorrow, ideally over its next resistance level of $4.50, this would confirm a BUY signal. C has bounced back up, over its support level at around $4.10-$4.15, but still has some resistance levels to get through at $4.50, $5.00, and $5.25.
BAC - BUY
BAC looks also like it may have bottomed, as the price now stands over the left shoulder of what would i have considered a head & shoulders formation if BAC continued lower instead. I have covered my position today at a small loss, after seeing BAC cross $17.50. Also, even if BAC heads back lower, I no longer see much opportunnity to make a decent gain on the downside as it has great support at its 50 day MA at $15.50 (heading higher). I have now taken a long position with BAC, expecting to see it hold over $17.50. The safest time to get in BAC would be when it crosses $18.00.
Trading Result: Approximate loss (excluding commissions): -4.00% in 17 days.September 1st: Entered BAC Short Position @ $16.96
September 17th: Closed BAC Short Position @ $17.64
Long BAC @ $17.6574 - Stop Loss @ $16.54
Wednesday, September 16, 2009
MGM, LVS, WYNN - Weird action going on during after hours
I just noticed, like other people on google forums some weird action the after hours, which I really have no idea what to make of it, but find it interesting none the less. The share price of MGM, LVS & WYNN are having huge up and down swings in the after hours, between the lows and the highs of the day.
My Trading Strategy : "Y-SWING"
When I started my blog, I posted my trading strategy "Y-Swing" that a lot of you may have missed, and I thought it would be a good idea to re-post it for those who missed it.
Originally Posted September 2nd:
Over the years I have developed a trading strategy that all revolves around having a discipline. I have tweaked from time to time this strategy to perfect it. Please note that I use a virtual trailing stop order in this strategy, that I know many people do not have access to. You may use stop orders instead, but it would be preferable to adjust it up gradually as the share price continues higher.
Y-SWING Trading Strategy Steps
STEP 1 Buy stock ABC
TIP: When your stock's share price fluctuates between -6.99% & +4.99% for 28 days (20 business days), you should sell the stock no matter what the price and move on to another (Unless you strongly believe that the stock is about to make its move and move in the direction you desire, whether you are long or short)
STEP 2 Set -7.00% Stop Loss order
TIP: If your stop loss gets triggered, take your loss and move on to another stock.
STEP 3 Set -7.00% VTSO (Virtual Trailing Stop Order)
TIP: The moment you have a gain of +8.00%, set an average -7.00% VTSO, based on the average purchased price -7.00%, and the current price -7.00%. You will now be guaranteed to make a profit on this position.
STEP 4 Sell portion of shares representing gain
TIP: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain.
STEP 5 Set new VTSO for remaining shares
TIP: For your remaining shares set an average -7.00% VTSO,based on the average initial purchased price -7.00%, and your last sell point -7.00% (Step 4).
STEP 6 Repeat Steps 4 & 5
NOTE 1 Withdraw 50.00% of your gains, while maintaining a minimum set total balance for the value of your portfolio. The moment you reach Step 3, you are guaranteed to make a gain on your position.
I used to use a -8.00% stop loss order, but from my experience every stock that went down -7.00% fell also to -8.00%. So I changed my stop loss order to -7.00%, to not give up that extra 1.00%. If you have a more or less risk tolerance you can adjust your stop loss to your liking. What is extremely hard when you start trading, it's the inability to take losses, and set your stops in advance. When I first started trying to apply this strategy, I found myself either canceling my stop orders before they would get triggered or wait till it hit my stop loss target and tell myself I would just place a market sell order then. It took me about 2-3 years to be able to accept the fact that I had to take some losses. The most successful traders have more losing trades than winners. The reason is because, those traders cut and limit their losses while when they start making gains they try to ride those trends as long as possible and will make huge gains. If out of 3 trades, 2 represent losses of -7.00% each, while your winner made you 40.00%, you are profitable, and that's the goal of this strategy. Most people will hold on to losses and hope they bounce back, while they quickly sell their winners because they're scared of losing it when they have it. Think of it like this, if you are making gains it means that you are doing something right, and probably made the right call, and you should hold on to it as long as you can or as trend persists. The beauty of this strategy, is that even if you're not good at picking stocks, by limiting your losses, the chances are that you may be profitable in the end. You may get frustrated, if you get stopped out several times consecutively. If this occurs, you should set back and stop trading for a little while, and try to figure what is it that you're doing wrong.
Notes 2
Ideally this strategy is to be used with a well diversified portfolio with 2 stocks during uncertain times, 3 stocks during normal times, and 4 stocks during a clear up or down trend, either on the long or short side. For example when there are signs of a change of a trend, let's say from a bull run turning into a correction, you may already turn bearish and have 2 short positions. When the correction is not completely into motion you may want to keep your 2 short positions and add one long position. During a normal/decent bull run (up trend), you may want to hold 3 long positions, and up to 4 if you are extremely bullish. Ideally you should have a minimum cash balance of $10,000 for this strategy, by investing around $2000-$2500 per stock. The more you can put for each stock the better (the easier to make some more cash gains), but it doesn't really matter since it's all relative to the total money you have. With this strategy, each stock you buy should be from a unique sector.
Notes 3
This strategy allows you to be disciplined and well diversified, and to cut your losses @ -7.00%, while cashing in gains as they come along. You may need to follow the price moves of your stocks almost everyday, while paying close attention the technical charts when the price gets close to one of your buy or sell points If there is a crash, despite having stop losses, the stop losses are not active during pre-market and after-hours, you would need to place a seperate live order, and even if the stops were active during these periods you still won't be completely protected. If a crash occurs the first opening trades during the pre-market for example may be much lower than the previous day's closing price and may be much lower than your stop. For example assume you bought stock ABC @ $10 with a stop @ $8, and the price closes for the day @ $8.25. If a crash occurs the next day, when the pre-market opens the bid and asks could be $6.00 and $6.50. However, if you trade in the stock market this is a risk you have to assume; Only the careless would invest all their money that they have earned over the past years, it is important to cash in gains each year. For example when you first started trading you started with $10,000 and over the years you accumulated $5000 of gains. You would be stupid to invest your $15000 and risk all everyday, you should continue to invest $10000 and cash in the $5000, or just each year increase a little bit your investments if you can afford it to maybe $11,000 or $12,000. The whole point of this strategy is to cash in gains when you have them while continuing to investing the same amount of money without risking more, so that in the future your $10,000 investment may only represent a portion of gains you have accumulated over the years that you would otherwise never have had to begin with.During accumulation periods when the market moves sideways it may be harder to successfully use this strategy either way, you would need to be more precise in your buys and sells; and you may need to lower the profit point where you decide to take some profits or sell your position completely (for example selling portion or all shares of gain @ 10%-15% rather than 20%). Problem: When a stock moves up around 10%-15% and starts pulling back what do you do, do you leave it fall back to your stop loss and take a loss? Solution: You will have a -7% VTSO in place, meaning you are guaranteed to leave with +3% to +8%.
Originally Posted September 2nd:
Over the years I have developed a trading strategy that all revolves around having a discipline. I have tweaked from time to time this strategy to perfect it. Please note that I use a virtual trailing stop order in this strategy, that I know many people do not have access to. You may use stop orders instead, but it would be preferable to adjust it up gradually as the share price continues higher.
Y-SWING Trading Strategy Steps
STEP 1 Buy stock ABC
TIP: When your stock's share price fluctuates between -6.99% & +4.99% for 28 days (20 business days), you should sell the stock no matter what the price and move on to another (Unless you strongly believe that the stock is about to make its move and move in the direction you desire, whether you are long or short)
STEP 2 Set -7.00% Stop Loss order
TIP: If your stop loss gets triggered, take your loss and move on to another stock.
STEP 3 Set -7.00% VTSO (Virtual Trailing Stop Order)
TIP: The moment you have a gain of +8.00%, set an average -7.00% VTSO, based on the average purchased price -7.00%, and the current price -7.00%. You will now be guaranteed to make a profit on this position.
STEP 4 Sell portion of shares representing gain
TIP: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain.
STEP 5 Set new VTSO for remaining shares
TIP: For your remaining shares set an average -7.00% VTSO,based on the average initial purchased price -7.00%, and your last sell point -7.00% (Step 4).
STEP 6 Repeat Steps 4 & 5
NOTE 1 Withdraw 50.00% of your gains, while maintaining a minimum set total balance for the value of your portfolio. The moment you reach Step 3, you are guaranteed to make a gain on your position.
I used to use a -8.00% stop loss order, but from my experience every stock that went down -7.00% fell also to -8.00%. So I changed my stop loss order to -7.00%, to not give up that extra 1.00%. If you have a more or less risk tolerance you can adjust your stop loss to your liking. What is extremely hard when you start trading, it's the inability to take losses, and set your stops in advance. When I first started trying to apply this strategy, I found myself either canceling my stop orders before they would get triggered or wait till it hit my stop loss target and tell myself I would just place a market sell order then. It took me about 2-3 years to be able to accept the fact that I had to take some losses. The most successful traders have more losing trades than winners. The reason is because, those traders cut and limit their losses while when they start making gains they try to ride those trends as long as possible and will make huge gains. If out of 3 trades, 2 represent losses of -7.00% each, while your winner made you 40.00%, you are profitable, and that's the goal of this strategy. Most people will hold on to losses and hope they bounce back, while they quickly sell their winners because they're scared of losing it when they have it. Think of it like this, if you are making gains it means that you are doing something right, and probably made the right call, and you should hold on to it as long as you can or as trend persists. The beauty of this strategy, is that even if you're not good at picking stocks, by limiting your losses, the chances are that you may be profitable in the end. You may get frustrated, if you get stopped out several times consecutively. If this occurs, you should set back and stop trading for a little while, and try to figure what is it that you're doing wrong.
Notes 2
Ideally this strategy is to be used with a well diversified portfolio with 2 stocks during uncertain times, 3 stocks during normal times, and 4 stocks during a clear up or down trend, either on the long or short side. For example when there are signs of a change of a trend, let's say from a bull run turning into a correction, you may already turn bearish and have 2 short positions. When the correction is not completely into motion you may want to keep your 2 short positions and add one long position. During a normal/decent bull run (up trend), you may want to hold 3 long positions, and up to 4 if you are extremely bullish. Ideally you should have a minimum cash balance of $10,000 for this strategy, by investing around $2000-$2500 per stock. The more you can put for each stock the better (the easier to make some more cash gains), but it doesn't really matter since it's all relative to the total money you have. With this strategy, each stock you buy should be from a unique sector.
Notes 3
This strategy allows you to be disciplined and well diversified, and to cut your losses @ -7.00%, while cashing in gains as they come along. You may need to follow the price moves of your stocks almost everyday, while paying close attention the technical charts when the price gets close to one of your buy or sell points If there is a crash, despite having stop losses, the stop losses are not active during pre-market and after-hours, you would need to place a seperate live order, and even if the stops were active during these periods you still won't be completely protected. If a crash occurs the first opening trades during the pre-market for example may be much lower than the previous day's closing price and may be much lower than your stop. For example assume you bought stock ABC @ $10 with a stop @ $8, and the price closes for the day @ $8.25. If a crash occurs the next day, when the pre-market opens the bid and asks could be $6.00 and $6.50. However, if you trade in the stock market this is a risk you have to assume; Only the careless would invest all their money that they have earned over the past years, it is important to cash in gains each year. For example when you first started trading you started with $10,000 and over the years you accumulated $5000 of gains. You would be stupid to invest your $15000 and risk all everyday, you should continue to invest $10000 and cash in the $5000, or just each year increase a little bit your investments if you can afford it to maybe $11,000 or $12,000. The whole point of this strategy is to cash in gains when you have them while continuing to investing the same amount of money without risking more, so that in the future your $10,000 investment may only represent a portion of gains you have accumulated over the years that you would otherwise never have had to begin with.During accumulation periods when the market moves sideways it may be harder to successfully use this strategy either way, you would need to be more precise in your buys and sells; and you may need to lower the profit point where you decide to take some profits or sell your position completely (for example selling portion or all shares of gain @ 10%-15% rather than 20%). Problem: When a stock moves up around 10%-15% and starts pulling back what do you do, do you leave it fall back to your stop loss and take a loss? Solution: You will have a -7% VTSO in place, meaning you are guaranteed to leave with +3% to +8%.
RF - It's a BUY
RF - BUY
We got a lot of BUY signals from RF today, or at least BUY signals that are about to be confirmed. First of all RF has had 3 consecutive up gaps, with RF closing above its critical resistance point above $6.00, therefore getting out of its sideways trading channel. Volume has increased in these last sessions, which is required to continue to see RF share price continue its march up. To confirm this BUY signal, RF needs to close above $6.00 tomorrow and this would mean that the $6.00 resistance level has turned into a support level. The stochastic also gave us a BUY signal today crossing upwards the signal line.The MACD is about to cross its signal line also, as well as the 50 day MA crossing above its 200 day MA. Overall RF looks very bullish, with BUY signals to be confirmed, for the most part starting tomorrow.
We got a lot of BUY signals from RF today, or at least BUY signals that are about to be confirmed. First of all RF has had 3 consecutive up gaps, with RF closing above its critical resistance point above $6.00, therefore getting out of its sideways trading channel. Volume has increased in these last sessions, which is required to continue to see RF share price continue its march up. To confirm this BUY signal, RF needs to close above $6.00 tomorrow and this would mean that the $6.00 resistance level has turned into a support level. The stochastic also gave us a BUY signal today crossing upwards the signal line.The MACD is about to cross its signal line also, as well as the 50 day MA crossing above its 200 day MA. Overall RF looks very bullish, with BUY signals to be confirmed, for the most part starting tomorrow.
BAC, AUY, ABK, ENER - Updates
BAC - WAIT
Although BAC went up today, the possibility of seeing a head & shoulders being confirmed is still a possibility, although it has as much chance of seeing it fail. Right now we have to wait, and we may get our answer tomorrow of whether or not BAC will go higher or lower, for the moment it's going sideways. If BAC crosses and closes above $17.50, i will most likely cover my short position and take my loss. If BAC falls below $16.00-$15.50, this would be a confirmation of the head & shoulders formation. However BAC has very strong support at $15.50, where its 50 day MA stands. So, to be honest with you I don't see as much potential for profits on the short side as I first did when I entered my short position, and I may cover soon. I usually give myself up to to 20 business days to decide whether to hold or dump my stock, if I haven't achieved a minimum of +5.00% gain. I feel that even if BAC falls, it won't fall off by much and it will just be a healthy pullback. After all BAC is one of the stocks which I listed as one of those with the most potential to outperform the market by year end, and even if it doesn't in the long term I'm sure it will outperform the market.
AUY - BUY
AUY had a breakout today, to confirm my BUY signal given this morning, it would be best to see AUY stay above $11.25, or else the gap will get filled and I would change my indicator from BUY to HOLD, if the move down is not too major. Personally I'm very bullish towards gold, and I think it will move much higher in the future. I'm currently long AUY, at $10.28, up more than +10.00% with a TSO of -7.00%, meaning that I'm practically guaranteed to exit this position with a gain, if a big pullback occurs.
ABK - WAIT
ABK is back to being a WAIT after giving up all its gains of the previous sessions after it jumped +8.00%. The BUY signal failed because it wasn't followed by another up gap.
ENER - BUY
ENER is a BUY since it has managed to stay above its 50 day MA, ever since it closed above it 3-4 days ago.
I may post charts later today if I get the time.
LONG AUY @ 10.28 - TSO: $0.76
Short BAC @ $16.96 - Stop Loss: $18.02
Although BAC went up today, the possibility of seeing a head & shoulders being confirmed is still a possibility, although it has as much chance of seeing it fail. Right now we have to wait, and we may get our answer tomorrow of whether or not BAC will go higher or lower, for the moment it's going sideways. If BAC crosses and closes above $17.50, i will most likely cover my short position and take my loss. If BAC falls below $16.00-$15.50, this would be a confirmation of the head & shoulders formation. However BAC has very strong support at $15.50, where its 50 day MA stands. So, to be honest with you I don't see as much potential for profits on the short side as I first did when I entered my short position, and I may cover soon. I usually give myself up to to 20 business days to decide whether to hold or dump my stock, if I haven't achieved a minimum of +5.00% gain. I feel that even if BAC falls, it won't fall off by much and it will just be a healthy pullback. After all BAC is one of the stocks which I listed as one of those with the most potential to outperform the market by year end, and even if it doesn't in the long term I'm sure it will outperform the market.
AUY - BUY
AUY had a breakout today, to confirm my BUY signal given this morning, it would be best to see AUY stay above $11.25, or else the gap will get filled and I would change my indicator from BUY to HOLD, if the move down is not too major. Personally I'm very bullish towards gold, and I think it will move much higher in the future. I'm currently long AUY, at $10.28, up more than +10.00% with a TSO of -7.00%, meaning that I'm practically guaranteed to exit this position with a gain, if a big pullback occurs.
ABK - WAIT
ABK is back to being a WAIT after giving up all its gains of the previous sessions after it jumped +8.00%. The BUY signal failed because it wasn't followed by another up gap.
ENER - BUY
ENER is a BUY since it has managed to stay above its 50 day MA, ever since it closed above it 3-4 days ago.
I may post charts later today if I get the time.
LONG AUY @ 10.28 - TSO: $0.76
Short BAC @ $16.96 - Stop Loss: $18.02
MGM & LVS - Engulfing Patterns
MGM - SELL
LVS - SELL
MGM did go over $14.00 today, but miserably failed to close above this level. This was to be expected, after such a huge run, and this is brutal, yet healthy for MGM to continue higher in the future. MGM did not manage to close above $14.00 today, which cancels what would have been the BUY signal I indicated this morning. MGM's next support levels are at $11.50 and $11.00, so look for MGM to bounce back up from these levels for any new BUY signal. Like I told you in my last posts: the more quickly this up trend continued the more brutal the drop would be. Today more than ever you can see why it is crucial to always have stop loss orders in place. For my part my TSO got triggered at $13.32, when I got in yesterday at $12.74, still a +4.50% gain (I managed to still make a small gain, thanks to my "Y-Swing" strategy, in which you can check out in my older posts). Better to have a small gain than a loss. I strongly suggest to SELL if you are still long, this will most likely go down again tomorrow. We got an engulfing pattern today indicating the top. Also this is finally the first down gap of the last 10 days. Please note that we can also observe this formation with LVS, which indicates a top (pullback). LVS may go as low as $16.00, and if it bounces up this level its upward trending channel will remain intact. If it breaks $16.00, the channel will be broken, and LVS may start trending down. For the long term (by year end), I'm still very bullish towards casino stocks.
LVS - SELL
MGM did go over $14.00 today, but miserably failed to close above this level. This was to be expected, after such a huge run, and this is brutal, yet healthy for MGM to continue higher in the future. MGM did not manage to close above $14.00 today, which cancels what would have been the BUY signal I indicated this morning. MGM's next support levels are at $11.50 and $11.00, so look for MGM to bounce back up from these levels for any new BUY signal. Like I told you in my last posts: the more quickly this up trend continued the more brutal the drop would be. Today more than ever you can see why it is crucial to always have stop loss orders in place. For my part my TSO got triggered at $13.32, when I got in yesterday at $12.74, still a +4.50% gain (I managed to still make a small gain, thanks to my "Y-Swing" strategy, in which you can check out in my older posts). Better to have a small gain than a loss. I strongly suggest to SELL if you are still long, this will most likely go down again tomorrow. We got an engulfing pattern today indicating the top. Also this is finally the first down gap of the last 10 days. Please note that we can also observe this formation with LVS, which indicates a top (pullback). LVS may go as low as $16.00, and if it bounces up this level its upward trending channel will remain intact. If it breaks $16.00, the channel will be broken, and LVS may start trending down. For the long term (by year end), I'm still very bullish towards casino stocks.
AUY - Gold Rally
AUY - BUY
I advised on September 2nd to go long gold, for which I determined AUY to be the best gold stock which had the potential to outperform others. I am still long AUY at $10.28, which is now near $11.50, since my BUY signal. Gold has crossed this major $1000 resistance point, and you can expect to continuing to see it rally for a while. AUY also had a BUY signal today after it had a breakout.
LONG AUY @ 10.28 - TSO: $0.76 set at $11.48
I advised on September 2nd to go long gold, for which I determined AUY to be the best gold stock which had the potential to outperform others. I am still long AUY at $10.28, which is now near $11.50, since my BUY signal. Gold has crossed this major $1000 resistance point, and you can expect to continuing to see it rally for a while. AUY also had a BUY signal today after it had a breakout.
LONG AUY @ 10.28 - TSO: $0.76 set at $11.48
MGM - Could Go Much Higher
MGM - BUY
MGM has crossed a critical resistance point, going over $14.01. Ideally we would like to see it close above this level. Once it does the next resistance point is at $15.90, and if it crosses this level there is little resistance up until $38.50, so MGM has the potential to much higher than we are now. Look for MGM to cross those critical points. Also, MGM's 50 day MA has now crossed its 200 day MA, which is very bullish and another BUY signal.
Long MGM @ $12.74 - TSO: $0.93 set at $14.01
MGM has crossed a critical resistance point, going over $14.01. Ideally we would like to see it close above this level. Once it does the next resistance point is at $15.90, and if it crosses this level there is little resistance up until $38.50, so MGM has the potential to much higher than we are now. Look for MGM to cross those critical points. Also, MGM's 50 day MA has now crossed its 200 day MA, which is very bullish and another BUY signal.
Long MGM @ $12.74 - TSO: $0.93 set at $14.01
BAC - More evidence it could start to fall soon
Here is quick update on the possible head & shoulders formation first observed on September 9th, that could soon be confirmed (or if it reverses). Now that a break through the neckline seems imminent, we can observe that BAC's volume has continually decreased since the start of the left shoulder to the right shoulder where we seem to be now, if the head & shoulders formation gets confirmed. This is an important criteria for the head & shoulders formation to occur, and now it seems more likely that it will happen.
"Volume is usually highest during the left shoulder formation. As prices slip back, volume recedes, when a second rally forms, volume is again high, the head of the pattern is formed when surging prices and volumes begin to ease and fall back again. The trough between the head and the right shoulder must be below the peak of the left shoulder for the pattern to be considered a head and shoulder pattern. The right shoulder is another rally in prices but typically volume is lower than the volume that created the left shoulder and the head. Once the head and shoulders formation is complete, a breakout down through the neckline can be a good indication that the trend of prices will continue in the direction of the breakout." (source: http://www.trade10.com/Head_Shoulders.html)
Once BAC breaks down below $16.50, we should be able to confirm the head & shoulders formation. But to play it even safer,would be to wait to see BAC fall below $15.50.
Short BAC @ $16.96 - Stop Loss: $18.02
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