Trading runaway markets | stockbee

3/05/2007

Trading runaway markets

One of the things which Boucher emphasises in his book The Hedge Fund Edge is trading in runaway markets. The idea is to identify stocks with runaway characteristics based on earnings, momentum, chart patterns and enter in them. Such markets often continue moving much longer than you originally thought. Getting into these markets and then staying positioned in strong trends until you get stopped out is the essence of his strategy.

The most important lesson of the book is that there are two types of stocks, Meteors and Fixed Stars

Meteor is the stock that blasts off; reaches extreme overvaluation; and falls back into obscurity. Meteors are the `fad' stocks that explode up 300% or more in a 1 to 3 year period, then collapse. These stocks are good for short term traders.

Fixed Star: Starts the same way as a meteor but does not become extremely overvalued. These stocks sustain steady price growth for years, some more than a decade. These stocks are good for investors.

Boucher methodology tries to find such stocks during their initial moves.He offers a detailed step by step methodology for this using earnings and momentum. At the crux of it is looking at characteristics of the first one third of a move and based on that predict the next 2/3 rd move. He has found stocks exhibiting certain kinds of volume and momentum patterns in first 21 days of their move have very high probability of making the meteoric move. The book offers complete trading system with risk management, entry and exit strategies for this.

Now if you are TC2000 user your task is simple. Go to Yahoo Telechart200 users group (the old one) and look at messages 4502-4510. You will find complete set of scans for trading Mark Boucher system. Those series of scans can help you put it together very easily. You should also find a file explaining the system once you sign up with the group. Run a search in the group with "tbblbg" as search term. "tbblbg" is the short form for Mark Boucher system and it stands for thrust breakout, breakout lap, and breakaway gap.

Note: You can also find same scans here.

8 comments:

F. said...

Went long Nasdaq 100 calls during lunch today. Looking for a nice move.

gosu said...

This is hilarious


New Century upgraded at Bear Stearns
By Alistair Barr, MarketWatch
Last Update: 4:19 PM ET Mar 1, 2007

SAN FRANCISCO (MarketWatch) -- New Century Financial Corp. was upgraded Thursday by analysts at Bear Stearns, saying the risk of the subprime lender's shares falling further is limited by the potential for an acquisition of the struggling business.

NEW 4.52, -10.13, -69.1% ) were lifted to peer perform from underperform by Scott Coren and Michael Nannizzi at Bear Stearns.

James said...

interesting blog. Thanks for sharing.

F. said...

Call me crazy but I think the dip at the end of the day was a long shakeout before a nice short-term rally in the markets.

NO DooDahs said...

OK, you're crazy.

Seriously, the same automated trading programs that were stepping in and buying on the way up, are stepping in and selling on the way down, and doing it at around 2:30-3 PM EST. I don't think there's any other motivation for the selloff other than "the model says sell and the computer executes."

Gonna need some different technical patterns for the sell-bots to turn back into buy-bots.

Prashant said...

From where can I find out the EPS for a company for the past few quarters? Earlier I used to use the link that you gave - http://host.businessweek.com/businessweek/Quarterly_Earnings.html?Symbol=azz
But now that is not available. Thanks.

Pradeep Bonde said...

http://moneycentral.msn.com/

F. said...

No Doodahs, am I still crazy? A shakeout is a shakeout is a shakeout regardless if it's computers or dumb money selling.