The momentum trade factory | stockbee

12/02/2009

The momentum trade factory


Conceptually I think of swing trading in terms of a conveyor belt. You must set up a conveyor belt for long/ short ideas. So that long/short ideas come on that conveyor belt, you inspect and take them or reject them.

Considerable thought process should go in to setting up your conveyor belt. The logic for it should be solid, so that it brings only the best ideas and only those with high probability to you.

I have around 5-6 long conveyor belts. There are two types of momentum conveyor belts I have set up. One is based on six month momentum the other is based on very long range momentum reversal. There is a conveyor belt for trading earnings and other events. There is a conveyor belt for sector momentum. There is IBD100 and 200 conveyor belt. There is a IPO conveyor belt. Each one has a logic. On a daily basis they bring several ideas to table. The speed with which they bring ideas varies depending on market or depending on nature of the strategy. By using 5-6 conveyor belt, you get strategy diversification, plus you never run out of ideas. Some of these belts are based on momentum, some on earnings, some on value, some on market anomalies.

Once you set up such conveyor belts, opportunities keep popping up. You never run out of opportunities. You utilise your time effectively and can focus on only the best opportunities in market. More than that, you can use extremely tight stops and time stops, as you know, if this idea does not work, I have something else coming up on conveyor belts.

Currently the momentum and sector conveyor belt is bringing so many ideas to table that I cannot take all of them . There were many more trades possible yesterday , I took only 4-5 out of possible 20 good ideas.

AIXG
BONT
CAAS: open position. Partial position closed at profit.
CYD: open position. Partial position closed at profit.
CYTX
DAN
DSW: open position. Partial position closed at profit.
EWBC: watch this for possible b/o
FSYS
GOL
GY
HEAT: open position.
HGSI: watch this for possible b/o
HL
HPJ
IAG
IO
IOC
KFN: watch this for possible b/o
KGN
KNDI
MED: open position.
NABI: watch this for possible b/o
NANO: closed position
NLST: closed position
REV
RINO: open position. Partial position closed at profit.
RVI
SEED
SMTL
SNIC:open position
SVM
THM
TSTC: open position.
UFS
USEG:

2 comments:

elingford said...

What do you think about SLH. It has consolidated nicely in a tight range after announcing better than expected earnings on Nov 3rd.

Pradeep Bonde said...

Not much. Earnings is 14% growth and sales is 5% growth. Relative strength rank by my method is around 90. Not the kind of stock which can make a big move in short period of time in my opinion.