6/30/2009

IPO's in last five days

  • CBEH
  • CNR
  • CPC
  • DGW
  • IVR
  • MDSO
  • SKBI

Slowly this market is reviving. There are more IPO in pipeline for next month.

Stocks up 50% in a month

Currently 17 stocks that were priced above 5 a month ago are up 50% plus in a month.
One of the things you would notice is all these rallies started with release of some new information. Surprises create explosive trends.

AM
ATAI
ATNI
CRTX
DTG
FOLD
ISRL
NNI
PMFG
RAP
RBCN
RENT
SLM
SVNT
TEN
TIVO
USBI

6/29/2009

Chinese Stocks continue to offer opportunities




Member compiled list of Chinese stocks trading in US market:
ABAT
ACH
ADY
AOB
APWR
ASIA
ASX
AUO
BIDU
BWEN
CAEI
CAST
CBAK
CDII
CEO
CGA
CHA
CHDX
CHINA
CHL
CHLN
CHT
CHU
CISG
CMED
COGO
CPSL
CSIQ
CSKI
CSR
CSUN
CTRP
CYOU
EDU
EJ
FEED
FMCN
FSIN
FUQI
FXI
GA
GIGM
GRO
GSI
GU
HMIN
HOGS
JADE
JASO
KONG
LDK
LFC
LFT
MPEL
MR
NPD
NTES
NWD
PTR
PWRD
SDTH
SINA
SNDA
SNP
SOHU
SOL
SOLF
SPIL
STP
SVA
TSL
TSM
TYP
UMC
UTA
UTSI
VISN
VIT
WATG
WH
WX
XIN
YGE
YZC

The hundred year old art of swing trading Part5


Last week we looked at the basic philosophy behind swing trading . In that post we also looked at some of the books on swing trading. In next series of posts we will look at some of the details of method discussed in these books. We will start with Dave Landry. The basic idea behind all the Dave Landry set ups is "pullback" in a strong thrust. The objective is to capture the thrust after the pullback. The method works only in stocks with momentum.


Trend Knockout
The next pattern which Dave Landry likes is Trend Knockout and which once you understand it will find to be a very common pattern in strongly trending stocks. Strongly trending stocks often have sudden shakeouts that knock your stops and then the trend resumes all over again. You would see this everyday in strong stocks. Trend Knockout enters such stocks post trend resumption.
Again he gives you the basic concept , you have to take it to the next level. From a concept to tradable strategy.
The set up conditions are very simple:
  1. The stock should be in very strong uptrend, ideally in a persistent uptrend
  2. The stock should trade below at least the two prior lows.
  3. Get long above the high of prior lows (2 above)
  4. Place protective stop below the low of the correction
Now this is the basic concept. Not everything is spelled out completely. But there is enough to recreate a scan. How can this be done in Telechart. If you think through each condition you can build a scan which will help you find such stocks.


6/26/2009

The hundred year old art of swing trading Part4


Basic building blocks for Dave Landry's Persistent Pullbacks will be :

Scan for 20 day persistence.
One way to do this is using our relative linearity or fractal efficiency scan. The Relative Linearity or Fractal Efficiency scan in Telechart can be done as:
(C - C20) / (ABS(C - C1) + ABS(C1 - C2) + ABS(C2 - C3) + ABS(C3 - C4) + ABS(C4 - C5) + ABS(C5 - C6) + ABS(C6 - C7) + ABS(C7 - C8) + ABS(C8 - C9) + ABS(C9 - C10) + ABS(C10 - C11) + ABS(C11 - C12) + ABS(C12 - C13) + ABS(C13 - C14) + ABS(C14 - C15) + ABS(C15 - C16) + ABS(C16 - C17) + ABS(C17 - C18) + ABS(C18 - C19) + ABS(C19 - C20))
Using above scan you can pick stocks with greater than +0.30 readings. They tend to have smoother trends.

Scan for 20 day persistence.
Or another way is by defining persistence as ability of stock to make say a new high every 3 or 4 days. A scan for that would be , if using 4 days:
C >C4 AND C1 > C5 AND C2> C6 AND C3 > C7 AND C4> C8 AND C5 > C9 AND C6> C10 AND C7 > C11 AND C8 > C12 ANDC9 >c13 and c10>c14 and c11>c15 and c12>c16 and c13>c17 and c14>c18 and c15>c19 and c16>c20

Scan for stocks up 10 points in 20 days
Stock should be up 10 points in 20 days prior to pullback, one of the ways to do this is:
((C1 - C21) > 10) OR ((C2 - C22) >= 10) OR ((C3 - C23) > 10) OR ((C4 - C24) > 10) OR ((C5 - C25) > 10) OR ((C6 - C26) > 10) OR ((C7 - C27) > 10)
This gives you stocks in last seven which had 10 points move in last 20 days.


Condition to show trend resumption after such a pullback:
C>c1and c>h1

Some liquidity condition to eliminate low volume stocks:
AVGV20 > 3000 or
you can use Volume (Dollars) 1 day greater than 10 million or
MINV3.1 > 1000

This is just one of the ways to translate it in to Telechart.

6/25/2009

The hundred year old art of swing trading Part3

Sometime back we looked at the basic philosophy behind swing trading . In that post we also looked at some of the books on swing trading. In next series of posts we will look at some of the details of method discussed in these books.

We will start with Dave Landry. The basic idea behind all the Dave Landry set ups is "pullback" in a strong thrust. The objective is to capture the thrust after the pullback. The method works only in stocks with momentum.


Dave Landry's Persistent Pullbacks

Persistent Pullbacks is Dave Landry's favorite strategy out of the 10 strategies he details in his book. Persistence as he defines it is stocks ability to follow through from one day to another. He offers his set up conditions for buy and sell for this strategy as follow:
  • Stock should have 20 bar persistence before a pullback.
  • It should be up at least 10 points in 20 days.
  • It should have a pullback.
  • Enter when the trend resumes after pullback
  • Rule for shorts are reverse of the buy criteria.
Now this is the basic concept. Not everything is spelled out completely. But there is enough to recreate a scan. How can this be done in Telechart. If you think through each condition you can build a scan which will help you find such stocks.
Basic building blocks will be :
  • Scan for 20 day persistence.
    • One way to do this is using our relative linearity or fractal efficiency scan.
    • Other ways is by linear regression.
    • Or another way is by defining persistence as ability of stock to make say a new high every 3 days
  • Stock should be up 10 points in 20 days prior to pullback
  • Condition to indicate a pullback in stock meeting above condition.
  • Condition to show trend resumption after such a pullback.
  • Some liquidity condition to eliminate low volume stocks
So if put your Telechart thinking hats on and give it a try there are many ways to build this scan. Some scans will give you very few good candidate some will give you lots of them, then you have to manually select candidates. The Yahoo Telechart group has scans for this if you go through the archives.

Related Posts:

6/24/2009

The hundred year old art of swing trading Part2

Sometime back we looked at the basic philosophy behind swing trading . In that post we also looked at some of the books on swing trading. In next series of posts we will look at some of the details of method discussed in these books.

We will start with Dave Landry. The basic idea behind all the Dave Landry set ups is "pullback" in a strong thrust. The objective is to capture the thrust after the pullback. The method works only in stocks with momentum.

Like every other swing trader the methodology looks for a trend and then looks for a place to enter it. the objective is to:
  1. Capture a short term thrust
  2. sometime to hit a home run
According to Landry there are three phases of trend that can be traded:
  1. trend resumption
  2. trend acceleration
  3. trend transition
He uses ten setups to identify such low risk entry points. He has over the years identified ten such pullback set ups. Setups are set of conditions which needs to be satisfied for a stock to be considered for a pullback entry. the ten set ups are:
  1. Persistent pullbacks
  2. Trend knockouts
  3. Witch hats
  4. false rally pullback/trend pivot pullback or second entry pullback
  5. accelerating momentum strategy
  6. explosion gap pivots
  7. First thrust
  8. Bow tie
  9. Reversal gap strategies
  10. The gatekeeper
This week we will look at some of these set ups in detail and how one can possibly build scans for them in Telechart.

Related Posts:

6/23/2009

Buyers strike



  • Very ugly action but not enough volume to support such a drop.
  • This looks like buyers strike. In absence of buyers it is straight down move on low volume.
  • In one week there will be quarter close, so chances of further weakness are low in my opinion.
  • Most likely buyers will step in at some level to drive market higher just before quarter ends.
  • In few weeks you have earning season starting. Earnings related strategies will still be my primary focus at this stage.

6/22/2009

Market in pullback mode after big rally

Market Monitor Market in pullback mode
after a
big three month rally
TypeIndicatorValueComments
Daily# of Stocks Up >4% on high volume318A positive day. Need to see 500 plus
day to be aggressively bullish
Daily# of stocks down >4% on high volume 136
Primary# of stocks up >25% in a quarter2542
Primary# of stocks down >25% in a quarter437no major damage to breadth so far
Secondary#of stocks up >50% in a month20
Secondary#of stocks down >50% in a month2
Secondary#of stocks up >25% in a month154
Secondary#of stocks down >25% in a month24not climbing fast indicates sideways move Not much opportunity for shorting.
Primary fast MM 34/13 + 1828This ratio will be the first to indicate
breadth has turned negative.
Primary Fast MM 34/13 - 1272

6/19/2009

How to find stocks likely to make 50% plus move



The key to finding stock with potential for explosive move is to find stock with explosive earnings. Some of the stocks with explosive earnings have now started to breakout and some have already made big moves of 40% to 50% in a quarter.
What really is explosive earnings. On Members site we are looking at series past examples and trades of past explosive moves and earnings behind them. Two stocks with such explosive earnings we discussed were NTRI and CROX.
Nutrisystem has been around in the market since 2000.Till 2005 no one cared about it. It was a neglected stock. In 2003 new management took over. The new line of food introduced in 2004 was what kicked off the earnings.

yearepssaleslow
price
high
price
20020.082811
20030.032312
20040.033814
20050.59210244
20062.305653276
20073.0077620 74
20081.756871030
This table tells you why NTRI made a explosive move of 2 to 76 in two years. It had explosive earnings and sales growth. From a 20 million company it became a 776 million company in 3 years. That is what is really explosive growth looks like. This is the kind of stock one should look for in EP.

This is what Cliffman was trying to explain in this very good comment. His comment makes a very good point and if you understand the significance of it, you will be able to find such stocks.
Comment posted by Cliffman on 6/16/2009 4:58:00 PM ESTArticle: Pre Market movers
In my studies of historical EP's, i believe that nothing quite has the potential and tradability of a hot consumer discretionary stock particularly when the expansion of that product is mostly a matter of distribution (as opposed to opening physical stores). If the story gains traction then the market opportunity factor can be given a lot of value and that can lead to an incredible move in the stock. They trade at increidble PE's sometimes because it is not seen as a product cycle, it is secular and long lasting. Something like HANS is the ideal example of a success story here. Very simple high margin product, easy to mass produce, with a huge market opportunity. The stock can trade ahead of YEARS of EPS growth instead of just a few good quarters of a product cycle situation.

I always take very seriously anything in consumer discretionary, i have a natural inclination to "like" GMCR's story because i see the similarities to HANS, NTRI, etc. Even if its a CROX it wouldn't be bad, CROX had a very solid EP in '07 that led to a 6 month rally. It turned out bad but it had a great rally on 2 data points (2 EPS reports), the 3rd killed it obviously. Just look at how CROX's rally was framed within the EPS reports and you will see that it was very tradable and not as risky as it looked.

Crocs is often cited by shorts and critics of growth investing as an ideal example of what is wrong with hot momentum stocks. But what they don't understand is that if a growth stock is bought at right level, you can make incredible amount of money.
Crocs IPOed in 2006. Look at the earnings and sales from 2004 to 2007. In three years it went from 14 million to 847 million. That is when it went up from 10 to 75 before crashing. This kind of explosive growth is possible in such consumer products kind of stocks because if a product becomes popular it is very easy to ramp up production and distribution is easy as you just have to push it in exiting distribution channels. That is the point Cliffman was making.
yearepssaleslowhigh
2003-0.011--
2004-0.0114--
20050.22108--
20060.813551025
20072.008472175
2008-2.04721391
One of the ways to find such stocks is to run a scan in IBD scanner with following conditions:

Screen Criteria Parameters
% Change in Latest Quarter's EPS vs. Same Quarter Prior Year Greater than or equal to:100
Current Total Annual Sales(Mil.) Greater than or equal to: 20.0
%Change Latest Quarter's Sales vs. Same Quarter Prior Year Greater than or equal to: 50
Current 50-Day Average Volume(1000) Greater than or equal to: 50

The entire idea behind the Episodic Pivots method is to find such stocks early in their price growth cycle before they make the big move.


Are you serious about your trading?

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

Why traders come to stockbee?

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.





What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading site that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.



How can I become a member?

To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.

6/18/2009

Market in pullback mode


Market Monitor

Market in pullback mode after a
big three month rally




TypeIndicatorValueComments
Daily# of Stocks Up >4% on high volume150
Daily# of stocks down >4% on high volume 260Another negative day.
The pullback continues.
Primary# of stocks up >25% in a quarter2529Breadth is still positive. So this is
correction/pullback
in primary bullish trend.
Primary# of stocks down >25% in a quarter437There is no major deterioration in breadth so far.
Secondary#of stocks up >50% in a month17Overbought levels are finally below 20.
Secondary#of stocks down >50% in a month3
Secondary#of stocks up >25% in a month101
Secondary#of stocks down >25% in a month31
Primary fast MM 34/13 + 1926This ratio will be the first to indicate
breadth has turned negative.
Primary Fast MM 34/13 - 1374



6/17/2009

Some new books

There is a pile of pending books to read currently. Some quick notes on some noteworthy books I am currently reading are:


How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition
Lot of new material in this latest edition. 100 plus charts of biggest historical winners. Must read.


Good overall view of all green technologies and companies in sectors like solar energy, wind power, fuel cell, geothermal, biofuels, smart grid, green buildings,and so on. Recommended reading to give you good perspective on this alternative energy sector.


Inside the Mind of the Turtles: How the World's Best Traders Master Risk
New book on risk management by Curtis Faith. Nice book on risk management.

Market Wizard style interview with 13 big names in technical analysis. But the interviews were conducted by mail. So it does not work. A good concept badly executed. Don't waste your money.

Detailed reviews later.

6/16/2009

Your methods are under your control

Methodology trumps the market. The market is a unknown variable, it does its own thing, you cannot control it.

Market is ever changing.

Market is full of surprises.

Market is not predictable all the time.

Market is complex.

Market offers too many choices.

Market is full of traps.

Market is not controllable but.....

your methods are compltely under your controll. Your reaction to the market is under your control. What you can control is your own method to trade the market.



Trading decisions fall in to five "controllable" categories which I call Trading Mix:

1. What time frames to trade (trade frequency)
  • Day trade
  • swing trade
  • position trate
  • macro trade
2. What markets to trade (equity selection)
equity
growth
momentum
value
technical analysis
futures
options
currencies
etf

3. When, where, and how to enter them (entry selection)
4. When , where , and how to exit them (exit selection)
5. How to manage risk (risk management)
how much to risk per trade
where to put stops
how and when to use margin

The profit opportunity is in the market if you get the mix of above elements right the result is profit. Each of these five variables are completely under your control.
If you change these variables your profit increases or decreases. So for a same size of profit opportunity in the market two traders using two different set of trading mix will have completely different profit outcomes. Controlling your trading mix is the key to profitability.

6/15/2009

How to find pullbacks using Telechart

The market has been churning at this level.Many stocks which had gone up in past month or so are having a pullback now. Some of these are having very orderly low volume pullbacks. Some of these stocks will resume their uptrend after few days.
There are many ways to find such stocks. One of the ways is by using a Telechart scan

(100 * (C - C21) / C21) >= 20 AND (100 * (C - C5) / C5) <= 0 AND (100 * (C - C5) / C5) >= ( - 15)AND (100 * (C - C1) / C1) < 2 AND C >= 5 AND V >= 1000

As of now the scan will give you 164 stocks. You can further reduce the list by taking only pullbacks which are within 8 to 10% of 52 week high or six month high.

If you want to take stocks within say 10% of six month high you can use the following scan to sort the above list:
(100 * ((C + .01) - (MAXC130 + .01)) / (MAXC130 + .01))

To further eliminate low liquidity stocks you can sort the list by Volume (Dollars) 1 day and take those with above USD 5 million volume.