7/30/2009
Current positions and last 10 closed trade
The market did not get rattled by China drop
We are clearly at a extreme bullish breadth levels. Such high levels lead to corrections. Many such corrections can be sudden and vicious. But a overbought market can remain overbought fr long. In a long running bull market such overbought levels correct slowly and then the move resumes. At this stage we do not know how this move will play out. But you should be in a pullback/correction anticipation mood. Protecting profits made so far should be one of the prime objective. The market did not get rattled by China drop, which is a good sign.
- A series of 300 plus negative 4% days will be negative for market.
- The #of stocks up 25% in a quarter going below 200 would be bearish
- So far we have not seen these things.
- So breadth is showing you a good bull market currently.
- Which is getting reflected in our trading.
Market Monitor Market monitor is market breadth based market timing tool | Current Readings Market in a rally mode. Earnings season currently on | ||
Type | Indicator | Value | Comments |
Daily | # of stocks up >4% on high volume | 135 | No heavy selling so far. But I have sold most vulnerable positions. |
Daily | # of stocks down>4% on high volume | 217 | |
Primary | # of stocks up >25% in a quarter | 2049 | |
Primary | # of stocks down>25% in a quarter | 355 | Approaching 200 indicates extreme bullishness |
Secondary | # of stocks up> 50% in a month | 9 | But this one is not in extreme zone. |
Secondary | # of stocks down>50% in a month | 3 | |
Secondary | # of stocks up>25% in a month | 191 | |
Secondary | # of stocks down>25% in a month | 14 | |
Primary fast | # of stocks up>13% in 34 days | 2574 | |
Primary fast | # of stocks down>13% in 34 days | 591 | |
MMA+ | % of stocks in confirmed uptrend | 70 | This is in bearish territory. |
MMA- | % of stocks in confirmed downtrend | 14 | |
10 day cumulative breadth ratio | #of stocks up> 4% in last 10 days/ #of stocks down>4% in last 10 days | 2.67 | |
7/29/2009
Current open positions
Symbol | Entry | Date |
LCRD | 6.20 | 7/28/09 |
KONG | 11.92 | 7/28./09 |
UTA | 11.80 | 7/28/09 |
CGA | 8.87 | 7/24/09 |
GCI | 4.48 | 7/16/09 |
HITK | 12.53 | 7/14/09 |
OSK | 18.32 | 7/2/09 |
LCC | 2.30 | 7/2/09 |
STEC | 24 | 7/1/09 |
STEC | 13.52 | 5/13/09 |
What is market breadth telling us
We are clearly at a extreme bullish breadth levels. The T2108 is at 85.72. Such high levels lead to corrections. Many such corrections can be sudden and vicious. But a overbought market can remain overbought for long. In a long running bull market such overbought levels correct slowly and then the move resumes. At this stage we do not know how this move will play out. But you should be in a pullback/correction anticipation mood. Protecting profits made so far should be one of the prime objective.
- A series of 300 plus negative 4% days will be negative for market.
- The #of stocks up 25% in a quarter going below 200 would be bearish
- So far we have not seen these things.
- So breadth is showing you a good bull market currently.
- Which is getting reflected in our trading.
Market Monitor Market monitor is market breadth based market timing tool | Current Readings Market in a rally mode. Earnings season currently on | ||
Type | Indicator | Value | Comments |
Daily | # of stocks up >4% on high volume | 202 | |
Daily | # of stocks down>4% on high volume | 158 | |
Primary | # of stocks up >25% in a quarter | 2214 | |
Primary | # of stocks down>25% in a quarter | 314 | Approaching 200 indicates extreme bullishness |
Secondary | # of stocks up> 50% in a month | 13 | But this one is not in extreme zone. |
Secondary | # of stocks down>50% in a month | 3 | |
Secondary | # of stocks up>25% in a month | 193 | |
Secondary | # of stocks down>25% in a month | 19 | |
Primary fast | # of stocks up>13% in 34 days | 2717 | |
Primary fast | # of stocks down>13% in 34 days | 526 | |
MMA+ | % of stocks in confirmed uptrend | 66 | |
MMA- | % of stocks in confirmed downtrend | 13 | |
10 day cumulative breadth ratio | 4.42 | ||
7/28/2009
What is market breadth
Market breadth is one of the core concept you must understand if you want to succeeds in trading and investing in stock market . A comprehensive understanding of market breadth will help you trade confidently in any time frame. What should you know about market breadth.
- What is market breadth
- Why is market breadth called the grand daddy of all indicator
- What information does market breadth tells you
- How is market breadth calculated
- What are the most commonly used market breadth indicators
- How can you use market breadth for day trading
- How can you use market breadth for swing trading
- How can you use market breadth for long term investing
- What are the famous market breadth "proprietary indicators" and how you can hack them
- Which books explain market breadth the best
7/27/2009
What is market breadth telling us
Market Monitor Market monitor is market breadth based market timing tool | Current Readings Market in a rally mode. Earnings season currently on | ||
Type | Indicator | Value | Comments |
Daily | # of stocks up >4% on high volume | 175 | |
Daily | # of stocks down>4% on high volume | 67 | |
Primary | # of stocks up >25% in a quarter | 2293 | |
Primary | # of stocks down>25% in a quarter | 373 | Approaching 200 indicates extreme bullishness |
Secondary | # of stocks up> 50% in a month | 21 | This is bearish indicates likelihood of pullback. |
Secondary | # of stocks down>50% in a month | 3 | |
Secondary | # of stocks up>25% in a month | 224 | |
Secondary | # of stocks down>25% in a month | 16 | |
Primary fast | # of stocks up>13% in 34 days | 2742 | |
Primary fast | # of stocks down>13% in 34 days | 592 | |
MMA+ | % of stocks in confirmed uptrend | 66 | |
MMA- | % of stocks in confirmed downtrend | 15 | |
10 day cumulative breadth ratio | #of stocks up> 4% in last 10 days/ #of stocks down>4% in last 10 days | 5.36 | |
7/24/2009
Why I am not worried about high frequency trading
It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.Everyone is getting hyper about this article in NYT today. But what is the solution:. trade a idea with big edge. Don't trade 25 cents edges. Before HFT, there was quarter spread, there were SOES bandits, there were market makers and before that there were pools and market corners.
It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.
These things have been around since market started. If you trade a 20% or 50% edge strategy, you should not spend too much time worying about such things.
They can use all the HFT strategy they want to use, but if you trade a strategy like Episodic Pivots and find stocks STEC, OSK, HITK, or GCI at the beginning of their big move , those stocks are going to go up.
My philosophy is control things which you can control. Do not worry about uncontrollable forces. Your Trading Mix is under your own control.
How to find stocks using IBD 100 and IBD 200
Method | Scan output | Possible Buy | Verdict |
IBD 100 | ffiv vprt ttek din cern cri abvt
| din cern cri abvt
abvt is best out of the four | abvt open position |
IBD 200 | ffiv vprt mv cri abvt | mv cri abvt
abvt is the best | abvt open position |
|
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Criteria | Where to get information | ABVT | |
Relative linearity | Telechart | good for previous move | |
Closeness to 6 month high % | Telechart | at high | |
Volume surge 50%+ | Telechart | yes | |
Prior day narrow or negative | Telechart | yes | |
+4 b/o in prior 5 to 10 days | Telechart | no 4% b/o0 | |
-4% b/o in prior 5 to 10 days | Telechart | no -ve4% b/o | |
Float in million | Telechart | 8 million | |
IBD EPS ratings 95 plus | IBD | 80 | |
Recent EPS acceleration | IBD | no | |
Sector Top 25 | IBD | 7 | |
Recent catalyst | Moneycentral or Finviz | nyse euronext service
provider | |
Earnings due | IBD | 7/28/09 | |
Recent IPO | Telechart | shifted from BB recently | |
EPS growth 40 plus | IBD | 693% | |
Sales growth 25% plus | IBD | 20% | |
Margin | IBD | 15.8% | |
ROE | IBD | 16.7% | |
Verdict | Thinly traded. | ||
open position |
Key posts explaining these methods
7/23/2009
The running of the bulls
Market Monitor | Market resumes its rally after a pullback. Earnings season currently on. Focus is on Episodic Pivots | ||
Type | Indicator | Value | Comments |
Daily | # of Stocks Up >4% on high volume | 895 | Characteristic of bull market are that they are difficult to ride. This market is like that. Just 10 days ago the bears were salivating at the prospect of H&S. That was a trap. Since then market have gone up straight. If you dithered or listened to bears, you never had a opportunity to get in at low risk. This reminds me of 2003 all over again. In the short run we have unsustainable momentum so extremely high probability of dip in next 1 to 5 days. But remember overbought markets can remain overbought long time. And tops take long to form. |
Daily | # of stocks down >4% on high volume | 58 | You should get worried if we see 2 or 3 days of 500 plus readings on this. |
Primary | # of stocks up >25% in a quarter | 2250 | You should not become completely bearish on market till the primary ratio becomes negative. It never became negative during the correction in June. So we benefited by buying b/o during that period and selling those positions today Buy dips in bull market till they stop working. |
Primary | # of stocks down >25% in a quarter | 389 | |
Secondary | #of stocks up >50% in a month | 30 | Over 20 indicating overbought level. A correction of 1-3 duration most probable course in next one week. |
Secondary | #of stocks down >50% in a month | 4 | |
Secondary | #of stocks up >25% in a month | 296 | This number is not really high. So I think the pullback is a buy opportunity |
Secondary | #of stocks down >25% in a month | 16 | |
Primary fast | MM 34/13 + | 2666 | Good breadth on this. |
Primary Fast | MM 34/13 - | 646 |
Top ten stock by Dollar Volume up 4% plus on high volume | f amzn pot rimm medx isrg ebay ems celg mon large stocks are being bought. Money is flowing in to the market. |
Top ten stocks by Dollar Volume down 4% plus on high volume | mcd pnc sndk swy gr dhr bms esi hban flir |
- Coming in to today I was 170% invested, the mantra today was to sell in to the strength.
- By afternoon I was 50% invested only.
- Current focus is Episodic Pivots (EP) and that too earnings EP only.
- Within that I am interested in 100% plus eps kind EP.
- I am not taking many of the turnaround kind EP.
- Because in next phase of bull market growth stock should dominate.
- I am not in hit and run mentality.
- I am trying to take larger positions and hold for 40 % plus kind of gains.
Shortage of growth stocks
Only 102 stocks meet the 40/25 eps/growth and 100k average volume parameter currently. (40% plus eps growth and 25% plus sales growth and average 50 day volume greater than 100k)
Diamonds are rare so they are in demand.
If diamonds were available abundantly, they would sell in dollar stores for 99 cents.
Only 23 stocks in top 40 sectors have 40/25 growth story. Out of those 23 the best ones I have positions in currently.
In a bull market I like to buy only 100/25 stories but in this market I am willing to buy 40/25 story
This is a list of stocks meeting 40 eps growth and 25 sales growth criteria using Momneycentral scanner as of yesterday.
Bold faced stocks are current open positions.
7/22/2009
Building strategy around core concepts
Lot of time is spent by new traders in tactical details of the methods like scan or indicator without understanding the core concept. Understanding the core concept is the key to trading any method.
Once you understand the logic behind core concept you would be able to do your own scans and trade some of the methods discussed here profitably with conviction.
Core Concept | Application |
Market Breadth can help you determine market direction | Market Monitor |
Equity selection is "the key" to profitability | Using Momentum+growth+Event catalyst |
Price Momentum from a yearly low Because trends start from a low point | Double Trouble |
Price Momentum six month | Modified Double Trouble |
Historic precedent analysis | Growth stock+IBD 100 and 200 |
Momentum Anomaly | IBD 100 + IBD 200 |
Post Earnings Announcement Drift PEADS The most robust anomaly found to date | Earnings Episodic Pivots |
Post news announcement drift | Other Episodic Pivots |
Momentum and mean reversion | Entry on weakness for swing trading in a momentum stock |
Risk Management | Initial stop placement |
Risk Management | Position Sizing Calculator |
Risk Management | Fast exit on trades that do not work |
Risk Management | Partial exits |
Risk management | Exit in to euphoria |
Risk management | Higher risk on conviction trades |
Earnings remain in focus
Market Monitor | Market resumes its rally after a pullback. Earnings season currently on. Focus is on Episodic Pivots | ||
Type | Indicator | Value | Comments |
Daily | # of Stocks Up >4% on high volume | 150 | Some sort of pullback after muti day gains was expected. |
Daily | # of stocks down >4% on high volume | 157 | You should get worried if we see 2 or 3 days of 500 plus readings on this. |
Primary | # of stocks up >25% in a quarter | 2023 | |
Primary | # of stocks down >25% in a quarter | 484 | |
Secondary | #of stocks up >50% in a month | 17 | Approaching 20 indicating overbought level. |
Secondary | #of stocks down >50% in a month | 3 | |
Secondary | #of stocks up >25% in a month | 202 | |
Secondary | #of stocks down >25% in a month | 16 | |
Primary fast | MM 34/13 + | 2181 | |
Primary Fast | MM 34/13 - | 892 |
Top ten stock by Dollar Volume up 4% plus on high volume | cat mon mrk fslr ntap jci nrg ip wfr stp |
Top ten stocks by Dollar Volume down 4% plus on high volume | lmt aa btu mco rf aks sti lxk shw cno |
- Current focus is EP and that too earnings EP only.