January 2010 Archives

Via CNN. I love the "stealth stimulus" term which is probably code for bank bonuses.   

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I wrote about $PMCS back on 1/14/10, the day after it made a nice hammer formation at its 200 DMA.  It made the hammer at the bottom of a trend with very little volume or conviction for me, and I reviewed the weekly chart for additional clues.  At that time I suspected it might test its lower boundary of about $7.94, and it did yesterday.  Too bad I didn't short this one.

Rules of candlestick formations: Volume is always key indicator of how meaningful the candlestick formation is.

$RFV was a winner for me. In fact it was my largest winner in the bunch, clocking in over 12% or about +3R.  However, it got taken out via a stop on 1/21/10 as the market looked like it started to rollover.  

Rules of the trend system: Always use stops and strict money management.  Let the market decide when its time to quit.

I entered Visa ($V) back on 12/22/09 after it made an all time high, with heavy volume, the day before.  It then went sideways for a month and I was finally taken out on 1/22, right below its 50 DMA.  I did manage to move my stop a bit higher over the course of this trade, per my trend system, but lost -0.7R on this one.  Such is life I guess...

I wonder if Chris got taken out of V on Friday as well?

I've been posting a few candlestick chart scans and asking my readers, "would you buy them" here and now or just posting some basic commentary about them being screwed.  Let's take a look at how one of them faired after I wrote about them. Today's review is $NEP, which made a wicked hanging man on Jan 7th, and I thought it was in trouble based on its parabolic move and then hanging man.

Well it was in trouble, see how's breaking down from here? I think its gunning for the $8 area...

Another candlestick chart pattern for your eyes this morning.  SMBL made a nice hammer at its 50DMA and right at the bottom of its trend line BUT volume is unconvincing for me...  So, would you buy it?

After having 8 of my 12 open stock and ETF positions stopped out this week, I'd say the market is starting to roll over.  It could be because of Obama's bank tax or something else.  Who knows and who cares!

All I know is that my trend system took me out as it was designed to do.  Of course it was sooner than I expected but I guess that's the way the cookie crumbles.

I got taken out in FDM yesterday after riding a bit of its trend.  I made money on this one, about 8.5%.  Not too shabby.

And yesterday out of a total of 5 positions.  One position was a good gain (FDM) but the others added up to slight losses; add them all up and I'm down only $5.  I'm not upset, just satisfied my system is working.  Of course I'd hope for more of a gain but sometimes break even is just as good.

and I'm about to die!!! No, I'm just kidding but I am in North Dakota for work.  So what do I do in my spare time up at 30,000 feet? I'm doing Python tutorials.

Well would you punk?  BIDU made a gap up under heavy volume after the anouncement that Google might leave China.  The first candlestick after the news was a hammer at the top of a resistance line, which brought out the Bears.  But the Bulls broke through that resistance the very next day with vigor.  So, would you buy BIDU here?

With the encouragement of @W0nk0, I've decided to start fooling around with the scripting language Python.  It appears to be an easy script language to learn and I hope to build various routines that will help me with my Automated Trading System.  There's also an open source ANN library for Python (and others) that I plan on fooling around with too.  That, coupled with ibPY, will let me finally build my ATS over the course of the year(s) and hook it up to Interactive Brokers.

I went long these ETF's back on 11/19 (as well as others I will post about).  These holdings are part of the AAII ETF portfolio and I was experimenting with them.  These do not fit my new trend strategy but they've been performing well and I'm making profit.  Profit is profit, right?

Note: I accidently annotated the entry date on the charts wrong, it should be 11/19 and not 11/13.

My life is extremely busy these days and I've gotten my "trading" down to about 30 minutes every morning, before the market opens. Unless I initiate a new position, my daily trading routine is as follows:

1. Download End of Day (EOD) closing data into my trading worksheet. (5 minutes)
2. Run my strategy through the data (my worksheet does this automatically via Excel Macros) (<1 minute)
3. See which positions I need to move my stops up in. (<1 minute)
4. Log into my trading account and move my stops (10 minute)
5. Post on Twitter which symbols I'm moving my stops up on (2 minutes)
6. Scan of all-time highs (<1 minute)
7. Look through the charts of the new all-time highs (10 minutes)
8. Place candidates on my stock watch list (5 minutes)

Time spent is about 30  minutes every morning.  If I initiate a new position, I'll either place a market order for the open or wait till after 10AM to make a buy and place a stop.  That adds another 5 minutes to my routine.

Have a good weekend all!

PMCS made a hammer on its daily chart, right at the 200 DMA.  Hammers at the bottom of a trend channel are usually an indicator of a trend change.  This assumes some heavy volume, which with PMCS is questionable.  Volume is greater than the day before where we see a gap down, but not as big as when the dam broke back on 10/25.

So we'll look to the weekly chart for additional clues.

It looks like the wick of the hammer is wick on the red filled candle for PMCS this week.  Its testing the 50 WMA on about average volume.  I suspect that PMCS will test this lower boundary of $7.97 again, and possibly go through it because the hammer formation IS NOT convincing to me.

These are my links for January 12th through January 13th:

• http://www.pcworld.com/businesscenter/article/186786/google_attack_part_of_widespread_spying_effort.html - Google's decision Tuesday to risk walking away from the world's largest Internet market may have come as a shock, but security experts see it as the most public admission of a top IT problem for U.S. companies: ongoing corporate espionage originating from China. - MUST PROTECT INTELLECTUAL CAPITAL FROM CHINA. THEY JUST STEAL AND COPY.
• Google, Citing Attack, Threatens to Exit China - NYTimes.com - “Unless they turn themselves into a Chinese company, Google could not win,” she said. “The company has clearly put its foot down and said enough is enough.”
• http://www.pcworld.com/businesscenter/article/186786/google_attack_part_of_widespread_spying_effort.html - Google's decision Tuesday to risk walking away from the world's largest Internet market may have come as a shock, but security experts see it as the most public admission of a top IT problem for U.S. companies: ongoing corporate espionage originating from China. - MUST PROTECT INTELLECTUAL CAPITAL FROM CHINA. THEY JUST STEAL AND COPY.
• Google, Citing Attack, Threatens to Exit China - NYTimes.com - “Unless they turn themselves into a Chinese company, Google could not win,” she said. “The company has clearly put its foot down and said enough is enough.”
• Haitians Confront Devastation of Quake - NYTimes.com - The quake, with a magnitude estimated at 7.0, caused the collapse of the National Palace, leveled countless shantytown dwellings and brought more suffering to a nation that was already the hemisphere’s poorest and most disaster-prone. - WOW. I FEEL BAD FOR THE HAITIANS
• Official Google Blog: A new approach to China - We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China. - WOW GOOGLE TAKING ON CHINA

These are my links for January 11th:

• LaHood: Auto bailouts were a good investment - MarketWatch - U.S. Transportation Secretary Ray LaHood kicked off the Detroit auto show on Monday by telling reporters that the government's commitment to the car industry was "a good investment of taxpayer dollars." - UM, YEAH, RIGHT.
• Geithner Has Support of Obama, Democratic Lawmakers, Aides Say - Bloomberg.com - Asked yesterday for comment, White House Press Secretary Robert Gibbs said he stood by his earlier statements that the president had full confidence in Geithner. Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada, said “Secretary Geithner enjoys the strong support of the Senate Democratic caucus.” - ATROCIOUS!
• Stocks, Commodities Advance as China Imports Soar; Dollar Falls - Bloomberg.com - “The market doesn’t actually care if more or less Americans have jobs, it’s watching for rate hike signals,” Bill Blain, the joint head of fixed income at Matrix Corporate Capital in London, wrote in a research note. “Other aspects, such as U.S. retail sales or this morning’s dramatic growth in China’s exports, are equally valid indicators of just how strongly the global economy is recovering.” - YES, THE MARKETS DON'T CARE ABOUT THE USA, IT JUST CARES ABOUT $$$$, LIKE IT SHOULD!
• Chavez Devalues Bolivar 50%, First Time Since 2005 (Update1) - Bloomberg.com - Chavez said the bolivar will be devalued to 4.3 per dollar from 2.15 per dollar for most imports. A second, subsidized peg of 2.60 bolivars per dollar will be used for importing food, medicine and machinery intended to boost the economy’s competitiveness. - HA! SOCIALISM = SUCKS.
• New York Seeks National Effort to Curb Salt in Food - NYTimes.com - The plan, for which the city claims support from health agencies in other cities and states, sets a goal of reducing the amount of salt in packaged and restaurant food by 25 percent over the next five years. - FOR A PALEO TYPE PERSON, TOO MUCH SALT IS DEADLY. I'M SURPRISED BY HOW MUCH SALT IS IN PROCESSED FOODS>
• Pimco move to sell gilts raises spectre of a UK sovereign debt crisis - Telegraph - The American investment group said it will be a net seller of UK Government bonds this year, at the very point when the Bank of England brings its £200bn programme of purchases to and end and the Treasury attempts to raise unprecedented sums through the capital markets. - I THINK WE'LL SEE EITHER A DEFAULT IN THE POUND STERLING OR THE USD.

Well would you?  It made an all time high on Friday but the volume isn't overly impressive, relatively speaking.  Well would you buy it?

Here's a snapshot of my current portfolio.  This includes entry points, returns, and stop levels.

ITs back to basics for me.  I'm spending more time looking at candlestick formations again for potential clues.  Today's review is MYL.

MYL looks in trouble.  Its had a nice trend run but on Friday it gapped lower on heavy volume and created a nice hammer.  Hammers on up trends spell danger, as the trend could be changing.  Let's keep an eye on this one to see what happens.

While we're at it, lets take a look at NEP and see how its turning out from this past Thursday when I wrote about it looking screwed.

Well the short of it is, it still looks screwed.  It had a nasty gap down and then the Bull tried to hold on.  My guess is that they'll be a further push lower as the Bears want to fill that gap at the $8.00 level.

These are my links for January 8th:

• http://science.slashdot.org/story/10/01/07/1425242/8-of-Your-DNA-Comes-From-a-Virus?from=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Slashdot%2Fslashdot+Slashdot&utm_content=Google+Reader - A recent study on the 8 percent of human DNA that is derived from viruses may show a cause of cell mutation and psychiatric disorders such as schizophrenia and mood disorders, according to an article by The University of Texas at Arlington biology professor Cédric Feschotte published in the Jan. 7, 2010, issue of Nature magazine.
• Yahoo CEO Carol Bartz Gives Herself B-Minus Grade in First Year - Bloomberg.com - Bartz, who marks her one-year anniversary as CEO next week, is striving to keep Yahoo’s 15-year-old site relevant in an era of Twitter and Facebook. Yahoo’s sales have fallen for four straight quarters, and its stock trailed the Nasdaq Composite Index in the past year. Bartz expects Yahoo’s sales and profit to grow in 2010 as it makes acquisitions and improves products. - DO THEY EVER GIVE THEMSELVES A "D" OR AN "F"?

I dabbled in the AAII.com screens for a bit  this year and bought AIRT on 11/17/09 after it showed up on the Grahman Enterprising screen. I figured it was worth a shot.  I sold that POS on 12/28/09 for a stinking 6.73% loss.  It wasn't a trend play but more of a position play that didn't pan out. Lesson learned, this screen is for suckers and not for me.

These are my links for January 7th through January 8th:

• As Goldman Thrives, Some Say an Ethos Has Faded - NYTimes.com - Even so, many Goldman employees are stunned by the public resentment directed at the bank in general and Mr. Blankfein in particular, who, after first steadfastly defending Goldman’s profits and pay, recently offered a vague apology for “mistakes” that led to the financial crisis. - LET THEM EAT CAKE!
• Countdown to January 18: Goldman’s Bonus Day « The Baseline Scenario - Goldman’s management should come to its senses and pay no bonuses of any kind to anyone; no good people would leave. Fortunately, while the executives who run Goldman are smart, they are not that smart. The bonuses they announce on January 18 and pay in early February will become the rallying point for real reform.
• Contrarian Investor Predicts Economic Crash in China - NYTimes.com - He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent. - OF COURSE THEY ARE. CHINA WANTS TO MAINTAIN THE HARMONIOUS SOCIETY.
• Fed Advice to A.I.G. Scrutinized - NYTimes.com - The e-mail messages dealt with one of the most controversial aspects of A.I.G.’s bailout: that the Fed was paying the insurer’s trading partners 100 cents on the dollar for their soured investments. A.I.G. cited this fact, but the lawyer crossed the reference out. The Fed also struck a paragraph about other investments that could not be unwound. - GOLDMAN SACHS AND SOCIETE GENERAL. SCUMBAGS TO THE BONE>
• In New York Commercial Real Estate, News Is Bad (or Worse) - NYTimes.com - “We’re projecting the biggest value losses in the nation,” said Aaron Jodka, a senior real estate economist at Property and Portfolio Research, a Boston-based independent real estate research and advisory firm. He predicts that by 2011, the value of New York metropolitan area office buildings will decline by 58 percent from its late 2007 peak. It is already down 40 percent. - CONFIRMED BY THE MARKETDOCTOR OVER BEERS LAST NIGHT.
• Contrarian Investor Predicts Economic Crash in China - NYTimes.com - He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent. - OF COURSE THEY ARE. CHINA WANTS TO MAINTAIN THE HARMONIOUS SOCIETY.
• Fed Advice to A.I.G. Scrutinized - NYTimes.com - The e-mail messages dealt with one of the most controversial aspects of A.I.G.’s bailout: that the Fed was paying the insurer’s trading partners 100 cents on the dollar for their soured investments. A.I.G. cited this fact, but the lawyer crossed the reference out. The Fed also struck a paragraph about other investments that could not be unwound. - GOLDMAN SACHS AND SOCIETE GENERAL. SCUMBAGS TO THE BONE>
• In New York Commercial Real Estate, News Is Bad (or Worse) - NYTimes.com - “We’re projecting the biggest value losses in the nation,” said Aaron Jodka, a senior real estate economist at Property and Portfolio Research, a Boston-based independent real estate research and advisory firm. He predicts that by 2011, the value of New York metropolitan area office buildings will decline by 58 percent from its late 2007 peak. It is already down 40 percent. - CONFIRMED BY THE MARKETDOCTOR OVER BEERS LAST NIGHT.
• Maybe You're the Reason Your Job Is Boring - Wake yourself up by renewing your leadership agenda. Re-engage by mentally firing yourself and spending the next few weeks acting as if you just joined the company. This entails assessing the current situation anew with the help of key stakeholders. Make it a disciplined process. - LOL. YES AND CORPORATE LOYALTY IS STILL IN EFFECT. SUCKERS. CEO'S LIVE IN A WORLD DIVORCED FROM REALITY.
• SFO Magazine Article - Lately, when a stock makes an important new high, it will inch even higher until a seller finally refuses to lift for higher ground. Immediately, the sell-the-new-high program will sell much lower than you bought. The longs are trapped and squeezed out of their positions. - I'VE NOTICED THIS ON MY POSITION IN V. MUST ADAPT TO HFT AND ADJUST RISK.
• HFT Market Making Will Lead to a Crash - Computerized algorithmic market making works in any type of oscillating market, as the computer can keep flipping out of it’s longs, and covering it’s shorts. It works in a trending market, as long as there is some type of choppy trade. The problem lies, when the computer system can’t flip out of the position. Most algorithmic systems are programmed with some type of risk parameter. If this risk parameter is breached, the computer will dump it’s position and cut it’s losses. This is what may have happened in RMBS today. An algorithmic system making markets on the long side, got too long, and was unable to wiggle out of the position because of the follow-through in selling pressure. Once it was down so much in the position (the risk parameter was breached), it dumped. This simply added fuel to the fire. That is why the sudden plunge to $16 happened. - OK FINE, ITS DANGEROUS BUT HOW DO I MAKE MONEY FROM IT?
• NJ Airport Video Shows Guard Leaving Post - NYTimes.com - The video shows the guard leaving his podium for several seconds. The woman then comes from inside a secure, passengers-only area and motions to the man, who ducks under a rope. The couple embraces and walks arm-in-arm past the vacant podium. - DUMBASSES
• Jamie Gritton's MI Backtester - This is a tool for backtesting stock screens, as defined and used by the Mechanical Investing (MI) message board at The Motley Fool. While it's quite handy (if I do say so myself), it is by no means an introduction to (or even a description of) mechanical investing. - VERY INTERESTING SITE, MUST SPEND SOME TIME HERE DIGGING ABOUT!
• Chinese Decision on Rates Seen as ‘Turning Point’ - NYTimes.com - “It is a turning point,” said Ben Simpfendorfer, an economist in the Hong Kong offices of Royal Bank of Scotland. “There is a convergence of events that will lead to higher rates.” - MAYBE
• The Way We Live Now - Walk Away From Your Mortgage! - NYTimes.com - Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible? - NO, ITS SMART BUSINESS SAVVY. ITS PLAYING BY THE RULES THAT PLAY BY.
• Chinese Decision on Rates Seen as ‘Turning Point’ - NYTimes.com - “It is a turning point,” said Ben Simpfendorfer, an economist in the Hong Kong offices of Royal Bank of Scotland. “There is a convergence of events that will lead to higher rates.” - MAYBE
• The Way We Live Now - Walk Away From Your Mortgage! - NYTimes.com - Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible? - NO, ITS SMART BUSINESS SAVVY. ITS PLAYING BY THE RULES THAT PLAY BY.
• Retail Stores Report Modest Gains in December - NYTimes.com - Retailing groups calculated in recent days that sales for the combined months of November and December rose 1 to 2 percent from a year ago. Industry professionals were pleased Thursday that the results were at the high end of estimates and that retailers were not forced to discount as dramatically as they did in 2008. - LAUGH, 1% ABOVE SHIT SALES IS STILL SHITTY SALES

Went long SLXP yesterday (1/7/10) @ $27.72.  So far so good! Let's see where she takes me.

When I started formulating my simplified trading strategy, I tested it out on GOLD.  GOLD made a new all time high on high volume on 5/20, I entered on 5/21.  Needless to say, I caught a small portion of the trend before being stopped out.  The system worked nicely.

Here's the entry chart (the before):

And here's the exit chart (the after):

NEP showed up on my all-time high scan yesterday but after a closer look at its chart it scares me. Looks like the bears came out and created a hammer.  I think NEP is screwed.

These are my links for January 6th through January 7th:

• Geithner’s New York Fed Told AIG to Limit Swaps Disclosure - Bloomberg.com - “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year. - GOES TO SHOW YOU, THEY'RE ALL SNEAKY
• Geithner’s New York Fed Told AIG to Limit Swaps Disclosure - Bloomberg.com - “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year. - GOES TO SHOW YOU, THEY'RE ALL SNEAKY
• Deflation in Japan: To lose one decade may be misfortune... | The Economist - What effect has this steady erosion of value had on the psychology of Japanese people? The bust did not lay waste to Japan, after all, as the Depression did to America in the 1930s. Homelessness and suicide have risen, and life has got much harder for young people seeking good jobs. But Japan still has ¥1,500 trillion ($16.3 trillion) of savings, its exporters are world-class, and many of its citizens dress, shop and eat lavishly. As a senior civil servant puts it: “Japanese people have never really felt that they are in crisis, even though the economy is slowly withering away.” - WELL WE JUST HAD A LOST DECADE OF OUR OWN.
• Off the Charts - For Stocks in the Developed World, It Was a Decade of Zeros - NYTimes.com - The United States stock market lagged even that modest return. According to the MSCI indexes, which measure virtually all stock markets using consistent criteria, an investor in the American market who reinvested all dividends — and who somehow avoided all taxes and transaction costs for the decade — would have ended 2009 with 12 percent fewer dollars than when the decade began. That is an annual return of negative 1.3 percent. - NOT IF YOU'VE BEEN TREND FOLLOWING.
• Gold Outshines All Other Assets For Past Decade - Knowing about the 18 year cycle between commodities and equities, this isn’t surprising. In fact, thanks to this long term historical pattern, we can look forward to almost another decade of the same type of outperformance. - I WONDER FOR HOW LONG REALLY?

A great master at the game of GO once wrote that many advanced players begin to trip themselves up when they forget the basics of ladders and nets.  Ladders and nets are just simple beginner strategies that are grounded in the basic rules of the game.  These simple game formations are much like a stock's price and volume, and its technical chart.

Going back to the basics of understanding candlesticks, prices, volume, and formations associated with an asset can make the difference between success or failure.  Basics are important and now is a perfect time to go back and study a few.

Lately every new all time high appears to be Pharma related.  Today's scan picked up Salix Pharma (SLXP) and it looks tantalizing.  Its got lots of heavyish volume on gaps higher but gaps are sometimes doomed to fill themselves, or as the candlestick chartists say, "close a window."  With two trading sessions closing higher but after opening even higher and then closing lower, makes you wonder what the Bears are up to, or if SLXP is entering lightly defended territory.

The question is, would you buy SLXP now?

SWN showed up on my screens cause it keeps making new highs. The question is, would you buy it now?

I went long TEVA today.  My new trend system said to get long and hold tight.

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