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.

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.

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?