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OfflinegeokillsA
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Stock Update for March 19, 2009 - NAT, QQQQ, CELG [Re: Stonehenge]
    #10006666 - 03/20/09 09:09 AM (14 years, 10 months ago)
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That's some good advice there Stonehenge... I just don't want to have to deal with more numbers than I have to!  The whole options thing is a little much for me to wrap my head around, but I can admit that there's a good possibility I'm just being lazy about it and set in my ways.  I will have to try it one of these days.  For anyone else interested in options trading, download the PDF attached to this post: Characteristics & Risks of Standardized Options.

On that note, I did make a couple more sales yesterday as I'm going to have a lot going on this weekend and probably into next week... so I just don't want to stress about what's going on in my portfolio during this time.  The market is still acting very well, with underlying support on pullbacks.  Of course, this is options expiration week and that often pegs stocks near their strikes.  More often than not, the market has given back a bit in the week after options.  And if that happens this time, I will surely be stepping in to buy some shares back.

  • Nordic American Tanker (NAT) - Sold 50 shares @ $27.85

    This position has shown me 18% upside in little more than a week's time.  I'm selling half of the position to book profits on this run.  Enough said.


  • Powershares QQQ Trust [Nasdaq 100 equiv] (QQQQ) - Sold 75 shares @ $29.60

    This one was a wash, but I wanted to get out of it for now as all the major indicies are at significant resistance levels.  While I believe we can break through them in due time, I am mindful that after such a sharp run over the past week, we are likely to trade sideways and succumb to some profit taking after options expiration.






  • Celgene (CELG) - Sold 22 shares @ $46

    This one's been a stinker ever since healthcare names fell out of favor on news out of the Obama administration about cutting healthcare costs.  While I love the idea of cutting healthcare costs, obviously health care providers are anticipating a pinch.  I don't think Celgene will be all that adversely affected, since its cancer drugs are so life saving... but I can't fight the trend on this one.  Celgene made a 62% retracement (that's the same Fibonacci retracement number I brought up in support of 666 being the S&P 500 bottom a couple of weeks ago) from its February highs to its March lows, stalling at its 50-day moving average.  Technically, this doesn't bode well for the stock, and since I have another biotech name in my portfolio (GILD), I'm happy to lighten up on this one, and will buy it back if the shares fall below $40.



I am totally loaded up on firepower (cash) now after our sweet 20% run over the last two weeks, ready to deploy when opportunity strikes!


Discretionary Portfolio as of 3/19/2009:
  • 42.2% Cash
  • 10.2% Altria (MO)
  • 9.5% WalMart (WMT)
  • 9.0% Kinder Morgan Energy Partners (KMP)
  • 4.5% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 4.0% BP plc (BP)
  • 3.8% Gilead Sciences (GILD)
  • 3.3% Pepsico (PEP)
  • 3.2% Hatteras Financial (HTS)
  • 3.1% Marathon Oil (MRO)
  • 2.3% Nordic American Tanker (NAT)
  • 2.2% JPMorgan (JPM)
  • 1.9% Celgene (CELG)
  • 0.8% General Electric (GE)


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InvisibleStonehenge
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Re: Stock Update for March 19, 2009 - NAT, QQQQ, CELG [Re: geokills]
    #10015098 - 03/21/09 04:31 PM (14 years, 10 months ago)

I finished the week ahead but had many turbulent ups and downs. If I hadn't gotten clobbered friday, I'd be way ahead. I got out thursday with a nothing loss but friday it all caught up with me.

Exploring the option method I mentioned before, there are many ways yo can fine tune it to match what you want to do. It needn't be a $20 stock, it could be more or even a $5 one. I explained how you could could take a $20 stock and force them to either give you money or give you the stock for less than 18. There are slight risks associated with this play but they can be managed as I explained in my last post.

What if you want the stock at a discount but think it will go up fairly soon, what should you do? If it goes up, selling a put makes you money but you miss out on the price rise if there is one. You could do a spread in which you sell the put option but at the same time buy a call. The put might be at 18 and the call at 22. Lets say the cost of the call is covered by the premium you get by selling the put. You don't walk away with a profit under that situation if the price stays the same but you have a chance of getting the stock cheaper and if it runs, you can jump in at 22. A call gives the call option holder the right to buy at 22 just like the put gives the put holder the right to sell at 18, in this case.

If you wanted to make money on this spread, you could sell the put at 19 and buy the call at 22. Since the 19 put is closer to the actual selling price of the stock, it will bring more money than the cost of the call which is farther out. The put might bring you $2 and the call might cost you $1.20, just to pick numbers. That locks in a profit of .80, gives you the chance to pick up the stock for 19 - .80 or 18.20 and still gives you a shot at the long side. If it takes off and goes to 30, you can buy back in for 22 and collect your profit. You would also keep the .80 difference.


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

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OfflinegeokillsA
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Stock Update for March 20, 2009 - WFC [Re: geokills]
    #10015660 - 03/21/09 05:55 PM (14 years, 10 months ago)

Just a quick note that I am slowly easing back in to Wells Fargo (WFC).  Picked up 50 shares @ $14 on Friday, with the intent to start loading up if the stock finds its way back down to (and below) $12.  Wells Fargo has had a tremendous run, but it is a well managed bank with a solid balance sheet.  Their purchase of Wachovia did bring with it some darker notes, but I believe WFC will emerge from the crisis as one of the stronger banks, alongside JPMorgan and Goldman Sachs. 

The Treasury Department is also likely to make news next week about their plans to deal with "toxic" assets, but those of us who have followed the market in recent months know that whenever Treasury Secretary Tim Geithner has spoken, it hasn't carried the best reception in the market... which is why I'm keeping my purchases in this sector small, as there will likely continue to be tremendous volatility throughout the banking sector moving forward.


Discretionary Portfolio as of 3/20/2009:
  • 41.3% Cash
  • 10.3% Altria (MO)
  • 9.5% Walmart (WMT)
  • 8.9% Kinder Morgan Energy Partners (KMP)
  • 4.4% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 4.0% BP plc (BP)
  • 3.7% Gilead Sciences (GILD)
  • 3.4% Pepsico (PEP)
  • 3.1% Hatteras Financial (HTS)
  • 3.1% Marathon Oil (MRO)
  • 2.3% Nordic American Tanker (NAT)
  • 2.2% JPMorgan (JPM)
  • 1.9% Celgene (CELG)
  • 1.2% Wells Fargo (WFC)
  • 0.8% General Electric (GE)


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OfflinegeokillsA
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Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: geokills]
    #10026751 - 03/23/09 02:33 PM (14 years, 10 months ago)

Wow, this market is on fire.  But I think we're in a dangerous territory here with very overbought conditions.  I won't mind missing out on further upside in exchange for the peace of mind afforded by holding a lot of cash.  Financials went totally nuts at the end of the day today, hence the following moves:


  • Wells Fargo (WFC) - Closed position @ $16.25

    Didn't have time to to re-build my position here just yet.  Having bought at $14 last Friday and the stock up nearly 24% today, I closed the position again as it really seems like these financials have been running too far too fast.  I understand we have a renewed hope for intermediate term recovery in the sector given the government's unprecedented actions over the past two weeks, but I really want to see a pullback here before I really start building my positions in the space.



  • JPMorgan (JPM) - Closed position @ $28

    Here's another bank that's been absolutely on fire here.  Likely to be the strongest bank around, I can understand why - but as with WFC, it's just too fast too furious.  Time to sit on the sidelines and wait for the market to take a breather before re-building this position.  Though surely, I do want a piece of JPM for the long haul.



  • Nordic American Tanker (NAT) - Closed position @ $28

    You'll recall I cut this position in half last week for a handsome gain.  I'm going to follow that lead and dump the remaining 50 shares today for a healthy 18% profit in three weeks.



  • Hatteras Financial (HTS) - Closed position @ $22.08

    Breaking the trend here to close this position at an 8% loss.  It has been acting very poorly ever since the Fed's announcement to buy up to $1 trillion of government and agency debt.  I had initially thought the Fed move would be positive for these guys, but I can't argue the price action in the stock.  So rather than worry about it, I'll stop my losses and look for opportunity on a pullback.



  • UltraShort Financials ProShares (SKF) - Bought 12 shares @ $92

    This leveraged short ETF has been the topic of much controversy, and if the uptick rule is reinstated, it will probably go the way of the dinosaur.  While it's still around however, I am going to initiate a very small position on the heels of the tremendous performance from financial stocks.  Granted financials may keep steamrolling ahead on their momentum for a while longer, so I will keep this position small.  But as noted within my statements re: WFC and JPM, I think these stocks have moved way too quickly to the upside.  Though there is considerably more confidence in the market, banks do still have to deal with the old mark-to-market accounting rules and will actually have to write down losses if they participate in the new TALF federally sponsored lending program that allows investors to leverage up and reduce their risk on behalf of taxpayers in return for purchasing "toxic" assets from the banks.  Frankly, banks may not want to participate in this program, rather hoping that mark to market accounting rules will be modified instead in order to allow them to preserve their balance sheets.  Otherwise, when selling these assets at distressed prices, they will be taking a loss versus having been able to hold the assets (such as a mortgage) to maturity.



Discretionary Portfolio as of 3/23/2009:
  • 47.5% Cash
  • 10.2% Altria (MO)
  • 9.6% WalMart (WMT)
  • 8.9% Kinder Morgan Energy Partners (KMP)
  • 4.8% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 4.1% BP plc (BP)
  • 3.7% Gilead Sciences (GILD)
  • 3.4% Pepsico (PEP)
  • 3.3% Marathon Oil (MRO)
  • 2.0% Celgene (CELG)
  • 1.8% UltraShort Financial ProShares (SKF)
  • 0.9% General Electric (GE)


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InvisibleStonehenge
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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: geokills]
    #10026883 - 03/23/09 02:55 PM (14 years, 10 months ago)

Geo, you did very well to get out of wfc when it was near a high and then get back in at a lower price, even if you were very cautious. You are a trader or speculator as opposed to an investor. Seems like the traders do better... if they guess right. Buffet is an investor and he is the most successful in the markets of all. He laughs at transactional analysis which many other experts swear by.

I cleaned up today, up nearly 7% on all my investments though some did better than others. I'm wondering if I should take some profits and sit out or stay in even though dips are inevitable? I already have automatic sell orders in for ebay and ge.

We should talk more about transactional analysis or TA. The more simple forms of it is to notice levels of support and resistance. Support meaning price levels at which the stock seems to shoot up after buying occurs when it drops to that point. Resistance being levels at which selling occurs when it rises to that point. You can put a line on the chart and see the resistance and support points. But then sometimes it pushes through and goes higher or lower. Then we have a new resistance or support level. And then there are all sorts of chart formations to tell you when to get in and when to get out. Do you use charts, Geo?


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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OfflinegeokillsA
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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: Stonehenge]
    #10027172 - 03/23/09 03:29 PM (14 years, 10 months ago)

Something I've learned (the hard way), is that you either need to be able to adapt to the human psychology that ultimately drives the market, or sit out until it conforms with your specific strategy.  Those of you who have followed this thread from its beginnings a couple of years ago, know that I began trading with a long-term strategy, not interested in day trading or short-term holds.  I was content to initiate positions for a 12 - 18 month time horizon, not trying to avoid dips but instead using them to add to my favorite positions.  This strategy worked wonderfully... in a bull market!

Unfortunately for me, the market changed.  At some point over the last several months, fundamentals were thrown out the window.  I have no doubt that they will come back into play again, but for this very moment in time, the market is a highly technical one.  It is for this very reason that I have been putting a greater emphasis on moving averages, resistance and support levels in the updates I've been posting over the past few months (just take a look at my updates on 3/12 and espeically 3/19, flush with chartology).  It is also for this reason that I have been making an effort to become a more nimble trader - by locking in gains when the market gives them to me (such as my recent involvement with the financials), and learning to cut losing positions faster in order to avoid further downside (such as the TBT and HTS).  This isn't to say I have completely abandoned my old philosophy of course, as evidenced by my largest positions.

I welcome you to contribute any technical analysis to this discussion that you feel would be useful.  I will of course continue to post updates relating to my own positioning, but it would be beyond me to take on the responsibility of teaching detailed methods for technical/chart analysis.


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InvisibleStonehenge
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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: geokills]
    #10027600 - 03/23/09 04:25 PM (14 years, 10 months ago)

Geo, is walmart and altria part of your long term strategy? You've done better on your short term in and out play. WMT has been generally going down for about a year though it's up a little lately. MO fell like a rock about a year ago and has been basically a flat liner since then.

I see your charts on 3-19. We have no way of drawing charts and presenting them, or it would be very hard to do. We can link to charts already drawn. You gave no commentary on the charts except to mention that since the stock had gone up, it may go back down. There were support and resistance lines drawn and one had a wedge formation showing. There are of course a zillion formations including those and "head and shoulders" etc etc. Then there are the candlesticks which have become very popular. Candlesticks go back to the 17th century! The explanation and patterns associated with them sound like something out of an astrology handbook or the i ching.

Then there are bollinger bands, stochastics, and so on. Just with charts and candlesticks you can spend a lifetime studying them. I agree with you point about how investor psychology must enter into it. You can see it clearly with resistance and support. People set their auto buys and auto sells for a certain level. Then you have channels where the stock price bounces between those levels. I don't know that much about it so it would be nice if some expert came in and helped us. Otherwise, it's the blind leading the blind but we can share our experiences and what worked for us.

I've done a little channeling on ebay but then it broke out of the channels a few weeks ago. I'm looking for it to go up some more and then I'll sell it all and perhaps go short and try to channel it some more. GE I think may dip but I'm holding for a bigger profit before I sell any. I think ge is going to be great in the long run unlike ebay. You should have rebought your ge when it dipped. You got out at the right time but not back in. It just zoomed up again. You were brilliant on wfc but only bought  50 shares on the dip. You should have trusted your judgement more.

I had my second biggest day ever today. When I saw how high my portfolio was around 2, I was tempted to cash in figuring the inevitable drop was coming but it went up a bunch more. It's like sitting in on a high stakes poker game. You can get out any time you wish but if you are winning in the long run, better stay in and take the occasional drops.


--------------------
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: Stonehenge]
    #10028415 - 03/23/09 06:22 PM (14 years, 10 months ago)

and as if everything was going great, this might be the cog in the wheel

"China Pitches Idea of New Global Currency

Russia too

currently, foreign markets are not responding negatively to this news.... But i imagine that this would hurt the USA more than anything, as china is the number one buyer of our debt.

Perhaps its time for some shorts.


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PEACE

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"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: ZippoZ]
    #10035645 - 03/24/09 09:04 PM (14 years, 10 months ago)

ALDA PHARMACEUTICALS CORP - APH (TSX Venture)

Would love to hear some professional thoughts on this one.


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OfflinegeokillsA
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Re: Stock Update for March 23, 2009 - WFC, JPM, NAT, HTS, SKF [Re: Horse_Meister]
    #10038305 - 03/25/09 11:33 AM (14 years, 10 months ago)

I can only find Alda Pharmaceuticals listed on the Pink Sheets as a foreign issue (APCSF).  I don't have access to reliable information/coverage on that name, not to mention the fact that it trades so thinly (extremely low volume), that the price action is also unreliable as a single motivated buyer/seller could move the stock by mountains.  If you're set on the healthcare complex, I would look towards Gilead Sciences (GILD) or Celgene (CELG), two higher growth biotech companies with proven life-saving cancer drugs.  GILD's stock acts better, but I believe both will be long-term winners, and I'm holding both in my portfolio presently.  Note that the healthcare sector continues to face pressure on account of Obama's agenda to cut consumer healthcare costs.


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Stock Update for March 25, 2009 - SKF, GS, BEN, SDS, GLD [Re: geokills]
    #10039266 - 03/25/09 02:30 PM (14 years, 10 months ago)

Well that was a ho-hum trading session for me.  Quite an intraday swing, but ending pretty much where we opened.  I still think we are in for consolidation/pullback here and attempted to initiate several short sales which were ultimately stopped out.  Alas, these trades helped me a little bit, but a sharp reversal at the end of the day triggered my trailing stops for minimal gain.


  • Swapped out of ProShares UltraShort Financials (SKF) and shorted 25 shares of Goldman Sachs (GS) at $110.05 (stopped out @ $109.45)

    I was feeling a little uncomfortable with the very rapid moves in the SKF, so I tried to swap into individual shorts with tight stops instead.  My 3% trailing stop ended up getting triggered during the last hour of trading today... allowing me to walk away from this trade unscathed, though there was an opportunity to sell the SKF and cover my GS for a solid 5-8% profit that I missed.


  • Franklin Resources (BEN) - Sold Short 50 shares @ $53.50 (stopped out @ $52.20)

    This investment services firm was looking toppy and I wanted to short it on the heels of the 5% move higher this morning.  It was working great, until that last hour of trading when everything started to spike higher.  I had a trailing sell stop of 3% active (same that I used on GS), so I did get to pocket $50 or so on this trade.


  • UltraShort S&P500 ProShares (SDS) - Bought 30 shares @ $74.97 (stopped out @ $76.97)

    This is the popular leveraged ETF that returns two times the inverse movement of the S&P 500.  Feeling that the market is due for a pullback, I put this one on with a 4% trailing stop.  The stop here also got triggered at the end of the day, but I was able to walk away with another $50 on this flip.  If we open up huge (gap higher) tomorrow morning, I will be buying these shares back again.


  • SPDR Gold Trust (GLD) - Bought 12 shares @ $90.75

    The Fed's announcement last week to create $1 trillion in order to purchase government and agency debt cause gold to spike higher on inflation fears.  Much of this spike has been retraced, so I am using this pullback as an opportunity to take out some inflation insurance by beginning a position in this trust that moves 1 to 1 with the spot price of gold.


Discretionary Portfolio as of 3/25/2009:
  • 48.4% Cash
  • 10.3% Altria (MO)
  • 9.6% Walmart (WMT)
  • 8.9% Kinder Morgan Energy Partners (KMP)
  • 4.7% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 4.1% BP plc (BP)
  • 3.6% Gilead Sciences (GILD)
  • 3.4% Pepsico (PEP)
  • 3.3% Marathon Oil (MRO)
  • 1.9% Celgene (CELG)
  • 1.8% SPDR Gold Trust (GLD)


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Re: Stock Update for March 25, 2009 - SKF, GS, BEN, SDS, GLD [Re: geokills]
    #10039932 - 03/25/09 04:05 PM (14 years, 10 months ago)

  • I'm back in Goldman Sachs (GS) on the short side.

    Decided to sell 25 shares short @ $113 in after hours based on a review I caught by Alan Farley.  This trade is based on the technical chart formation.




    The technical evidence:

    * Rally into 200-day EMA resistance
    * Graveyard doji reversal at resistance
    * Rally into bear flag resistance
    * Negative OBV divergence at high

    As a side note, Morgan Stanley (MS) also traded into 200-day EMA resistance on Tuesday. This gives credence
    to the completion of a cyclical up wave in the broker-dealer group and the start of a notable counter-reaction.


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Re: Stock Update for March 25, 2009 - SKF, GS, BEN, SDS, GLD [Re: geokills]
    #10040313 - 03/25/09 04:54 PM (14 years, 10 months ago)

Wow, you plunged into charts, TA, candlesticks, and everything, it seems.  I don't want to put you on the spot but could you explain your reasoning on those things? I doubt that any of us understand all of that completely. Why use the ema rather than the dma? For those new to this, ema = exponential moving averag and dma = daily moving average.

It would be nice to get a discussion on candlestick patterns, which you mentioned, the use of moving averages and so on. I've heard that when the 50 dma crosses above the 200 dma, it's a good sign and vice versa when it crosses under. Have you used candlesticks before? What has worked for you?

Perhaps this needs it's own thread.

I notice in the chart that you have the stock moving upward in a channel. This rally in the channel continued even when the ema kept dropping but the ema is now leveling off and rising a bit. Have you used these indicators before? I haven't. What can you tell us about the stochastic chart?

OK, I did put you on the spot but you kind of asked for it. In the past you've said things like "it looks toppy so I sold" You've gone from that to this in one post. Lets digest what we've learned or are learning here.

I got hit tuesday but not hard compared to the killing I made on monday. Today, I was up, down, up, down and it looked like another losing day but I finished with a not too bad gain which offset a good part of tuesday's correction. I got saved at the end of today with a late surge. Lets hope the correction is over, the profit takers have their profits and we can move forward.


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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OfflinegeokillsA
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Re: Stock Update for March 25, 2009 - SKF, GS, BEN, SDS, GLD [Re: Stonehenge]
    #10040750 - 03/25/09 06:12 PM (14 years, 10 months ago)

An EMA (exponential moving average) and SMA (simple moving average) are both valuable tools, as for which one YOU will use, it's largely personal preference.  Suffice it to say that some sort of moving average is integral to any technical chart analysis.  The difference here is that the EMA is faster to move because it adds more weight to the most recent price action, which can help you identify a change in the trend quicker than an SMA.  A simple moving average reacts slower to immediate changes in price direction (since each trading day is given equal weight), but as a result may help you avoid a fake signal derived by a heavy hitter who is trying to manipulate a stock on a short term basis.

As for what works for me, I always look at 3 - 12 month charts to get a picture of the overall trend for a given stock, paying close attention to high volume movements as well as the 20, 50, and 200 day moving averages.  Once I feel like I have a firm grip on the overall trend, I will pay closer attention to the 5 day, 10 day, & 1 month charts in order to define my preferred entry or exit points.

I can explain my strategy, but I am by no means a professional technical analyst.  I rely heavily on the work from people like Helene Meisler, Dan Fitzpatrick and Alan Farley.  Helene provides very valuable charts that indicate major market trends/risks as indicated in her Technical Indicators: A Primer publication on TheStreet.com.  Dan Fitzpatrick runs StockMarketMentor.com, posts frequently on TheStreet.com and RealMoney.com, and appears on various CNBC programs.  You can view an exmaple of his work here and here.  Alan Farley runs Hard Right Edge and also writes for RealMoney.com.

Frankly, the topic of technical analysis does deserve its own thread, as valuable information will quickly be buried in this thread.

Here is a good tutorial for those of you interested in Technical Analysis to peruse: Technical Analysis: Introduction


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InvisibleStonehenge
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Re: Stock Update for March 25, 2009 - SKF, GS, BEN, SDS, GLD [Re: geokills]
    #10045760 - 03/26/09 12:49 PM (14 years, 10 months ago)

You give one of your reasons for shorting it as "* Rally into 200-day EMA resistance" However, I see the ema leveling off and going upward. How does this indicate a good time to short? What is the bear flag you spoke of? Explain the negative OBV divergence? And how did you interpret the candlesticks?

I think we all just take other people's say so on many things. I know I've done that a lot at times. I bought a couple stocks because you recommended them and they have gone up. But I'd like to know the whys and wherefores of it if possible. Are you taking other people's say so that this is a good time to sell short and the technicals they mention sound good? Probably over 90% of investors do it that way. I'm trying to get away from that.

Maybe you should start a thread on TA just for that. I agree that a thread of this length tends to put people off from reading it. And the gems get buried in the day to day recounts of stock moves and so on. Maybe if you did some research and I did the same, we could come up with a really informative thread? We could share what we know, what we have researched and perhaps give examples of when it worked and when it didn't. Nothing always works well. I did some channeling on a stock a while back and made money but then it broke through support and I just recently got back to the black and have not returned to channeling it again.

I'm having a great day so far but I know anything can happen in the closing hours and minutes. I read a number of good economic indications in the news today. This could turn out to be another great week. I predicted a while back that we had passed the bottom and it looks more and more like I was correct.


--------------------
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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Technical & Fundamental Analysis on Goldman Sachs (GS) [Re: Stonehenge]
    #10046121 - 03/26/09 01:47 PM (14 years, 10 months ago)

The point by point list provided in post#10039932 was quoted from the article linked just before the chart image (should have been more clear on that).  Though I'm fairly certain that the entire list does lend support to the short thesis, my primary deciding factor in shorting Goldman Sachs (GS) is that it is currently sitting at the 200 day SMA in conjunction with the fact that the stock has had a tremendous run and is due for a pullback since nothing goes up in a straight line.

For the record, I use SMA's in my own analysis, but the chart shown was drawn by Alan Farley and he seems to prefer the faster moving EMA.  Given today's price action at the time of this writing, both 200 day moving averages are flat and have not turned higher.  The trend in GS is definitely looking to continue positive in the intermediate term, but I believe that we should see a short-term pullback to the 50 day moving average around $90, which will likely serve as strong support if the uptrend stays intact.  Given Goldman's top position in its sector, I have little reason to believe that it will break its intermediate term uptrend... but the financial sector is a high beta group, volatile and reactive to news, so who really knows?  This is where a tight trailing stop becomes invaluable.

On Balance Volume shows the relationship between the number of shares traded on up days versus down days.  On a day the stock closes higher, the total volume for that day is added to the line; when the stock closes lower, the total volume for that day is subtracted.  The OBV divergence indicated in the aforementioned chart shows that the volume on up days is now less relative to the volume on down days.  This is shown given that the OBV was considerably higher in early February when GS was around $95, compared to where it sits today at around $110.

So we have my rational for what could go right (which is largely technical)... now let's take a look at the risks (which happen to be largely fundamental).  Defining your risk is extremely important.

There is one strong headwind on my GS short, and that is the end of the quarter.  Markups or "window dressing" as it's often called, is the practice employed by major money managers who want to look good on their quarterly reports.  During the last days of the quarter, they'll tend to pile into the stocks that have shown the most sizable gains over the past quarter so that they look like they really knew what they were doing when people who read their quarterly summary see that they're holding positions in the biggest winners (even if the manager only got into those names right before the quarter ended and didn't realize any of the previous gain).  Since GS has undoubtedly been a big winner here, I would not be terribly surprised to see it hold steady through the end of the month.

A second headwind that may or may not materialize, is the pressure put on the FASB (Financial Accounting Standards Board) to modify the Mark-to-Market rules by April 2nd.  If this happens, it could provide for more strong upside to the financial sector, no doubt GS included.  Therefore, I am keeping a tight stop on this trade.  The position will automatically close out if Goldman starts to turn a few bucks higher.  In the meanwhile, I believe that we could have a hard time breaking through 833 on the S&P without some more consolidation... and given that the banks have been down today while the rest of the market has been markedly higher, I am still comfortable on this short.


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Stock Update for March 26, 2009 - FXI, HSIC, MO, CELG [Re: geokills]
    #10046378 - 03/26/09 02:24 PM (14 years, 10 months ago)

The market has continued to show excellent resilience, bouncing off of yesterday's intraday low and maintaining its uptrend.  833 on the S&P 500 is a strong level of resistance, but there are a couple of things (mentioned in my last post) that could continue to fuel the markets.  Namely, end of quarter window dressing and the potential for modified mark-to-market account rules in early April.  On the other hand, the market has come a long way in a short time, and these types of rapid moves often face some consolidation / backing and filling / pullback, call it what you will, these things don't tend to go up in a straight line.  I've seen some nice profits over the past few weeks, and have been lightening up on my long positions in anticipation of a pullback.  If we get it, I would certainly like to put that money back to work.  In the meanwhile...

  • iShares FTSE/Xinhua China 25 Fund (FXI) - Sold 30 shares @ $30

    This is an ETF of Chinese stocks (many financial issues), that affords me exposure to what could very well become the world's next super power.  China has been taking efforts to stimulate their economy, but this ETF has spiked some 30% over the last month and I would like to protect a piece of my 13% average gain.  I will definitely be looking to add back to this position if the shares fall back to $28 or below.


  • Henry Schein (HSIC) - Sold SHORT 60 shares @ $40.10

    I have attempted to short this name in the past with no success, but this distributor of healthcare products and services to office-based practitioners (largely dental) is up a whopping 21% in the past few weeks and I believe is ripe for a pullback.  With the Obama administration putting pressure on the healthcare industry to lower consumer costs, I don't think HSIC is poised to grow as rapidly as it has in the past.  I have a tight $1.50 trailing stop on this trade to protect my downside if I'm wrong.  Because if the market breaks through 833 and 850, it won't be long before we see 900 on the S&P.


  • Altria (MO) - Sold 239 shares @ $17.05

    Altria has been able to raise prices in order to offset what has seemed to be ever-increasing federal excise taxes.  However, with these costs being passed on directly to the consumer, there is fear of lower sales volume (sales contraction).  The dividend is still very attractive, and MO will definitely be able to continue paying it, but I fear for some near-term weakness now that the stock has moved 20% off of its lows.  I am also weary that Doug Kass initiated a short on the shares today.  Doug is a smart guy who gets these things right more often than not.  I honestly don't feel very comfortable betting against him so I'm going to lighten up on this position.


  • Celgene (CELG) - Closed position at $46

    Sold my last 25 shares at a loss, because this stock has been acting really piss poorly and still faces headwinds from the political climate regarding cutting consumer healthcare costs.  While Celgene shouldn't be materially affected from government actions pertaining to healthcare, it is not immune from the selloff in the entire sector, and therefore I will look to get back into this position once the shares have come down closer to $40.  I will maintain my position in GILD, as that stock has shown more resiliency.


Discretionary Portfolio as of 3/26/2009:
  • 63.5% Cash
  • 10.7% Walmart (WMT)
  • 9.8% Kinder Morgan Energy Partners (KMP)
  • 4.5% BP plc (BP)
  • 3.9% Gilead Sciences (GILD)
  • 3.9% Altria (MO)
  • 3.8% Pepsico (PEP)
  • 3.8% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 3.7% Marathon Oil (MRO)
  • 2.0% SPDR Gold Trust (GLD)

  • 4.3% margined short equivalent Henry Schein (HSIC)
  • 5.0% margined short equivalent Goldman Sachs (GS)


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InvisibleStonehenge
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Re: Stock Update for March 26, 2009 - FXI, HSIC, MO [Re: geokills]
    #10046860 - 03/26/09 03:37 PM (14 years, 10 months ago)

OK, that's about the way I figured it but you have to expect some questions when you present material like that. I will probably start a TA thread in the future unless you do it yourself.

I notice that you cut back about half of your altria stock which had been going nowhere. Kmart is on an upswing and is approaching it's 3 month high. But historically, it's been fairly low except for 08. Neglecting the spike in 08, it's higher now than it's been since 04. I find it odd that you have sold most of your positions when the market is recovering from a crash and from the mini crash early this month? You are even shorting a stock. Seems like this is the time to go long, but what do I know?

I finished the day with a solid gain of over 2.7%. This week looks to be a major week unless it tanks tomorrow. With the news saying rosy things, I predict more upward movement with the usual dips along the way. I am trying to learn more about the technical aspects although I've been doing great lately just sitting and letting them do their thing. A new thread might bring out people who have crossed this one off their list because of the length or some factor. There must be some experience out there or at least others who are interested. It's getting down to mostly just you and me on this one.

I see gld is at 91.93 and yet gold is at 934 closing price. Does that mean gld will shoot up to 93.4 tomorrow and should we have bought some today at the low price? I see you bought 1.2 oz recently (equivalent). I see my slv stock is about 9 cents below silver closing price but your gold is about $1.50 below.


--------------------
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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OfflinegeokillsA
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Stock Update for March 27, 2009 - FCX, FAF, BGZ, GLD [Re: Stonehenge]
    #10054039 - 03/27/09 02:15 PM (14 years, 10 months ago)

> It's getting down to mostly just you and me on this one.

No biggie.  I'm doing this firstly for myself, to learn from my mistakes and see what works by being able to review my detailed history in this trading journal.  If other people wish to add additional discussion, I'm more than happy to have it; but I'll keep on posting my updates either way. :hehehe:


In an effort to become a more nimble and active trader - which seems to be a solid strategy for capitalizing off of the volatility in this rapidly paced market - I'm pressing my shorts pretty heavily today.  Of course, the market has indeed developed an intermediate-term uptrend, so I am maintaining tight trailing stops on each short position in order to clearly define my risk and cut my losses quickly if the timing proves wrong. 

Nevertheless, the volume in the S&P has been slowing down markedly over the past week and a half, and on a short-term basis the market appears to be very overbought.  I think we can start pulling back here sometime during the next week or two, though I also believe that significant buying support will re-emerge at around 750 - 780 on the S&P... which is where I will cover my shorts (if I'm not stopped out first).

This is the end-of-the-quarter, where large money managers tend to pile into winning stocks in order to look good on their quarterly reports, thereby providing support for the market.  We may also get modified mark to market accounting rules next week from the FASB, which certainly has the potential to move the market higher.  But we're also in for some potentially sobering economic data such as the consumer confidence and unemployment numbers.  Should make for an interesting week ahead!


  • Freeport McMoRan (FCX) - Sold short 100 shares @ $42.70

    This thing is up some 169% from its low.  It's up almost 40% in March alone!  I like FCX, a
    commodity play (mainly copper & gold) with lots of exposure to China... but volume has been
    thinning out all week and this one can stand to give up some points on a pull back below $40.


  • First American Corp (FAF) - Sold short 100 shares @ $27.10

    Property/casualty insurance company, up 40% in a few weeks... due for a pullback.


  • Direxion Triple Bear Large Cap (BGZ) - Bought 40 shares @ $57.75

    This leveraged ETF returns roughly 300% of the inverse daily performance of the
    Russell 1000 index.  Bigtime betting on the downside.


  • SPDR Gold Trust (GLD) - Bought 12 shares @ $90.60

    Adding to my gold for security/insurance, inflation hedge.


Discretionary Portfolio as of 3/27/2009:
  • 65.6% Cash
  • 12.2% WalMart (WMT)
  • 11.0% Kinder Morgan Energy Partners (KMP)
  • 5.0% BP plc (BP)
  • 4.8% Direxion Triple Bear Large Cap (BGZ)
  • 4.5% Gilead Sciences (GILD)
  • 4.4% SPDR Gold Trust (GLD)
  • 4.3% Pepsico (PEP)
  • 4.2% Altria (MO)
  • 4.2% iShares FTSE/Xinhua China 25 Fund (FXI)
  • 4.2% Marathon Oil (MRO)

  • 4.9% margined SHORT equivalent Henry Schein (HSIC)
  • 5.4% margined SHORT equivalent First American (FAF)
  • 5.5% margined SHORT equivalent Goldman Sachs (GS)
  • 8.6% margined SHORT equivalent Freeport McMoRan (FCX)


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OfflineRedstorm
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Re: Stock Update for March 27, 2009 - FCX, FAF, BGZ, GLD [Re: geokills]
    #10054572 - 03/27/09 03:40 PM (14 years, 10 months ago)

Definitely keep posting. I read this every day. I don't really post since I don't have the funds yet to comfortably be able to put into the market, but I love learning.

I have a relatively small position in one stock, but that's just there so I can make sure I always keep an eye on things. That position is up 33% though. :wink:


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