In association with
The first game with the handbook of dividend achievers. A screen on MSN for payout growth, earnings growths, and revenue growth turned up 81 companies. How many of these are listed in the handbook?
I may be using the incompleteness of information at MSN (and hence companies not showing up in the screen that should) as my dartboard, but picking from 15 companies is something I can do. Picking from 320 companies isn't. |
| 8:38 AM |
| Got the Mergent Handbook of Dividend Achievers 2000 Edition. A list of 320 companies who have raised their dividends every year for at least 10 years. This will somehow help me pick stocks for the 401k. I probably jumped the gun and should have waited for the 2001 edition, since I'm not messing with the 401k until December. |
| 8:05 AM |
| Why I'm wrong about HOTT I'm judging a clothing store by their nick nacks. The clothing is high quality. HOTT goes into my retail stocks to watch list with GPS and JWN. |
| 7:37 AM |
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CIT held out yesterday. Hopefully, it'll keep going up on Monday. Meanwhile, I've been pondering long term buy and hold securities. Not that I have the money to put into the market for more than a couple of days, but who knows, maybe I can siphon off a few bucks next time we blow out all our employee stock options. I'm thinking retail. As consumers, we know what retailers appeal to us and which ones suck. That's better information than any annual report. So.. where do we buy stuff... Restaurants We do take out from a Chinese restaurant near home every Friday evening. They haven't IPOed yet. We eat at Red Robin a lot. They're a private company, but they're expanding rapidly, so they're worth watching. We love the Old Spaghetti Factory. My pop is one of their biggest fans, and so are we. It's the only restaurant we drive into Seattle for. Again, not publicly traded, but we can hope. Grocery We shop at QFC and Fred Meyer. QFC has better meat and produce. Fred Meyer has a pharmacy, gardening, toys... it's a better one-stop shopping experience. Both chains are owned by Kroger (KR). Books Barnes and Noble (BNBN) and Border's Books (BGP) are a toss up. We do shop at Amazon, but it's hard to bet on a dot com. Clothes We like Old Navy. They're owned by the Gap (GPS). We also like Nordstrom's (JWN). Most of their stuff is too expensive for us, but we like the children's shoes. Top of the line is worth it for the kid's feet. Home Improvement We used to like Eagle. It sucks now that it's Lowes (LOW). The employees used to be extremely knowledgeable and helpful. Now they're not so bright. Either Lowes decided to mix it up and put the plumbing expert in lighting, or they told their employees not to offer advice for fear of liability. Also, they sometimes let the phone ring and ring when you get transfered to a department. Also, we bought a shower door - a special order item. We had to listen to the phone ring and ring to follow up on it when it was weeks late. When we finally got it, one of the employees mentioned that it had been sitting there for weeks. They were supposed to call us when it arrived. So, Lowe's sucks. But we like Home Depot (HD). Costco Ticker: COST. Crafts Michael's (MIKE). Coolness What triggered all this thinking about adding to the long term portfolio with retail stocks was ODP finally going up and HOTT showing up on the 52 week high screen. HOTT is Hot Topics, that store in the mall with the cool stuff. I have mixed feelings about HOTT. On the one hand, they have vampire clothes. They have purple hair dye. They have cool stuff. On the other hand, I haven't spent as much money there as I could. When I was shopping for gargolye and vampire related stuff, I passed on their merchandise and walked down the mall to buy at Spenser's Gifts. The problem with Hot Topics is the Wolfman Jack syndrome. Here's my theory on Rock and Roll. Baby boomers in general seem to have the theory that teenagers are into rock and roll, but it's a phase they grow out of. Yet, all of their kids (who are now in their 30s) didn't grow out of it. The difference isn't that people have changed since the 50s. The difference is that marketing has changed. In the 50s and 60s, Rock and Roll radio was targeted at teenagers only. Wolfman Jack howling at the moon is just plain silly and no self respecting adult would be caught dead listening to it. But that's not so true anymore. There is a great divergence in the musical tastes of my peers (30-somethings), but in general none of them are into easy listening. Some are into heavy metal, some are into punk rock, some are into trance and techno, some are into goth, some are into alternative, some are into pop. Why didn't we lose interest in music after college like our parents? Marketing! MTV is not aimed exclusively at teenagers. VH1 isn't aimed at teenagers at all. The music industry hasn't abandoned us. That's what bothers me about Hot Topic. They have a good supply of little caskets and skulls and bats and assorted other goff stuff, but it's all cheap plastic. It might work well into the allowance of a 12 year old, but the 38 year old is going to walk down the mall to Spenser's Gifts and buy a gargoyle fountain for $50. That's what I did anyway. I bet if they had a wider range of price and quality, they'd be surprised how much money a 12 year old will spend on a quality little wood coffin. My coolness pick would be Spencer's Gifts, but it's owned by Universal Studios which is owned by Seagram which has merged into something larger. This is so far removed from coolness, that I don't think I have a coolness pick after all. |
| 9:17 AM |
| CIT is down a nickle for the day. Maybe this is one of those 3 day streaks that end instead of turning into 4 day streaks - that happened 45% of the time in the past 868 days. Maybe the analysis can be kept simple, no resorting to fast lines and moving averages, but maybe there's a simple measure that indicates which of the streaks continue and which end. Trading volume is probably the key. The volume stays high as the stock is still rallying and drops when the stock is reaching it's new base. All your base are belong to us. |
| 7:31 AM |
| Bought 50 shares of CIT at 36.64. Stop at 35. Next stop at 37.50. |
| 6:40 AM |
| Wait a minute!!! The Europe and pre-market trading numbers are older news than the GDP announcement! It's all good! |
| 6:35 AM |
| The good news on the GDP... Is it good news? Or are investors hoping for negative economic reports so that the Fed will continue to slash rates? |
| 6:29 AM |
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Breaking news: U.S. 1Q GDP surges. According to CNNfn.com,
"Bond prices fell after the report but stock futures held their gains, pointing to a stronger start for stocks on Wall Street." But I'm not convinced that the market is opening up. True, futures are up, but my other two indicators don't look so positive. US stocks are getting creamed in Frankfort and before market trading is mixed at best. Verisign (good thing I had a stop on that short!) is up $7 in pre-market trading. Lucent and Proxicom (PXCM) are also up, but AMGN, SBUX, EXDS, PPRO and UPCOY are down. In Germany, Exxon Mobile is up, but Microsoft, Yahoo, AT&T, Intel, Citigroup, Ford and Wal-Mart are all down. Since futures are up, arbitrage trading will guarantee that the market will open up, but these other indicators aren't positive, so I'm thinking that maybe it won't be up for long. On the other hand, maybe the futures market is the only indicator worth considering. It'll be interesting to see how the morning plays out: for the market in general and for CIT in particular. |
| 6:27 AM |
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The Nasdaq closed down. The Dow and S&P 500 managed to close up, but it doesn't look good for tomorrow. I'll go ahead and finish the analysis, even though it probably won't result in a trade. CIT and ROP are still in the running. PHM is doing extremely well, but was only up 5.32% today as compared to 5.45% yesterday. What the heck, let's leave it in the mix too.
Looks like the winner is CIT. |
| 1:39 PM |
| HI is closing down. It's off the list. |
| 12:50 PM |
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The 52 week high indicator on MSN might not be entirely accurate, but it's the best way I know of to screen down the hundreds of companies trading at 52 week highs today. Positive and growing earnings, good average volume, price over $20 and 52 week high gives me: XEL, KMG, PNM, AHC, MDU, LEN, PPDI, BUCA, TX, CHBS, OXY, EQT, SGR, PHM, KMP, CHV, CIT, SYK, SHFL, HCP, ACS, ROP, STRA, HI, ITT, TFX, ATR, RCBK, DRI, SONC. LEN is down a nickle at the moment. BUCA is down a buck fifty. CHBS is down. SGR is down. SHFL is down. ATR is down. So is SONC. This leaves 23 stocks to consider: XEL, KMG, PNM, AHC, MDU, PPDI, TX, OXY, EQT, PHM, KMP, CHV, CIT, SYK, HCP, ACS, ROP, STRA, HI, ITT, TFX, RCBK, DRI. KMG, AHC, TX, CHV, and DRI closed down on the 24th, so they're not really on a roll yet. PNM, MDU, PPDI, OXY, EQT, KMP, ACS, ITT, TFX, and RCBK had at least one day in their current streak that didn't close at as high a percent gain as the day before (so they may be cooling off). This leaves XEL, PHM, CIT, SYK, HCP, ROP, STRA, and HI. Hopefully, some of these will close at a higher percent gain today than they did yesterday. |
| 12:35 PM |
| It's all up this morning (all the major indices that is). If it closes up, I'll pick a stock this evening to buy tomorrow (if it opens up tomorrow too). |
| 6:37 AM |
| This morning's open is mixed. That means no trading today or tomorrow. |
| 7:01 AM |
Lost $100 today. The system isn't working like it should. I can think of two things wrong with it.
AOG closing prices
To address the first point, I'll have to trade even less often. Instead of buying if the market opens up, I'll only buy if the market opens up, closes up and opens up again. Instead of shorting if the market opens down, I'll only short if the market opens down. closes down and opens down again. Today the market opened up, but it's closing down. No matter what happens tomorrow, I'll sit the day out. Hopefully, I won't systematically protect myself from trading altogether! |
| 12:32 PM |
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The market was up this morning, so I'm long 50 shares of AOG. The MSN stock screener seems to be very unreliable. AOG isn't even showing up on the screen anymore even though yesterday's high was higher than Friday's. Yesterday's close was higher than Friday's close. MSN's "advisor alerts" just aren't always up to date. |
| 7:26 AM |
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Dang! The "new 52 week high in last trading day" on the MSN stock screener isn't up to date. Of the 15 companies that made it through the screen, 6 didn't trade at their 52 week high today - they did Friday. So, any company that hit a 52 week high today, but not on Friday, probably didn't make it through the screen. Oh well, AOG is still on the list, so if the market opens up tomorrow, I have a buy.
Not trusting the MSN screener to find new 52 week lows either, here's the list of 52 week lows over $20 from trading-ideas.com: BRP, GBCB, SBC,SID, TAR, TBH, TMB, TND. They all pay dividends, so there's no short pick for tomorrow. |
| 6:22 PM |
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The market is going to open down. Too bad there's nothing to short. Maybe tomorrow. My stake is down from $5000 to $3000. We need a closet system. On the bright side, this gives me more time before the kitchen remodel sucks away the entire trading stake. |
| 6:14 AM |
| This streak analysis thing might just be a record of how many heads you get in a row when you toss a coin. Maybe every stock has a 50% chance of going up and a 50% chance of going down every day. I tend to think that it's not just random. These 6 companies have recently traded at 52 week highs. They are companies that make money. They are companies that are making more money now than they did in the past. These factors make them more likely to sustain rallys, and that's why there's more percentages in the table above 50% than below 50%. (or maybe that's just how the coin landed!) |
| 5:22 PM |
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| 4:43 PM |
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Screen for Monday. Nothing to short. Of those companies at 52 week lows and negative earnings and no dividends, the highest price is $10.55. 20 stocks pass the long screen: NFB, CEI, MTON, AOG, CP, LEN, TARO, CHBS, ACF, SGR, KMP, HOTT, CIT, CBL, DORL, ROP, ESI, BPOP, ITT, SOTR. Of this, the ones that closed up were: CEI, AOG, TARO, KMP, HOTT, CIT. Maybe I'll have to do some half baked streak length analysis on these. |
| 1:50 PM |
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Testing assumptions I've been assuming (in a fit of blind ignorance?) that if a stock closes up for the day, it's more likely to close up the next day than down. Also, if a stock closes down for the day, it's more likely to close down the next day than up. Is this true? Fortunately, we live in the information age. Let's look at some historical data. QQQ The Nasdaq 100 tracking stock. From March 10, 1999 to April 19, 2001, there were 279 up days for which the closing price was higher than the previous day's closing price (or the same as the previous days closing price and the previous day was an up day). There were 254 down days for which the closing price was lower than the previous day's closing price (or the same as the previous days closing price and the previous day was an down day). 135 days were up days that followed down days. 135 days were down days that followed up days. So, 270 days switched direction. 262 days were the same direction as the previous day. My assumption is wrong just over half the time (50.7519%). BRCM Broadcom, my favorite stock to short when it was still shooting down. From Jan 19, 1999 to April 19,2001, there were 290 up days and 277 down days. 297 days were the same direction as the previous day. 269 days were switch days (134 to down, 135 to up). My assumption was right just over half the time (52.4735%). SGR The stock I would have bought today if the market was opening up. From Jan 20, 1999 to April 19,2001, there were 288 up days and 279 down days. 318 days were the same direction as the previous day. 248 days were switch days (124 up and 124 down). My assumption was right over half the time (56%). I'm also assuming that if a stock closes up two days in a row, then it's more likely to close up than down on the third day. QQQ 262 days of the last 532 were in the same direction as the previous day, that makes them 2 day streaks. Two such days in a row is a three day streak. There were 118 three day streaks, 50 four day streaks and 20 five day streaks. Two day streaks end rather than becoming three day streaks 55% of the time. Three day streaks end rather than becoming four day streaks 58% if the time. Four day streaks end rather than becoming five day streaks 60% of the time. BRCM 297 of the last 566 days were two day streaks. 151 were three day streaks. 78 were four day streaks, and 41 were five day streaks. Two day streaks become three day streaks 51% of the time. Three day streaks become four day streaks 52% of the time. Four day streaks become five day streaks 53% of the time. No wonder I love BRCM! SGR 318 of the last 566 days were two day streaks, 169 three day streaks, 85 four day streaks, and 41 five day streaks. Two day streaks became three day streaks 53% of the time. Three day streaks become four day streaks half the time (50.3%). Four day streaks end rather than becoming five day streaks 52% of the time. The 19th was an up day, the 18th was a down day, the 12th through the 17th was a three day up streak. If today is up, it'll be a two day streak. This limited and bizarre analysis seems to confirm my wild hypothesis. Not in general. Some stocks change direction more than they run in streaks. But for at least a couple of the stocks that have shown up in my screens, there seems to be a slight edge in betting on a streak. I'll have to do this sort of deceptive data mining considering 52-week highs and lows, since that's what I actually use to pick the stocks. |
| 7:59 AM |
| Futures are down, pre-market activity is mixed (7 big winners, 5 big losers), US Stocks in Frankfurt are mixed. It won't be boring, but I'll watch from the sidelines. |
| 6:13 AM |
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| 4:45 PM |
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Well, that sucked. Out of APL at 31.5. Still, gotta love stop orders. It's at 29 now, down 9.43%. Make that 28.90. Screening for tomorrow. 93 stocks traded at 52 week lows yesterday. 72 of these don't pay dividends. Of the 72, the highest previous day's closing price is $17.22. There is nothing to short (yet). 233 stocks traded at 52 week highs yesterday. 138 of these have prices of at least 20. 127 of these have positive earnings. 63 of these have growing earnings. 42 of these have an average daily volume over the last 2 weeks of at least 100,000 shares. Of these 42 contenders, which were on the list 2 days ago? CP, MUR, SGR, UCU, UDS, VLO (damn! shoulda stuck with it!) So, if the market opens up tomorrow, and if one of these 6 closes up today, I'll buy some stock tomorrow morning. |
| 7:02 AM |
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Finally stumbled across the Level II quotes on Power E*Trade. Unfortunately, APL is an AMEX stock and the Level II stuff only seems to be correct for NASDAQ stocks. Still pretty cool nonetheless. Learned something about interday graphs of low volume stocks (not really low volume stocks, they don't really have interday graphs to speak of at all). When you see a square wave in an interday graph, what happened is that the bid and ask just sat there and buyers and sellers popped in and did their trade without changing anything. When someone sold, it was at the bid. When someone bought, it was at the ask. So, you get a square wave. The whole market went nuts today just before 11:00. The fed anounced a surprise interest rate cut. The Nasdaq went nuts and closed up something like 10%. APL ignored the news for about an hour and then traded a little lower on next to no volume. Oh well, at least I didn't lose any money. The gain isn't locked in yet, but APL still seems to be up at least a couple percent a day, so we'll see. I'm starting to get more patient about the game. If a trade doesn't lose in the first hour, it'll probably win. If a stock goes up 1% a day, it'll double in 2 or 3 months. Hopefully, APL won't gap down overnight and I can up the stop a little tomorrow. |
| 1:36 PM |
| Got APL at 32.45. Have the stop at 31.5, waiting for a bid of 33 to move the stop up to 32.75. Did I mention I have Power E*Trade now? If you do 30 trades a quarter, you get streaming real time watch lists. At 10 trades a month, I'm paying E*Trade $200 in commissions. At financial cafe it would be $175 (the commissions are much lower, but streaming real time quotes is $70/month). If I ever get the portfolio up to $20k, and if thefinancialcafe.com is still around when I do, I might have to switch. They have even cheaper commissions if you park a pile of dough there. |
| 6:48 AM |
| All signs point to yes, so I'm buying 150 shares of APL. |
| 6:32 AM |
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52 week low, closed down, price over $20: AET, FLA.B, LTRE, NPK, PHG All except LTRE pay dividends. LTRE has positive earnings. There's nothing to short. Long. Yesterday's list was: AHC, ALLY, AMN, APD, APL, APPB, ASH, CP, EME, EQT, HOC, HSE, KMG, MUR, SGR, SRE, TX, UCU, UDS, VLO, WGR Of these, which are still at 52 week highs? AHC, AMN, APL, ASH, CP, EME, EQT, HOC, HSE, KMG, MUR, SGR, SRE, UCU, UDS, VLO
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| 1:45 PM |
| Well, that's why I have rules! Got out of Verisign at 43.01 with a loss of $140.90. The bright side... still up $800 overall. |
| 6:59 AM |
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All signs point to down. So, I'm going to break my rule. I should sit the day out because nothing worth shorting is trading at a 52 week low. If the market has turned back down, the big losers will be scraping the bottom again later this week. That's when my rules say I should start shorting again. The rules are to protect me from false starts. How about if I just bend the rules? Instead of stocks that traded at 52 week lows yesterday, I'll look at stocks that have traded at 52 week lows in the last month.
So I'm 100 shares short VRSN at 42 with a stop at 43. |
| 6:48 AM |
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Got out of that call at 4 with a (shudder) limit order. Tomorrow, if the market picks a direction, it'll be back in with a stock purchase or a short sale. Companies at 52 week highs: ACI, AFAM, AHC, ALLY, AMN, APD, APL, APPB, APU, ASH, ASP, ATK, BARR, BBI, BMED, BPOP, BRKL, BWFC, CENX, CHKR, CP, CPRT, CSX, DEBS, DYII, EDO, EEI, EFTD, EGN, EME, EQT, ERTS, ETT, FBCI, FF, FFFL, FFIC, FGP, FLIR, FLM, FLYA, FSVB, FTO, GOSHA, GTY, GVA, HCC, HCN, HIB, HOC, HRP, HSE, HTB, IRETS, ITRI, IXX, JCI, JEC, JH, KEYS, KMG, KMP, KOSS, LAF, LAYN, MAGI, MARPS, MDU, MEOH, MGAM, MGAMW, MMSI, MODT, MUR, NAVG, NFB, NGT, NNN, NOR, NSDB, O, OCLR, OSG, PNG, PNM, PRENP, RGFC, ROIL, RSG, SGR, SHBK, SJT, SKIL, SOL, SRE, SRK, STNV, STRA, STRC, STU, STW, TMM, TMM.A, TSS, TX, UCU, UDS, UG, UHT, UNF, USLB, USLBW, USU, VCFC, VGR, VLO, VPHM, WASH, WGR, WHES. Closed down today: APU, ATK, BRKL, CPRT, CSX, EDO, ETT, FF, FFFL, HCN, HRP, JCI, JEC, KMP, MDU, MODT, NGT, NOR, RSG Stock price under $20: AFAM, ASP, BARR, BMED, BWFC, CENX, CHKR, DYII (hey!), EEI, EFTD, FFIC, FGP, FLIR, FLYA, FSVB, FTO, HIB, IRETS, ITRI, IXX, JH, KEYS, MEOH, MGAM, MGAMW, MMSI, NAVG, NNN, NSDB, PRENP, RGFC, ROIL, SJT, SRK, STNV, STW, TMM, TMM.A, UG, UNF, USLB, USLBW, USU Negative earnings: ACI, BBI, FLM, LAYN, PNG, SKIL, SOL, VPHM, WHES Earnings not consistently growing: DEBS, EGN, GVA, HCC, LAF, MAGI, NFB, OSG, PNM, SHBK, STRC, WASH Low volume: BPOP, FBCI, GOSHA, GTY, KOSS, MARPS, O, OCLR, STRA, STU, TSS, UHT, VCFC, VGR My employer: ERTS Something weird: HTB That leaves: AHC, ALLY, AMN, APD, APL, APPB, ASH, CP, EME (nice!), EQT, HOC, HSE, KMG, MUR, SGR, SRE, TX, UCU, UDS, VLO (might get right back in!), WGR Companies at 52 week lows: ACTT, AET, AG, AIF, AMCV, BELM, BPC, BTGC, CAS, CHRZ, CLGY, CLTX, CMAL, CSAR, FDY, FEP, FGHC, FLA, FLA.B, FLCG, FLOW, FLXS, FLY, GFR, IFN, JAS.B, JDEC, LNTY, LYNX, MATV, MDA, MM, MXB, NCS, ONXS, OST, PTRY, PUMA, QCHI, RENN, RIV, RSYS, SCOP, SCR.A, SCR.B, SGT, SLT, STAA, TNOX, TOE, TRT, USG, UTHR, VICM, VICR, WDFC. Stock price under $20: ACTT, AG, AIF, AMCV, BELM, BTGC, CAS, CHRZ, CLGY, CLTX, CMAL, CSAR, FDY, FEP, FGHC, FLCG, FLOW, FLXS, FLY, GFR, IFN, JAS.B, JDEC, LNTY, LYNX, MATV, MDA, MM, MXB, NCS, ONXS, OST, PTRY, PUMA, QCHI, RENN, RIV, RSYS, SCOP, SCR.A, SCR.B, SGT, SLT, STAA, TNOX, TOE, TRT, USG, UTHR, VICM, VICR, WDFC Positive earnings: AET Low volume: BPC, FLA, FLA.B That leaves: Nothing to short!!! The four that are trading at over $20 all pay dividends. |
| 1:52 PM |
| Mixed indicators before open. Futures are mixed (DJI up, Naz down, S&P down), US stocks in Europe are up, big losers vastly outnumber big losers. Maybe we're ready for another leg down. |
| 6:14 AM |
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Trading System version 0.21
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| 8:20 AM |
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It's Good Friday, so the market is closed. So far, I haven't seen the bid go below 2.05 on VLOEH, but I don't like the way options move. Had I had a stop on VLOEH on Wednesday at 2.50, I would have got out at 2.05, even though the bid/ask range was between 2.05 and 2.50 for a couple of hours. It would work if there were such a thing as an ask stop - enter a market order to sell if the ask gets below the stop price. Now that I have "Power E-Trade" and real time streaming watch lists, I'm thinking about scripted trading. Once I'm in a position, my system for following it is completely mechanical and could be completely scripted. |
| 7:56 AM |
| I don't think I like options. The volume is so low that stop orders are basically worthless. The bid/ask range can go all over the place without any trades happening... for days. So you either just let it ride or you have to watch it continually. Yuch! |
| 11:01 AM |
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Futures are up, US stocks in Frankfort are up, and in pre-market trading winners are creaming losers. Winners: SONS, CHINA, INTC, AMAT, AMCC, PALM, AWEB, and my old buddy BRCM (up $3.70 to $33.50). Losers: INFY. Looks like another day of rally. Let's find a call to buy. Oh my goodness! Hundreds of stocks trading at 52 week highs. So here's the screen:
Bought 2 May 40 contracts (VLOEH) @ 3. Put in a stop order at 2. When the bid gets up to 3.75, I'll move the stop order up to 3.5. Come on rally! |
| 6:48 AM |
| The DYII stop was hit right before close. Out with a $28 profit after commissions. |
| 1:24 PM |
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Locked in the profit on DYII (well, barring a gap down overnight or anything like that) with a stop at 18.25. Pondering price range. If you get in a stock in the teens, either long or short, it takes a long time to be able to move your stops. On E-Trade, stops have to be .25 below the bid or .25 above the ask. If a stock is $5, that's 5% below the bid or above the ask. If the stock is $10, that's two and a half percent outside the range. If the stock is $20, it's one and a quarter percent. At $25, it's only one percent outside the range. DYII is going up by 4% a day, yet it took a day to lock in a small profit. The bid-ask range is 20 cents at the moment. That's about 1%. Add the padding of 25 cents on either side and it's 45 cents or two and a half percent. The day's range is 17.66 to 18.90, $1.24. That's about 7%. Not sure what that has to do with anything. I'm fishing for the conclusion that it takes too long to make money on stocks that are under $25 because of the .25 restriction on placing stops. |
| 11:23 AM |
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The investment community is a herd of docile herbivores munching away on the prarie grass. The market just cruises along without anything spectacular happening. And then, with the slightest hint of rustling in the trees, the herd stampedes. Huge price moves in manic buying or panic selling. There's a slide at prudent bear that claims that 1921 to 1928, 1949 to 1966, and 1982 to 1999 were "super bull" markets and that 1900 to 1920, 1929 to 1948, and 1966 to 1981 were "super bear" markets. So, how many years were stable markets in the 20th century? Oh, that would be zero! That's not the most common view of the 20th century, but if it's true... if the markets were down 20 years, up 7 years, down 19 years, up 17 years, down 15 years and up 17 years... then this one year downturn isn't over. It's just beginning. The rally is just a lull in the panic. One oddity that makes it difficult to form broad and general investment strategies is the idea that there is one stock market. In fact, the market is greatly fragmented and polarized. The NASDAQ is still deep in bear territory. The Dow just crossed back over the 10K mark. Even "NASDAQ" and "Dow" are fragmented and polarized. And yet, even though the individual companies that make up the markets have greatly differing behaviours, greatly differing and even conflicting critereon for success, the market pulls them all up or pushes them all down. As if Amazon not losing as much money as everyone thought this quarter has anything to do with any other company. |
| 7:43 AM |
| What a boring position! The market is up today, but DYII isn't moving. It opened at 17.74 and the day's range (in the first 12 minutes of trading) is 17.66 to 17.79. Right now it's at 17.66 with a bid of 17.66 and an ask of 17.88. For someone betting on blind luck, I guess I should be happy I'm not losing money at the moment. But having everything in a stock that just sits there is like not playing at all. If this puppy doesn't make it out of the 17.4 to 18.5 range this week, I'll have to get out and try something else. It seems like a good time to move into wild speculation in options. |
| 6:49 AM |
| So that's what I did. Stocks that are at 52 week highs are AHC, CCJ, DYII, FCN, MKC, MUR and SRDX. Of these, DYII is up the most for the day, 4.2%. So, I bought 300 shares at 17.9. It rose to 17.95, fell to 17.68, went back up to 17.75... I've got a stop in at 17.4 and am waiting for a move upward to a bid of 18.5 so I can put a stop in at 18.25. |
| 7:49 AM |
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Well, gap up == moving up sucks as a trading theory. Winners beat losers in before hours trading. AMZN was the big winner, up 2.73 to 11.10 at 8:38 ET, up 3.02 to 11.39 at 8:55. So I bought 300 shares at 11.85 at open. Hit the stop at 11.35 and got out with a two hundred dollar loss. But, it still seems like a good theory. AMZN was moving up before-hours. It did open gap up. Big winners beating big losers in before-hours did predict the market direction. But, AMZN opened up over 3 bucks and immediately fell by a buck. What I need is a screen that tells me what stocks hit 52 week highs or lows the most days in the past month. Then, if the market moves up because of some Amazon (a company headed for bankrupcy), I can be bullish with a stock that has been moving up. |
| 7:32 AM |
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Trading Rules version 0.1
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| 7:48 AM |
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The main reason to latch onto Broadcom is that their chart for the year was steadily down. Most days set new 52 week lows. They are being sued by their shareholders for cooking their books. I figured that the company is worth no more than it's book value and was slowly but steadily dropping to that point. On April 5th I made a big mistake. The entire market gapped up at open. I should have taken the day off to see if it was turning around or just rallying a bit before heading back down. Instead, I shorted BRCM again and lost about $500. One of my newly established trading rules is to take a month of off trading a security after a loss. This will avoid the complication of the wash rule at tax time, but it's also a good rule psychologically. I won't chase losses. I won't try to average into a position (well, the stops prevent that anyway). I won't throw good money after bad trying to make a bad decision look like a good decision. I won't flip flop between short and long on a position just to get burned on the other side. I decided that if the market closed up and opened up the next day, I would switch to being bullish and buy some calls. The market closed up, but it was obvious right before the market opened that it was going to be down. Futures were down. Europe closed down. A bad employment report was just released. There were more big losers than big winners in before market trading. So I shorted the big loser in pre-market trading that had a price over $20 and had lost the most. That was Juniper Networks (JNPR). Juniper's graph looks exactly like Broadcom's! Being in the networking sector has everything to do with that graph. The shareholder class action suit has more to do with BRCM trading at $10 less than JNPR than with the pattern. I could have been shorting JNPR every day and doing just as well as with BRCM. I made a couple hundred bucks off that JNPR trade and decided not to get back in because it was Friday and I didn't want to be exposed over the weekend with the market not sure if it was going to recover or not. That was the right decision because JNPR pretty much flattened out after it's morning dip. I would have lost if I had shorted it again right off the bat. So anyway, starting Monday, my new goofy system of wild speculation will be to be bearish or bullish depending on before market trading. I'll pick a stock that's really moving at open and ride it in the direction it's going. I'll just do one trade a day making it as big as I can and letting the market do whatever it wants after that trade runs it's course. When I get burned, I'll go back to the old method of deciding to be bear or bull based on overall market sentiment and picking winners or losers based on my really naive and questionable screens. |
| 11:39 PM |
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OK, so step one was to decide to put a stop order in on any stock that we own. No matter how confident you are in a company, there's no reason to risk all of the money that's invested in that company. If ODP goes up to 10, I'll move the stop up to 9. The ODP investment was for long term growth, so the stop shouldn't be too close to the current price, but getting out of the position with a small profit is far better than staying in the position if it loses big. Step two was to realize that the market is not shooting up. It may turn around any day now, but the market is still moving down. As long as the market is moving down, being bullish is swimming against the current. So on March 20, I shorted 100 shares of IJT (iShares S&P 400 small cap growth fund). This was right before the Fed lowered rates and the buzz was that the rates would come down by .5 and the market wanted .75. I chose a fund rather than an individual stock because I was worried that even though the market as a whole came down, the individual stock I picked might have some good news and go up instead. Well, it turned out to be a lucky move. I followed the stock down with loose stops and got out of the postion three days later $127 ahead on Friday the 23rd. Over the weekend I ran some screens and picked Apple (APPL) and JDS Uniphase (JDSU) as potential big losers. I can't remember what the screens were. I think it might have been something like previous close less than 50 day moving average and 50 day moving average less than 200 day moving average. Also, I've been avoiding any stock that pays dividends because that complicates being short (you have to pay the dividends). AAPL and JDSU were not great picks. I got out of both positions the next day with a $9 profit on Apple and a $2 loss on JDSU. Another screen led me to pick Homestore.com (HOMS) on the 28th. It was one of the rare dot coms that wasn't in the single digit price range. Picking short candidates with the screens was a very subjective affair. I'd look through the list and say "biotech... don't want to go there. real estate... nope, that's not going down. german company... don't know anything about that." Anyway, I shorted HOMS and shorted Apple again. The Apple short was pretty dumb. It was based on the fact that I don't think Macs have a future. I ignored the fact that they actually have earnings. Somebody out there is actually buying those cute little computers you see in the movies. Probably the same people that buy VW bugs. Well, anyway, I lost $140 on Apple. Made $50 on HOMS. Overall, shorting had me ahead by $45.75, so I was still in the game. Figuring out why Apple was a mistake led me to add a row to my screen. EPS <= 0. If you're going to short a stock, pick a company that isn't making money. That's simple enough. That's how I found Broadcom (BRCM). I love Broadcom. Between March 30th and April 4th, I made over $1200 shorting Broadcom. Broadcom also taught me how to act like a day trader on E*Trade (well not really like a day trader). At market open I'd short Broadcom. At first I was doing 100 shares, then 300 with 100 in something else, then 400 (which is all I can do with the amount of cash and securities in my account). I put in the short order at market and then keep refreshing the screen until it told me what I sold it at. Immediately, I put in a stop at 50 cents more. That way if it went up instead of down my loss would be limited. I could have done 25 cents more, but it seems better to give it a little bit of room to meander before it moves one way or the other. Then I figured out what price it would have to fall to for me to get out without a loss. I only put orders in for even quarters (for example, 27, 27.25, 27.5, or 27.75, not 27.6) so there would be a ten or twenty dollar gain with this first stop (first profitable stop that is). Then I click the button to change my stop and fill in the form, but don't press CHANGE yet. The stop has to be .25 above the current ask, so the stock has to fall before you can change to the lower stop. Then I open another window and get the real time quote. Every couple of minutes, I refresh the quote until the price falls enough, then I switch windows and click CHANGE to lock in the new price. This process of opening a change order form and watching the real time quote drop is repeated until the stock heads back up and a stop is hit. It's exhilarating. Riding the wave. Surfing the ask price. Now I know why people get addicted to gambling. |
| 4:24 PM |
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Last month I got tired of watching my portfolio shrink. Not that I have much of a portfolio. The shrinking portfolio consisted of 100 shares of CADA and 100 shares of ODP. Plus there's the 401k which is something like 130 shares of QQQ. That 401k was worth $10,000. Now it's worth a couple of thousand. The hundred shares of CADA were bought at 17. They popped up on a screen for high growth companies. They were high growth that quarter. The next quarter they weren't. They haven't been since. CADA now trades at about 3. The loss on CADA (well it's only a paper loss until you sell, right?) taught a lesson. Stop orders. So we have a stop order to sell ODP at 8. If it tumbles, we'll get out within $100 of break even. Much better than losing $1500 like we did on CADA. Fast forward a few months. We put a couple grand from employee stock options into the E*Trade account to earn interest. It's a savings fund for a kitchen remodel. If we can save up enough to pay off the mini van, we can afford the monthly payment of a home improvement loan. We're Americans. Our financial planning consists of juggling debt. So, anyway, there's a couple of thousand in the E*Trade account, plus about a thousand worth of stock. And it's a level 2 account because I was writing covered calls on my ESPP shares for a while. And the market hits a new low. It just keeps going down and down. That's when I decided to start shorting stocks. So far, it's working. I made $970 last week while drinking my morning coffee. I started a spreadsheet to keep track of the trades. Now I need to start a log to keep track of the philosophies. As I experiment with wild speculation, my philosophy changes. Every loss and every gain shifts the perspective. When I look at the spreadsheet, I see trades that I don't remember. What is that stock? Why did I trade it? This log is needed so that I can keep track of the plan. Dante's awake. Gotta run. |
| 8:40 AM |