When to Buy – Low Risk & High Reward

May 13, 2012 By Chris 11 Comments

This post contains three simple charts that will give all investors a fantastic risk vs. reward setup/ signal. By following these simple charts, any investor should be able to consistently outperform the market (buy when the market is deeply depressed and sell when it becomes over-bought). Please keep in mind that these signals are for longer term investors as they only appear once every year or so.

The three charts represent the % of stocks above the 50-day moving average for the NASDAQ, the % of stocks above the 200-day moving average for the NASDAQ and the % of stocks above the 50-day moving average for the S&P 500.

The recent sell-off has been steep (points only) but unfortunately, we haven’t come close to historic bottom signals. This simple fact (using the charts below) suggests that the market has further room to consolidate so be careful with your buy and sell decisions.

Filed Under: General Market, Technical Analysis

Ten Must Read Stock Market Books for 2012

March 6, 2012 By Chris 5 Comments

I highly suggest that all new swing and/ or trend “traders” begin with William O’Neil’s book based on the CANSLIM acronym.

1. How to Make Money in Stocks (4th edition) by William J. O’Neil (1988)
2. Reminiscences of a Stock Operator by Edwin Lefevre (1923)
3. The Nature of Risk by Justin Mamis (1991)
4. Trader Vic: Methods of a Wall Street Master by Victor Sperandeo (1991)
5. Trade Your Way to Financial Freedom by Van K. Tharp (1999)
6. The Battle for Investment Survival by Gerald M. Loeb (1935)
7. Martin Zweig’s Winning on Wall Street by Martin Zweig (1986)
8. How to Trade in Stocks by Jesse Livermore (1940)
9. Market Wizards: Interviews with Top Traders by Jack D. Schwager (1988)
10. When to Sell: Inside Strategies for Stock-Market Profits by Justin Mamis (1994)

**Original copyright dates are listed even though many of the books linked are newer editions**

Filed Under: Books

Market Pullback and Energy Opportunities in COP and BP?

February 20, 2012 By Chris 5 Comments

Set stops and look to take some profits at sign of weakness – a couple of signals are popping up for a slight brake right now $$ – 11:25 AM – 9 Feb 12 via web

That was my tweet from Thursday, February 9, 2012.

The signs that I was referring to are located in the following two charts. The divergence over the past month is very clear on the charts below as the transports are showing weakness in comparison to the industrials. I am not calling a market reversal or downtrend but I am seeing some exhaustion among the leaders and major market averages. Recent gains need to be digested before moving higher (if that’s where 2012 is headed).

Oil has become a topic of interest with gasoline prices across America making headline news on a daily basis. With crude oil pushing higher, above $100, I have become interested in two dividend plays that also present solid technical charts.

ConocoPhillips ($COP – $73.36) operates as an integrated energy company worldwide. The company’s Exploration and Production (E&P) segment explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids.

The company has a market cap just shy of $100B, an annual dividend of $2.64/3.60%, 65% held by institutional investors and a P/E of 8.17x. A move to new highs could catapult the stock well into the $80 range (along with that dividend). The company has been experiencing an increase in net income, year over year revenue growth and a solid record of earnings growth. One could argue that the ideal entry is closer to the 50-d moving average.

BP p.l.c. ($BP – $47.62) provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. Its Exploration and Production segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trading of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL).

The company has a market cap of $150B, an annual dividend of $1.92/4.03%, 10.68% held by institutional investors and a P/E of 5.90x. A move to new highs could push the stock back towards pre- “Gulf of Mexico” disaster levels (along with that dividend). The company has been experiencing increasing net income, growing revenues, reasonable debt and future potential with new contracts and repaired brand image.

As with $COP, an ideal entry for $BP is closer to the 50-d moving average but we are targeting these stocks as value plays considering their dividends and low PE’s.

Filed Under: 2012 Stock Watchlist, Dividend Stocks, General Market

InvenSense Inc – INVN

January 14, 2012 By Chris 2 Comments

InvenSense, Inc.
$INVN – NYSE

INVN is up 20% since my first tweet on January 5, 2012 which followed a 9% gain that day from $10.90. The stock is up 33.43% since January 1, 2012 and 77.20% since the IPO on November 16, 2011. It’s a young IPO moving on strong volume with a small float and a very interesting (in-demand) technology.

The ideal buy point for this young chart pattern is $11.95, $0.10 above the high of the left side of the base, see chart below. The stock is currently extended from the buy point so please be patient and wait for a new setup or a pullback on lighter than average volume.

I do not own shares as of this post but I am looking to get in based on the analysis above. The stock shot up too quickly before I was taking it serious. It now has my attention. Note that the stock closed down 1.85% on Friday and after-hours trading had it down another $1.13 or 8.50%.

INVN Tweets in 2012:

January 5, 2012 | $11.11: $INVN http://stks.co/1mSk Young IPO up 9% on vol 277% larger than ave. Interesting technology
January 9, 2012 | $12.19: $INVN crushing it lately, targeted last week. Up 10% on vol 78% larger than ave to new all time high. Great technology.
January 9, 2012 | $12.19: $INVN http://stks.co/1qYZ Making a move on volume
January 10, 2012 | $12.99: $INVN http://stks.co/1rhQ Tack on another 6.5% with volume 156% larger than ave
January 12, 2012 | $13.54: $INVN http://stks.co/1tyE A 22% move this week, as of noon Thursday. Small float, great technology.

Per Yahoo Finance:

InvenSense, Inc. designs, develops, markets, and sells micro-electro-mechanical systems (MEMS) gyroscopes for motion processing solutions in consumer electronics. The company delivers next-generation motion processing based on its advanced multi-axis gyroscope technology by targeting applications in video game devices, handsets and tablet devices, digital still and video cameras, digital television and set-top box remote controls, 3D mice, portable navigation devices, and household consumer and industrial devices.

It sells its products to manufacturers of consumer electronics devices, original design manufacturers, and contract manufacturers through direct sales organization and non-stocking distributors worldwide. The company was founded in 2003 and is headquartered in Sunnyvale, California.

Key Financials 2011:
Current Period (Quarterly) 10/2/2011 vs. Prior Period 7/2/2011
Cash (Bank Funds): $57,740,000 vs. $44,877,000
Total Assets: $102,312,000 vs. $84,150,000
Total Equity: $82,431,000 vs. $69,320,000
Sales (Income): $43,034,000 vs. $35,627,000
Gross Profit: $23,662,000 vs. $20,618,000
Net Operating Income: $14,799,000 vs. $11,731,000

Period (Yearly) 4/3/2011 vs. Prior Period 4/3/2010
Cash (Bank Funds): $38,075,000 vs. $35,269,000
Total Assets: $70,746,000 vs. $54,450,000
Total Equity: $59,141,000 vs. $35,000,000
Sales (Income): $96,547,000 vs. $79,556,000
Gross Profit: $52,900,000 VS. $43,483,000
Net Operating Income: $21,478,000 vs. $21,971,000

Filed Under: 2012 Stock Watchlist, Stocks

The Gold Climax Top: Down nearly 20 Percent

December 30, 2011 By Chris Leave a Comment

August 21, 2011: A Gold Climax Top?

Signs are pointing towards a possible climax run for $GLD but please note that this may only be the beginning. Climax runs can push stocks and commodities to extreme levels with parabolic shapes at nearly 90 degree take-offs. Gold is starting to make a similar run, right now!

Well, Gold is now off 16% from that climax top post in August and more than 19% from the ultimate top which is within 1% of a confirmed bear market for the metal.

More important is the recent chart pattern which resembles a Dow Theory Breakdown or 1-2-3 breakdown. This pattern suggests that Gold has further downside.

I don’t know what 2012 will bring but for now, I continue to remain bearish on Gold, especially considering the strength in the US dollar.

With that said, this is the market and things can change in a day so stay tuned to my daily twitter updates (featuring charts and 140 character analysis).