Archives for June 2007

Point and Figure Exercise – HANS

June 22, 2007 by Chris 8 Comments

Point and figure charts are one of the great tools many technical traders overlook. I have followed them since I was 15 years old due to my father’s love for the technique. He would plot hundreds of charts each year by hand in a graph book prior to computers in the 1970’s and 1980’s. He taught me about the charts and the key support and resistance areas to look for when scanning for opportunities. I found this old case study I did in 2005 and thought it would serve as a perfect example of the power of point and figure charts.

The chart was sounding a buy on 5/4/05 even though the stock had already moved from $20 to $60. Would you have bough? I did as did many MSW members that e-mailed me. See the updated chart below to see what HANS went on to accomplish.

For today’s exercise, please understand that I didn’t highlight every single breakout on the P&F as that would have cluttered the Hansen Natural (HANS) chart. However, I did highlight the obvious, stronger breakouts that were confirming this stock’s strength time and time again. No one should have missed HANS in 2004 and 2005 if you were trading this chart along with basic price and volume.

Follow along with the legend below and start to learn about the world of point and figure charts. I bet you won’t stop using them once you learn the benefits and accuracy that they can add to your more traditional technical analysis tools.

Please note that this chart was originally featured as a case study for MSW back in May 2005 when HANS was trading at $64.09 (pre-splits).

Stock Market Summer Reading

June 21, 2007 by Chris 5 Comments

I recommend each and every book on the list below for anyone that is looking for quality summer reading related to the stock market. The books are not listed in any particular order so please don’t select from top to bottom, left to right or any other systematic approach. However, they all make the top of my list of must reads.

I attempted (tried my best) to categorize the books according to their themes. The categories are based on a macro review of the material and many of the books can and do fall into multiple categories.

Learning about Stocks (Fundamental and Technical Principles):

System Development and Market Psychology:

Great All-around Reads:

To view other books I enjoyed, follow this link: Recommended Stock Market Books – 2005

Filed Under: Books

Young Guns Taking Off

June 20, 2007 by Chris 7 Comments

I posted a thread titled, Fresh IPO Ideas, last Wednesday (one week ago today) and have already witnessed some excellent results.

The blog entry included five trending IPO’s that look poised to make a further upwards advance over the next several months.

They included the five names below at these initial prices:
JASO – JA Solar Holdings, Co. Ltd. – $24.55
SMOD – SMART Modular Technologies Inc. – $14.31
SNCR – Synchronoss Technologies, Inc. – $27.88
GTLS – Chart Industries Inc. – $23.05
DVR – Cal Dive Intl., Inc. – $15.52

They closed Tuesday night at these levels:
JASO – $29.28, a 19.2% Gain
SMOD – $15.07, a 5.3% gain
SNCR – $28.78, a 3.2% gain
GTLS – $24.73, a 7.2% gain
DVR – $17.54, a 13.0% gain

I didn’t perform a full case study for any of the stocks but I will provide some additional information for JA Solar Holdings, Co. Ltd. I will start with last week’s data about the company’s institutional analysis. Notice the number of shares bought versus the number of shares sold (the stock is young so this is normal but I like the early support). I can’t argue with $300 million pouring into the stock.

JASO – JA Solar Holdings, Co. Ltd. – $29.28
Earnings Analysis:
$0.41 – Last Year Primary EPS
$1.00 – Current Year Mean Primary Estimate
$1.41 – Mean Primary Estimate — Next Year
30.00% 5-YEAR GROWTH MEAN EPS

Next Earnings: 8/14/07

Institutional Analysis:
Total Held by Institutions: 8%
Money Market: 68
Mutual Fund: 18
Other: 1
Shares Held: 15.16 mil
Shares Held Previous Period: 1.85 mil
Shares Bought: 13.51 mil
Shares Sold: 0.19 mil
Value of Shares Bought: $314.6 mil
Value of Shares Sold: $4.58 mil

Potential Trade Set-up:
The Ideal setup was last Wednesday at the moving average when I started coverage!
[Read more…]

Filed Under: China, IPO, Stocks

Don’t be Greedy

June 19, 2007 by Chris 10 Comments

I have talked numerous times about the market moving 30% higher than it was last year and how this is a warning of a pending correction in the near future.

I want you to understand that I can’t pick a top and I don’t know when a top will occur but be prepared. That’s all I can do to help my readers.

With that said, I am starting to read some very cocky blogs that are posting up their “amazing” winning stock “picks” over the past few months. This is fine as I too have posted my best trades and stock selections from 2006 and 2007 but I understand the difference between success and some market luck.

I tend to agree with Howard Lindzon’s post today, GREED on Wallstrip…A Parody of A Few Good Men, as he states:
“The main thing is don’t get caught up in the hysteria of great markets. You are not that smart. The markets are making you money.”

I completely agree with his statement and always repeat the cliché:
“Don’t confuse brains with a bull market”

The market is good; it has been trending higher for months and everyone should be making money. If you are not, something is very wrong with your system, your approach or your mental makeup towards trading.

Whatever your portfolio has done, understand that the market should get most of the credit for your recent gains and your emotions need to eliminate the sense of superiority and greed. I can’t stress enough how you must protect your profits when the general market is up 30% over its levels from last year. Set hard physical stops and don’t chase extended stocks even if they have excellent fundamental and technical characteristics. I am currently having this struggle with Shutterfly (SFLY). I missed the ideal risk-to-reward setup so I must let it go. I am not going to post a case study either, unless it sets up another ideal entry. Don’t chase extended stocks, especially at this phase of an up-trend.

A couple Jesse Livermore quotes:
“There is nothing more important than your emotional balance”
“But careful timing is essential…impatience is costly”

With that said, I know my profits in stocks such as MA, BIDU and EDU have a lot to do with the overall market gains, not my intellect.

Filed Under: Education, General Market, Psychology

Stock of the Day Updates

June 18, 2007 by Chris 2 Comments

I am going to start the week by highlighting the charts of several “stock of the day” candidates I have covered in 2007. MasterCard is quickly becoming the current master in my portfolio and one of the top performers on the blog this year. Quietly, Burger King has given investors a 24% gain since I covered it back in February while matching it up against JADE (covered by WallStrip last week).