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Stocks Catching my Eye

February 25, 2008 by 5 Comments

Three stocks are catching my eye while making multiple screens over the past couple of weeks. MTL is up over 13% in less than two weeks since I highlighted it in a post titled Basic Materials (Oil) Stocks Making New Highs

MTL – 111.60, Mechel Steel Group was up 10.60% on volume 97% larger than the daily average

Trading momentum is paying-off in the current market environment. Swing trading breakouts making new highs on volume at least 100% larger than the average is king. It’s working so pay attention and be smart while putting on trades. MTL is no longer a buy since it has become extended but TITN and RIO may be setting up for new 52-week highs.

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022408_rio_wkly.png

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Filed Under: Stocks

RIMM is my Pick

February 22, 2008 by 4 Comments

I choose Research in Motion Ltd. (RIMM) as my stock for the ibankcoin.com 2008 March Madness stock tournament after reading about it on Rajin’ Cajun’s blog (formerly known as Madstocks blog). It’s all in good fun as I typically avoid contests because they make me do things I might not do otherwise (like trade and root for a stock based on a pick rather than reality).

I picked RIMM for several reasons:

  • I don’t own shares at this time so I can be objective
  • Q4 ends on March 1, 2008 with a reporting date of April 2, 2008 (spans contest)
  • The chart is currently bullish (daily and weekly)

We’ll see how I do. A blow out earnings date that hits the wire early gives me great odds and the market is always about odds (I looked at this competition from a poker player’s perspective rather than a pure investor/ trader). The odds are strong for good news prior to the official earnings release in April.

I thought about going short, with several stocks in mind, including Chipotle Mexican grill (CMG) but figured I historically do better with long positions. The market in general will be a huge influence during the contest. A down market will severely hurt my chances to win.

Recent Posts with RIMM highlighted:

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Filed Under: Blogs, Misc., Stocks

My Chat with Trader Interviews

February 20, 2008 by 9 Comments

Tim Bourquin from Trader Interviews is scheduled to interview me tonight via telephone. Several popular bloggers and many successful traders have been interviewed in the past so I am looking forward to the experience. Trader Interviews is produced by TNC New Media, Inc. TNC New Media produces online media, tradeshows and conferences worldwide for highly-targeted audiences.

I am assuming that the audio version of the interview will be available in the near future via their website and through iTunes (this is how I listen to their interviews; I download them to my iTouch via subscription).

Dave from StockTicker did an e-mail interview with me last March that you can view here. Not much has changed since then but everyone grows from year to year so I am anxious to see if I answer questions differently. Trading and investing is an evolving endeavor so I would not be surprised if my answers change over the years.

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Below is the script of questions and answers from my interview last year:

StockTickr: Tell us a little about yourself, Chris.

Chris: My name is Chris Perruna and I am 29 years old. I currently reside in New Jersey with my wife but was born and raised in NY (still my favorite place). I graduated college with a degree in Architectural Engineering and went to work for a historic preservation firm in Manhattan. I started as an intern with the firm while still in college and worked on several high end projects around the corner from Wall Street. It wasn’t until I was about to graduate that I knew I wanted to work on Wall Street and trade the markets professionally (rather than personally). I even signed up and took the trips to the exchanges each year through my university’s business school. I currently consult for a fortune 500 big builder as an architect (listed on the NYSE) and trend trade for capital appreciation. I am a trend trader looking for gains of 25% or more and losses no larger than 10% (preferably smaller). Understand that this 10% loss is calculated into a position sizing spreadsheet that only risks a maximum of 1% of total capital. My foundation is rooted in CANSLIM philosophies but I developed my system with detailed position sizing calculations and money management rules from Dr. Van Tharp.

StockTickr: What do you like to do outside of trading?

Chris: My hobbies include poker on a competitive level, a men’s flag football league in the fall and a softball league in the spring. It drives my wife nuts but I like to compete in most things I do so sports, poker and the market feed that craving. I also enjoy traveling, attending professional baseball and football games and dining at great restaurants. Del Frisco’s (NYC) gets the nod here!

StockTickr: How did you get started trading stocks?

Chris: I open my first brokerage account as a sophomore in college and have not stopped trading since. I first gained an interest in trading from my father who owned restaurants and traded heavily in the 1970’s and 1980’s. I still trend trade heavily based on his 200-day moving average plays. I started tracking stocks when I was a teenager but didn’t become “obsessed” until college. I started college when the 1990’s market was starting to really boom and I benefited greatly over the first couple of years – it was all luck, pure luck.

StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?

[Read more…]

Filed Under: Media, Misc.

CMG starting to look like CROX

February 19, 2008 by 8 Comments

The weekly chart of Chipotle Mexican Grill (CMG) is starting to breakdown in a similar way that CROX broke down but the institutional numbers don’t support the down side as strongly as it did with CROX. The number of shares sold exceeded the number of shares bought by 46% when I highlighted CROX as a potential breakdown stock back in September in the post titled “Will CROX get Eaten?”

“Recent churning action below $60 per share shows that buyers are no longer in control of the stock. However, sellers haven’t completely gained control either. It is a tug-of-war between supply and demand as we await the ultimate direction of the next trend for the heavily covered Crocs Inc. (CROX).”

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The difference here is that CMG has only recorded a 19% increase in shares sold versus shares bought which is not excessive. However, the stock has violated the 200-d moving average for the first time since the long up-trend started. We can also see the first violation of the relative strength versus the S&P 500 suggesting that the stock is no longer a leader and may fall victim to increased institutional selling.

Yes, the current fundamentals look strong but CMG posted a fourth-quarter profit that missed Wall Street’s expectations and said 2008 would remain challenging, raising some red flags in my opinion. They could be playing it cautious or they could be signaling the beginning of the end of this particular run.

The stock is 32% off of its all-time high and has been falling on increasing volume as it violated the long term moving average. I am not shorting at this spot but I will jump on puts about six months out on the first failed attempt to make new highs above the 200-d m.a.

Listen to what the Institutional Buyers are Saying (with their actions):
Total Held by Institutions: 386
Money Market: 182
Mutual Fund: 200
Other: 4

New Positions: 107
Positions Sold: 58
Shares Held: 29.28 mil
Shares Held Previous Period: 30.12 mil

Shares Bought: 4.31 mil
Shares Sold: 5.16 mil
Value of Shares Bought: $554.8 mil
Value of Shares Sold: $663.9 mi

  • The number of shares held has decreased by 3%
  • The number of shares sold exceeded the number of shares bought by 19%
  • The value of shares sold was $109 million more than bought

It took a couple of months but CROX did get Swallowed and it all started with the small and subtle red flags that we are starting to see with CMG.

“I wrote a post titled Will CROX get Eaten? on September 20, 2007 and strongly noted the declining institutional support (see numbers below). Someone was jumping out of the stock and we now know why!”

“Stocks only churn when buyers and sellers are struggling to take control. More often than not, stocks churn because BIG institutions are selling shares to the small retail buyer (the sucker). Institutional numbers and charts that back them up don’t lie! The big boys can’t hide if you know how to read them.”

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Filed Under: Shorting, Stocks

Platinum Climax Top?

February 18, 2008 by 16 Comments

Platinum futures are up more than 600% over the past 10 years and have almost doubled from 1,200 to 2,053 over the past twelve months.

What catches my eye is the extreme run-up over the past two months as the metal seems to be making a climax run (out of character during the 10-year up-trend). Similar action started to happen in PTR and I highlighted it in the exact manner as I am doing here with $PLAT in a post titled The Real PTR Climax Run.

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Petrochina, currently trading at $150, is now 50% off of its high of $266.81, a number reached during the climax run. I was a little early with PTR when I wrote the post Petrochina (PTR) Climax Top? back in September 2007.

Based on my PTR analysis, wait for the breakdown in Platinum to begin prior to picking a top, if it even happens. This is a game of odds and we can’t be 100% certain that Platinum is going to breakdown and correct by more than 20% over the next six months. However, I will establish a position when the ideal entry presents itself. The ideal entry could be a large reversal on heavy volume while making new highs early in the day and/or week or it could be a series of large down days on increasing, above average volume.

I do want to be clear that I am not suggesting that the long term multi-year run in Platinum is over but a correction of more than 20% may be in the works.

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What do you think?

Filed Under: Commodities
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