You are here: Home / Home

Stock Bias Test

June 6, 2008 by 39 Comments

I was inspired to write this educational piece after listening to the audio interview between Tim Bourquin of Trader Interviews and Brian Shannon of Alphatrends.net, also the author of Technical Analysis Using Multiple Timeframes. Brian’s book starts shipping on June 7, 2008, a book I had the pleasure to read as an advance copy; I definitely recommend his work. I will be posting a complete review of the book within the next week.

  • Which stock would you buy below based on the nameless & dateless charts? (listed 1,2,3,4)
  • How would you rank them in order of technical characteristics?
  • Would you avoid buying of any of the stocks below based on price and volume?
  • Would you short any of the stocks below?

Tim mentioned that a couple traders he recently spoke with have written code within their charting software that allows them to strip the company name and ticker symbol off of the charts. I find this absolutely amazing – a tool I would pay for in a heart beat.

These traders do this to avoid the human biases of the companies they are trading. Humans tend to rationalize their thoughts and decisions based on what has happened, what is currently happening and what they think will happen.

For example (one provided in the interview that I agree with): Many traders are starting to talk about a bubble or possible top in oil. Now, I don’t know if oil is topping but I have been avoiding some oil and energy stocks in my own research based on the indicators of my screens. I truly can’t tell you if this is based on the biases of what I have been reading and hearing or the based on my screens dropping clues.

I typically avoid old time blue chip stocks such as GM, IBM and MSFT but maybe I wouldn’t do this if they were making a move and I didn’t know what company I was trading because the ticker symbol was stripped. I did analyze IBM earlier this year but I avoided the write-up for as long as possible because it has underperformed for much of my adult life.

Anyway, take a look at the stock charts below and let us all know (in the comments) which ones you would buy, sell or do nothing. I will post up the full charts with ticker symbols and dates in a couple of days. Some of you may be very surprised to see what stocks they really are and may question your own conclusions once the company names are revealed.

Good luck – let’s see what everyone comes up with (leave them in the comments section). Click through to see charts 2 through 4.

[Read more…]

Filed Under: Education, Technical Analysis

Possible Shorts Trending Downward

June 5, 2008 by Leave a Comment

Today’s screen locates stocks that may become longer term short candidates based on the direction and action of their major moving averages. They are all trading below their 200-day moving averages after reaching a new high within the past 6 months or so. This type of action has historically tipped off a longer term downtrend that may be in the stock’s future. As some of you know, I prefer to use options to capitalize on downtrends rather than shorting the stock outright.

See my posts below to understand exactly what I am looking for when placing a short trade or buying put options several months out.

Stocks Starting to Trend Downward:

  • PCP – 110.69, Precision Castparts Corp. is trending lower as the stock is challenging (to move above) the 200-d m.a. for the first time since crossing below the average in January. The stock does sport a 10-week m.a. below the 30-week m.a.
  • GME – 47.38, Gamestop Corp was screened back in March as a stock setting up a possible short but it had one last push before starting to crumble again. Now is the more ideal entry area for a short or put options based on the 200-d m.a. and the 10/30-week crossover.
  • VOD – 30.10, Vodafone Airtouch is attempting to challenge (move above) the 200-d moving average but doesn’t seem to be having success. The 10-week m.a. is trading below the 30-week m.a.
  • GR – 57.96, Goodrich Corp. is down more than 10% this week on large volume as the 10-week m.a. also trades below the 30-week m.a. A drop below $56 would violate all recent support.
  • LLL – 101.90, L-3 Communications is down more than 5% this week on above average volume as it violates the 200-d m.a. (for the second time since 2006). The 10-week m.a. is still above the 30-week moving average so I would not short the stock until they cross.
  • GOLD – 41.14, Randgold Resources, has started to pullback and violate the 200-d m.a. for the first time since the summer of 2007. It may be early to short for the long term but keep an eye on this stock and the commodity in general. The 10-week m.a. is still above the 30-week m.a. (10-week moving average is now trending downward).
  • TEF – 83.21, Telefonica is about six months removed from its high as it trades beneath its 200-d m.a. for the first time in years. The 10-week m.a. is now trading below the 30-week.

Please note that it is still early for a few of the names above (they may have some life left for a bounce higher before a longer term decline).

[Read more…]

Filed Under: Shorting

VisionChina Media, Inc. (VISN)

June 4, 2008 by 6 Comments

Stock of the Day
VisionChina Media, Inc.
Tuesday’s Closing Price: VISN – $18.84

Sector: Services
Industry: Advertising
52-week Price: $5.27 – $23.00

The stock is starting to pull back to the 50-day moving average which will offer us a solid entry opportunity with an excellent risk-to-reward ratio. If my swing target method can offer any accuracy whatsoever, we could be looking at a 10-to-1 risk-to-reward trade. A buy in the $16 to $17 area could also provide us a 5-to-1 risk-to-reward ratio assuming it can get back to $23 without violating the stop.

Not bad if you ask me. I will be taking on the trade if it drops below $17 and holds support at the 50-d moving average. Maybe it will work, maybe it will flop. As I say every time (like a broken record): take the trade and follow the rules. That’s all we can ask!

Take a look at some previous posts I have made with VISN highlighted:

Hot Momentum Stocks

A couple more HOT momentum stocks:
VISN – 22.53, VisionChina Media Inc. has also been tearing up my nightly screens but it slipped past any and all ideal entry points for me as a trend trader. It is now in the hands of the day traders with a year-to-date gain of 146%, a 148% gain over the past three months and a 42% gain over the past month.

Top Rated Stocks

Other High Rated Stocks in my System:
VISN – 18.88, VisionChina Media, Inc.

Potential Trade Set-up:
Entry: $16.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $14.72
Number of Shares: 781
Position Size is $12,500
Risk is $1.28
Target is $30 for a 10-to-1 risk/reward ratio.
A move back to $23 with a buy at $16 would be a 5-to-1 risk/reward trade.

Institutional Analysis:
Held By Institutions: 43.21%
Total Held by Institutions: 48
Money Market: 29
Mutual Fund: 17
Other: 2

New Positions: 27
Positions Sold: 8
Shares Held: 36.97M
Shares Held Previous Period: 32.43M

Shares Bought: 6.82M
Shares Sold: 2.32M
Value of Shares Bought: $133.2M
Value of Shares Sold: $45.19M

[Read more…]

Filed Under: 2008 Stock of Day, China, Stocks

Top Rated Stocks

June 2, 2008 by 13 Comments

Today I am posting a list that shows the stocks that are making multiple screens based on my fundamental screens and scans (click the link to understand the criteria in more detail). I run these scans every night and make notes of stocks that are appearing on more than one screen (I have found that these are the strongest stocks in the market and have been using this method for almost eight years).

I do own several of the stocks listed below but I am always ready to jump into new opportunities when the risk/reward warrants the purchase. I keep my personal watch list up to date on a daily and weekly basis so I can make a move when the charts are screaming buy. I also watch my current holdings to look for red flags that help me determine if a stock needs to be sold (yes, I do have predetermined sell points once I reach a 25%+ profit but I do remain active when monitoring my portfolio).

Two of the most important screens that have helped me buy and sell since 2007 have been stocks with:

  • Institutional Sponsorship Increasing
  • Quality Stocks with a new IPO within the past two Years

Stocks making new highs and stocks within 15% of new highs haven’t been my bread-and-butter in 2008 nor have stocks trading along the 200-d moving average. I have explained in the past how I use my screens and scans and how I determine which ones are more relevant during specific markets environments.

Top Rated Stocks according to my Research
*Disclaimer – this is not a buy list!*

  • SOL – 25.08, ReneSola Ltd. , the young stock has moved from $7.36 to a peak of $29.48 in two months with solid institutional accumulation along the way. Any drop with support in the $20 area is an excellent risk/ reward buy.
  • POT – 199.07, Potash Corp. Saskatch Inc., is the superstar of all superstar stocks over the past two years. Shorter term plays can happen on pullbacks to the 50-d m.a.; longer term accumulation can take place at the 30-week moving average. I wrote about the sister stock IPI in April.
  • MA – 308.65, Mastercard made another new all-time high this week as it reached $320 with consumers using the plastic as their home equity loans dry up. I still own the stocks and will continue to hold untila trend snaps.
  • SD – 55.00, Sandridge Energy Inc., made another new all-time high this week and it continues to trend higher on increasing volume. A couple late day reversals to end the week sent up a red flag (minor at this point in time).
  • GTLS – 41.89, Chart Industries Inc. is trading near new all-time high territory as the trend is higher. A move above $43 will trigger a triple top breakout on the point and figure chart (a positive sign if it comes on heavy volume and without a reversal).
  • TITN – 24.30, Titan Machinery Inc. is still making new all-time highs but did run into some selling pressure near the $26 level. The trend is higher and I am holding until told otherwise by the charts.
  • GFA – 44.68, Gafisa has been an enigma in my mind as I figured it would be much higher by now based on fundamental and technical feedback. But, we all know that’s not how the market works – it’s not rational in the way we think it should be. In any event, GFA remains a top rated stock on multiple screens I run every night.
  • V – 86.36, Visa is closing in on a new all-time high after the recent dip from last week which did present an excellent buying opportunity or additional accumulation area. I am a holder and will look to add on opportunities such as last week as Visa remains the new MA in my portfolio eyes. Again, the market must tell me otherwise before I consider selling.
  • HES – 122.81, Hess Corp. has been on a tear but is now extended from the major moving averages. Ideal accumulation areas along the present themselves on pullbacks to the 50-d m.a. and/ or 200-d m.a.
  • LL – 15.88, Lumber Liquidators, the recent up-trending chart is nice to look at but I am skeptical about its market. It sells hardwood flooring and we all know the construction industry is taking a black eye in the media and sheep follow the media (their decisions are based on what they see and hear). Regardless, the stock showed up on multiple screens once again so I can’t ignore it because of my biases.

Other High Rated Stocks in my System:

Filed Under: Daily Stock Screens, Stocks

NewsFlashr is Great

May 31, 2008 by 3 Comments

I wanted to point out that I highly recommend Newsflashr; more specifically, their business blogs page which displays the latest postings by many of the best blogs on the web. I visit the site on a daily basis to see who’s writing what about the market, people’s latest research or even more stock links. Everything is updated in one place and it is readily available anywhere I search the web. I understand that other RSS tools exist to monitor all your favorite blogs but there is something about Newsflashr that keeps me coming back.

I promise you that I am not plugging their website for any reason other than I use it myself. I am not getting anything in return to plug the site (that’s not my style). Take a look and perform your own opinion (let me know what you think).

newsflashr network

On another note, please take a few seconds to sign up for my free RSS feed and receive my latest posts in your e-mail, if you haven’t done so already.

Click the large icons below and sign up for FREE to get my daily blog posts in your e-mail and/or favorite RSS reader:

Filed Under: Blogs, Links, Media
« Previous Page
Next Page »