Financials

Further downside possible. And right after I post this, all banks are up a few percent due to government plan.

SKF


XLF


GS - H&S if resistance holds

Be Neutral

The market is very mixed now. Wait for the market to tell you where it will move next. There seems to be just as much probability of moving up as moving down.

Autmoation Part 2

After a little tweaking, I have better results for some stocks. Here are a few results for volatile stocks. Again, each trade is 10k, commission and slippage is accounted for

UAUA +200% in 1 yr


SMN +60% in 1 yr


PRU no good


LDK +250% in


HES chop


FXP


DRYS +350% in


CLF +200% in


MGM +100% in 6 months


EXM +150% in


ENER +80% in < style="text-decoration: underline;">

Now the big question is, will this kind of volatility continue? Or is this strategy sooooooo last year.

Autmoation

The reason I have been making such few posts is because I have been switching over to Tradestation as my trading platform and have been putting considerable amount of time trying to program some automated trades. I have programed a momentum driven strategy that only works for high momentum stocks (like SKF). I do not know if this strategy will be useful going forward, but here are some results showing its strengths and weakness.

Each trade has a position size of 10k. Commision is $.01/share and slippage is $4 per share.
Requirements for trading the stock are: 400k average volume, and avg daily change of 3%.

Note: The Annual Rate of Return is somewhat lower than what it should be since the stock started trading on 2-1-07, but the first trade was only put on 08-07.

SRS



SKF



I will be posting more results later, but just know that I am showing the 2 ETFs that work really well for this strategy. Most stocks it will not trade because the average daily move of the stock is < 3% and so the startegy will be too choppy.

I am not sure if this startegy is worth while, but I will continue to work on it for some time.

Books

Here are a few books that I have. I have only read Reminiscences of a Stock Operator and I highly recommend it.

Reminiscences of a Stock Operator - Edwin Lefevre
The Disciplined Trader - Mark Douglas
The Stock Trader, How I Make A Living - Tony Oz
Trading in the Zone - Mark Douglas
Trading in the Zone - Mark Douglas(2)

Please send me an email to jsssm@yahoo.com if you would like any of these books.

Percent Stocks Above 50 DMA

Using percent stocks above the daily moving average to determine overbought/oversold conditions.

S&P 500, percent of stocks above 50 DMA


Nasdaq


NYSE


S&P 100

Chart Answer

Well, not too many responses, but here is what the chart is of.

Would You Buy This?

I realize my audience is not that big, but I have a poll that I would like people to take.

Would you buy this chart? Leave a comment. If you know what the chart is, do not spoil it!

New Lows

To quote this article:

Some of the biggest winners on a total return basis were companies that had been acquired. Examples include Sun America, Warner Lambert, Gillette, Golden West Financial and Harrah’s Entertainment. However, most (68%) are still trading today. Not surprisingly, they are almost exclusively large cap companies. However, further research suggests that they weren’t large companies when they were enjoying the bulk of their cumulative returns. Becoming a large cap is simply the natural result of significant price appreciation above and beyond that of the other stocks in the market. We were not able to detect any sector tendencies. The biggest winners on a total return basis were simply the minority that outperformed their peers.

Both the biggest winners on annualized return and total return basis tended to have one thing in common while they were accumulating market beating gains. Relative to average stocks they spent a disproportionate amount of time making new multi-year highs. Stock ABC can’t typically travel from $20 to $300 without first crossing $30 and $40. A stock that’s going from $20 to $300 is likely going to spend a lot of time making new highs. Likewise, the worst performing stocks tended to spend zero time making new multi-year highs while they were accumulating losses. Rather, relative to average stocks they tended to spend a disproportionate amount of time at multi‐year lows.

Mathematically it makes perfect sense. Stocks that generate thousands of percent returns will hit new highs hundreds of times, usually over the course of many years.

















Could it be this simple; long term trend following on stocks? That’s our conclusion. For detailed results of the trading system that was inspired by this research see the paper, “Does trend following work on stocks?”

Same logic can be applied for new lows. Now on to the list, compare these with the list I posted yesterday :

AAPL: CLOSE=82.33, 52WEEKLOW=80.49
ADBE: CLOSE=21.06, 52WEEKLOW=20.44
BAC: CLOSE=7.18, 52WEEKLOW=7.18
BCS: CLOSE=7.25, 52WEEKLOW=7.25
BNI: CLOSE=63.66, 52WEEKLOW=63.36
COF: CLOSE=24.1, 52WEEKLOW=24.1
CSX: CLOSE=29.83, 52WEEKLOW=29.83
DO: CLOSE=57.97, 52WEEKLOW=55.45
DVN: CLOSE=58.68, 52WEEKLOW=58.17
HBC: CLOSE=39.95, 52WEEKLOW=39.95
JPM: CLOSE=22.82, 52WEEKLOW=22.72
KEY: CLOSE=6.31, 52WEEKLOW=6.22
KSU: CLOSE=17.79, 52WEEKLOW=16.59
MTB: CLOSE=39.93, 52WEEKLOW=39.93
NE: CLOSE=21.61, 52WEEKLOW=20.11
NSC: CLOSE=37.81, 52WEEKLOW=37.81
PDS: CLOSE=6.25, 52WEEKLOW=6.11
SINA: CLOSE=21.51, 52WEEKLOW=20.33
SLB: CLOSE=39.9, 52WEEKLOW=37.7
UNG: CLOSE=19.8301, 52WEEKLOW=19.8301
UNP: CLOSE=40.42, 52WEEKLOW=40.42
USO: CLOSE=29.86, 52WEEKLOW=27.78
WFC: CLOSE=18.68, 52WEEKLOW=18.68
XLF: CLOSE=9.68, 52WEEKLOW=9.39

Stocks Near Lows

The lows are 52 week closing or opening lows.

AAPL: CLOSE=85.33, 52WEEKLOW=80.49
ADBE: CLOSE=21.11, 52WEEKLOW=20.44
BAC: CLOSE=10.2, 52WEEKLOW=10.09
BIDU: CLOSE=109.75, 52WEEKLOW=104.54
BNI: CLOSE=63.94, 52WEEKLOW=63.94
CNI: CLOSE=34.05, 52WEEKLOW=31.69
COF: CLOSE=25.58, 52WEEKLOW=25.19
COST: CLOSE=47.63, 52WEEKLOW=44.99
CSX: CLOSE=30.1, 52WEEKLOW=30.1
DO: CLOSE=56.15, 52WEEKLOW=55.45
DVN: CLOSE=61.1, 52WEEKLOW=58.17
HBC: CLOSE=42.19, 52WEEKLOW=41.54
LULU: CLOSE=6.22, 52WEEKLOW=6.22
MTB: CLOSE=45.18, 52WEEKLOW=44.82
NBR: CLOSE=10.78, 52WEEKLOW=10.22
NE: CLOSE=21.04, 52WEEKLOW=20.11
NSC: CLOSE=39.52, 52WEEKLOW=39.52
ORCL: CLOSE=16.36, 52WEEKLOW=15.23
PDS: CLOSE=6.47, 52WEEKLOW=6.11
SINA: CLOSE=21.25, 52WEEKLOW=20.33
SLB: CLOSE=40.43, 52WEEKLOW=37.7
SNP: CLOSE=54.38, 52WEEKLOW=50.57
UNG: CLOSE=20.55, 52WEEKLOW=20.55
UNP: CLOSE=41.56, 52WEEKLOW=41.56

Looks like the rail stocks are struggling.

LIBOR

LIBOR rates have come down to normal levels.



Yet the bank stocks keep going down. This shows that the financials do not need much reason to sell off. Even if you have bullish fundamentals or technical reasons, there is no need to lose lots of money over it. Take a note and wait till conditions improve (demand picks up, supply slows down, probability is higher).

Financials

Financials are stinking it up again. My target for the XLF is 6.5, it can be found in my previous post. My optimistic bottom is 8. So far, the low is 8.67. After hours it is trading at 10.3. If XLF ever reaches the 6.5-8 area, it would make for an interesting long term buy.

Slow

I have been slow to get back into gear. I have just opened an account at TradeStation and am getting used to the platform. I am also learning EasyLangauge so that I can see what kind of automated trades I can come up with.

Ag stocks have been taking a huge beating recently. MON had good earnings and popped big time only to be faded back down and closed the gap today. Do or die for it, I say die after. POT, MOS, CF, ADM are all giving back their gains at 8%+ a day.

The parabolic stock, EBS looks like it broke down on some news while LOPE seems to be holding up very well.

Take a look at APOL for further downside, courtesy of Citron Research. I have yet to read the report, but I shorted the stock in a paper account as soon as I got the email notification and made 4 points on it. I have also browsed through the history of the site, and they have made some very nice calls. Not all the calls are profitable, but most are. Some stocks continue to move up after the report is put out, but eventually they crater, APOL might be like that, so always have your stops.