Friday, October 31, 2008

Heed the Warning Signs

Market is giving up a lot in the last one hour. That means we're nearing the near-term top. Get out while you're ahead (if:)

Tuesday, October 28, 2008

It's For Real

Okay, if you play your cards right, you could easily see a 30% return on your money over the next 3-4 months. But, don't be greedy and be prepared to bail in time. Once the near term correction sets in, the next set of leaders will be in the handle formation. Watch for those!

Wednesday, October 22, 2008

THOR - Strength in a Weak Mkt

What gives? And why isn't anyone screaming about this one?

And what about NTES? Someone seems to know something about this one - it could really take off.

BWLD looks good. So does NEOG.

Thursday, October 16, 2008

Now Get Ready

Alright, it's here - IBD's changed their tune to confirmed rally. Now, you need to act fast. I doubt very much we'll see a really strong rally, but I could be wrong. It's so hard to stick with one decision:) Now that I've pulled out, it's anyone's guess which I way I want it to go:) Actually, I do have a few positions still left. MT might have been premature - that was a big loss. But, let's see what happens.

Wednesday, October 15, 2008

Fanning the Flames

After I bolted, I put in an order to buy 2k VWO at 21:) The hardest part is to stick with your decision after you've made it.

It does look bad - consider, DELL will soon be a penny stock.

Catharsis

Alright folks, I'm out:) I was hoping for a strong rally till we got to the 200 day MA, but looks like that's a dream. I think one rule that applies is - sell when you get such an email from your financial advisor (even if you don't pay him):

About three weeks have passed since I last wrote to you about the economic turmoil affecting world markets. In that time, U.S. and worldwide stock markets have continued to gyrate and go down. We recognize that many of you have concerns and questions about how to respond to these events. Here are some important points to keep in mind.


We expect markets to recover. Of course, we don't know how soon, or how long it will take to make up for the recent losses. But markets are very resilient. The U.S. stock market has weathered a number of extreme events in our history—a Great Depression, world wars, oil embargos, and market crashes big and small. And despite these setbacks, the market has continued to grow over time.

This means that a broadly diversified portfolio is as important as ever—the kind of portfolio Financial Engines recommends through the Personal Online Advisor service. Just as market declines can happen in a single day or week, rebounds can be equally sudden and unpredictable. Missing those days by having your money out of the stock market can be very costly in the long run. Your best opportunity for success is keeping to a consistent investment strategy, not trying to time the ups and downs of the market.


end_quote.

That's the key - when he tells you that you might miss out on a big up day - is the time to run:)

Tuesday, October 14, 2008

Sell Sell Sell Sell Sell Sell Sell Sell

In a few weeks. With most big name stocks struggling to catch up to their 200 day MAs, we don't even have a right to be in the market.

And, once the next uptrend starts, don't fish at the bottom - look for new leaders - not past leaders that are beaten down.

And yes, please cut your losses.

Monday, October 13, 2008

When to Sell

Simple - watch IBD - and, when they yell Market in Confirmed Rally, get your stops in order. They're making a big deal out of the bounce coming in lighter volume than the previous day. They define a follow-through day as a 2+% advance in volume higher than the previous day. Problem is - the big players have realized that that's what people are looking for - so the game has changed - that's when they get ready to sell. At uncertain times like this, you have to view the market as a big poker game. Or musical chairs. Stay ahead of the pack and don't try to squeeze the last nickel out of the rally. One thing you can be sure of - we haven't seen the bottom - and there will be another huge downturn in a few weeks. Why? Simple - there were smart people who waited for the crash and got in at the bottom. After that, it's psychology - do you think they will hold on forever and take risk or be satisfied with a decent gain? Also, people who got burned will wait until there is a true bull-market.

Buy - Blue Chips Only

You can bet those will keep moving up for a couple of weeks. But, get ready to sell soon after that. There'll be a really downturn in a couple months. Remember, the biggest up days on the NASDAQ were during the dot-com bust bear-market.

Saturday, October 11, 2008

Iceland Must Pay

I'm not that dumb after all. I had made a mental note to ditch EZPW - the one holding that was actually in the black. Couple of days later, I look and see it's down about 4 points and I disapprove of myself again. I login yesterday and see that I actually got out at 15, and it's now at 11 - so I get back in. And this is one stock that actually seems to be going somewhere.

And oh, what about BRK-B, I held 8 shares at one time. Let go at 4100 and watched to soar all the way to 47, but I knew what was coming:) Ooph! And what about CHK? If I hadn't gotten out at 49? I could have watched it drop all the way to 15.

You're getting what you wanted now - get ready to sell out completely in about 3 months. And, you can get back in about 4 months after that.

A mistake I keep repeating - looking for gains from climaxing stocks - if a stock is off it's high, it's not necessarily a good buy - no matter how good the fundamentals look. Look at the chart on different scales - see if it's climaxing. If you want to buy - when the stock is in an uptrend, get in once it builds a base, and set a firm stop loss.

Thursday, October 09, 2008

Sixth Triple-Digit Loss in a Row

Iceland is bankrupt - they borrowed heavily from abroad to invest in banking assets. Those assets are essentially worthless now. Iceland was a big hedge fund.

Russia is hoping to get the US base in Iceland and get a foothold in the Atlantic. That's probably what we need - another cold war - so that we can get the defense industry moving again and get the economy going.

Wednesday, October 08, 2008

Bad Behaviour

Got out of WFR two days ago deciding to "keep what's left" and got back in today wanting to not-miss-out on a rally. I haven't done this in years. This should clue you. My emotions are starting to pick up. I've said the big players won't get back in until the little people really sell - so they can buy at rock bottom - and, the next day, stocks will open so high that the little people would have missed out anyway. Anyhow, I've decided to pull out completely. Oct is a free trade month on Zecco - so I can get out without commissions - got to make the most of it.

What's different about what's going on now versus just bad stock pics? In the case of the latter, you probably didn't anticipate a competitor that would put your company out of business, or you didn't anticipate a sector downturn because a particular technology went out of vogue - or something specific like that. What should have clued people here was the big names folding - Bear Stearns was the big one. That actually was warning enough. What is going on IS different - we've seen 150 year-old institutions like LEH give up. MER doesn't exist. Morgan Stanley is finished. This is as different as it gets.

And why is the economy going to be bad - it's because a good economy is where there is healthy consumer spending. Except, in this case, the spending is over. People (like me) spent money when it was easy to come buy - and that led to more houses being built. So, the houses are the assets that exist. For the next 5 years, there won't be any spending because the spending is over. In my case, though I didn't acquire tonnes of assets, I was lax over the last year - averaging down on bad buys - based on the value of my portfolio. I thought I was rich based on what people were willing to give me for what I had at a certain point in time. That's not a good standard. There is no standard - even if you own gold, what you can get with that gold can decline as time passes.

I honestly don't know what the answer is. One lesson I plan to take very seriously from now on is that trendline violations are very serious. Don't think you're getting a bargain. You think you're getting a good deal, but you could be in for a shock. If a stock is in a healthy uptrend, think about buying into dips - and setting very tight stops.

Monday, October 06, 2008

Near-Term Bottom?

Going by my behaviour, I would say so. Though I did buy some, I sold WFR which I've held for a long time. It's clear I've been investing on instinct and gut feeling rather than rules. I've watched that stock top out at 90+ and see it stare 20! Ridiculous. Now I'm hoping it keeps its downward journey:) But, my fear is starting to up on a daily basis now. And I'm not even margined.

Friday, October 03, 2008

Stick it Out

That's my advice. If you're not in the market, think about getting in. It's a tough time, but the institutions won't start buying until the little people lose heart and sell - that's when they get stuff cheap. If we keep up the rate of decline we've seen, the whole world should cost a dollar in a few months.

But, having bought, get ready to sell in a couple weeks - we need to bounce off the bottom a few times before we're ready to move up.

Of note - GOOG and AAPL explore levels they haven't seen in a while - GOOG back in the 300's and AAPL below 100.

My big embarrassments :

WB - who would guess that this stock, when it saw trouble, would offer traders the chance for almost 1000% in profit with smart trading?
SIMO - got in around 25, it's at 4! This seems like 2000 doesn't it?

And the ones I'm lucky I sold:

TS : got out around 63 - it's at 32. If it was a few bad picks, we could be faulted - but, at this time, it's every stock in the world that's searching for the bottom. And we haven't seen the bottom yet - forget it - not until MSFT hits 21 around mid next year are going to see the bottom.
WDC - got out around 37, it's at 20 now.

Once the new short-term rally starts - in a few hours - ensure you have really tight stops - so that you get out when the trend reverses - as you know, the stock market is just a game or musical chairs or poker - when it's dominated by traders.

I would suggest a good, hard look at GE. Don't expect stellar returns, but you might easily see 50% in a year.

And, has anyone wondered why WMT has done so well when the rest of the market has been heading south?

And what about TXN - test resistance at 35 three times and finally broke through last year and look at the sordid footprint after that. Goes to prove Curran right - eternal vigilance is the price of freedom.

To predict the future of the market, look at your own behaviour - if you buy items that you don't really need because your portfolio is looking good, then you can be sure that there is an uptrend in progress that is not tenable. That's really the time to get out - and see your money lose value anyway because of inflation:)