Articles filed under 'Stocks'
So the other day, the big sell off started. And it’s arguable that it’s just beginning. Spurred on by Phil’s post, I considered selling out of everything.
It made sense: I thought everything was going down, so I should sell.
But it also didn’t make sense. One thing I’ve pointed out before is my struggles with trading/investing using so many different strategies. It’s easy to mix them up. That’s why when I make an entry, I need to know what my exit is… and stick to it.
The clearest no-no, which I avoided…
Hey everyone,
We are seeing a nice bounce in the markets this morning. The S&P500 is at 1485 as I write this(!!!). If you look at the 5 day chart, you will see this could take us back to part way through the crash we saw last week. The market is saved!
To me, this feels like a dead cat bounce - one formed by a pump in liquidity and a jump in premarket futures.
We are told time and time again that you can’t predict the market. And time and time again people try to predict the market. Many model the market using stochastic principles, and use it to predict the market. I find this completely amusing (stochastics is about multiple destinys based on a single context.)
TraderFeed a favorite blog of mine had the following to say (Are We Making a Bottom).
There is both the sense that we could go much lower in a washout (a “Black Monday” scenario) and that we could be seeing an important bottom in the making.
Fair enough, good point we might be at an inflection point.
(more…)
Monday, Jul. 30, 2007
by Christian
Well, I was right (see Wednesday’s post). That at least feels good. However, I thought the market would make a decent recovery. I had raised my limit price to $51.20 (from $50.20) yesterday, realising the recovery was probably not going to be as strong as I wished.
However, when I logged on tonight (it’s after midnight in Australia), SDS had already moved up to $53, and as I watched it shot towards $54. I got out the calculator, changed the volume and bought in just as it crossed $54. As I hit refresh now, it is in the mid $54s, heading back down.
Maybe it’s all the green on the screen so far… but already after looking through things a bit more, I a am less bleak than I was earlier. I had commented on Philip John’s last post that after yesterday’s sell-off, I was ready to sell into today’s bounce to move to about 75% cash from 10% cash.
I’ve decided to make no move today. Today is likely to be a nice up-recovery day. I need some time to think things through before selling long-term mutual fund and index positions. And I’m likely to do more damage selling early today than holding too long. Tomorrow would be a different story. We’ll see.
Part of my motivation to sell off so much is that I’m on vacation right now and would like to not have to worry about the market during this volatile time. (Day-traders are on to something with their owning no positions after hours.)
I’m also being very loss averse as after selling my GRMN at $81 (which it has bounced back above after a few shaking trading sessions) I’ve gone ahead an lost about $150 so far on two investments in Amgen (AMGN) and Bed Bath and Beyond (BBBY). I had had those stocks on my list as good value-TA plays that were counter-cyclical to GRMN.
Some New Positions - What am I getting Into To?
AMGN still looks good…
Just a quick note to say I think the market has had its major top.
I am going to wait for a pullback tomorrow (Wednesday 25th July) and have an open order to go short SDS at $51. Hopefully this will get filled in the next day or two.
The consumer is tapped out. After consistent 25 basis point increases to the Federal Funds Rate, we are finally starting to see the effects on the stock market.
Yesterday morning we saw three headlines that caught my attention. The first detailed Sears’ guidance for this quarter – a reduction from $2.12 to from $1.06 to $1.32 per share. These revisions are, at best, a 30% reduction and, at worst, a 50% reduction from their previous optimistic estimates.
Notably, declines were across all categories. If you follow the theory that the consumer is on thin ice, then it is hardly surprising to find big ticket items are not being purchased. Sears is having trouble selling new stainless steel fridges and widescreen TVs because consumers do not feel confident about their financial situation. The only sector that wasn’t hit as hard was women’s apparel and footwear – suggesting stressed housewives may be engaging in retail therapy.
Many of you will have read about the advantages of Exchange Traded Funds over Mutual Funds. However, have you considered beyond the “ETF” moniker to ask: “What ETF index should I be looking for”?
To start with, let’s quickly examine the basics of ETFs. These are generalities, but tend to hold true.
Exchange Traded Funds are managed such that the asset allocation of the fund matches the underlying index the fund is attempting to emulate. The indexes range from well known (e.g. S&P500) to obscure, created specifically for the ETF (e.g. water focused). Management fees are generally less than 0.5%, but can be higher for specialized funds. ETFs trade daily on the stock exchange and can trade at a premium or discount to the underlying assets. Through fancy footwork, ETFs generally retain profits within the fund and make only small distributions each year.
I’m writing this one directly into the blog, and with any hope it will go up before market open today. Let’s what we have on dee plate.
AMGN
Notes from late last week: “Stoch sell. MACD still strong. I think this guy is recharging.”
I’ve since changed my theory from “recharging” to “dropping”. It’s looking bleak for this guy short term. 30DMA is providing resistance and Stoch and MACD are signaling sell. Lots and lots of support at $52. And although it’s well below my MOS of $65, I sold my 60 share stake last Friday at $55.62. There’s a lesson there on trusting your instincts while selling, as I could have sold it at $60 and kept $22 more, but that’s another story.
I have a bit of sellers remorse though. This really was a value play. I sold it in my trading acount, which means full tax on the $5 I made, not to mention E*Trade’s high fees. And I’m reminded of a bad sell I made on YHOO last summer where I avoided a $1 loss that was coming, but then missed the $6 run up. That could be happening here.
In any case, I thought it would be good to have some cash on hand going into this little bear run so I dropped this one too. Though my gut tells me I should possibly be selling this next stock to lock in some real profit.
GRMN (I own 75 shares)
Notes from late last week: “Can anything stop these guys? My higher sticker price was around $75, so I’m looking for any reason to sell. I want to let it run, but I’ve “made my year” on this one stock already. I’d like to ensure that I don’t give it all back. Need to figure out a good stop placement: $69.90?”
I’m glad I didn’t set that stop because I would have been stopped out and the stock has gone up since. But I haven’t made nothing until I sell right? But then what am I going to do after I sell? Put it back into GRMN? I need a better alternative, and I’m just going to watch this carefully for a more pessimistic sign. The thing is flying high right now.
AMD
Looking strong here. MACD and Stoch have thrown buys. The price is above the 30DMA, but I’d like to see a full bar there. I have some cash on hand, maybe this is where it should go. Seems like the news about AMD outsourcing fabrication went over well. Was it enough to turn the stock around? I’d be looking for the stock to reclaim the 200DMA at around $17.50, but there’s a lot of resistance on the way up. Plenty of support at $13.
ERTS
I second guessed myself, when ERTS went above my selling price of $49 last week. But it seems that was on the back of a stronger market, and the price is south again. This is a troubled stock (at least short term) that I don’t need the headache for. The 30DMA seems to be giving a lot of resistance. This one is going on the back burner until I gain my confidence back in EA. Technically, I’d like to see a full bar above the 30DMA and the 10DMA cross above the 50DMA before jumping back in.
EBAY
30DMA is showing resistance, but this stock is also in a nice little up channel. A break of the 30DMA could be very bullish. Look for more resistance at $34, support at $31.40. I think could see a large run here like we had with Amazon earlier. eBay is another tech business that Wall Street (and Main Street) doesn’t understand. Why did they buy Skype? Why did they buy this or that? What are they doing? Is the toning down of Google advertising going to hurt them or a good sign of their strength? I might buy some of this now and hope they can break $35 this time. Going to do some MOS calculations to check my risk here. Read here for Phil Town’s eBay analysis from last year (when the stock was at about the same price). My numbers are a bit more conservative, but they are still saying buy buy buy.
Current Earnings: $1.05
EPS Growth: 22%
Average PE: 44
EPS in 10 Years: $7.67
Future Value: $337.47
Sticker Price: $84.37
MOS 50%: $42.18
I’m going to be looking to buy this fella today. I’ll let y’all know how it goes.
QQQQ (I own 90 shares)
Staying the course. One of the major indexes above its 30DMA. I think we see a bounce here or after one more bad day. Holding this to keep pace with market.
ACN
My notes from late last week: “3 Buys. Looking good. $40.45 entry o short-term pullback. Need to do a MOS calculation.” And the stock is doing great. Still need to do that MOS, so here it is:
Current Earnings: $1.61
EPS Growth: 17%
Average PE: 20
EPS in 10 Years: $7.74
Future Value: $154.78
Sticker Price: $38.69
MOS 50%: $19.35
ACN is a great company and great stock, but it’s trading at around or just a little above sticker price (according to my off-the-cuff here). So I can’t invest now. My Average PE is a little low, so I might look into it more to double check. A PE of 34 (twice my EPS growth estimate, but higher than the historical average) gives us a sticker price of $65.78… which would be more room to grow.
Tuesday, Jun. 26, 2007
by Jason
Below are my notes from yesterday, which I wrote before the open. I realize that I should be a bit quicker about putting these online because (1) they are sometimes timely and people might find them useful and (2) if I make a great prediction it will be easier to believe if I posted my notes before that prediction came true. Still, maybe I don’t want people trading on this advice (be warned!).
I don’t know exactly why I’m doing this. I just feel I have already written the notes, might as well throw them online. At the same time, I’m hoping to get a few “what the hell are you doing” comments that could help me avert disaster. Like, where were you guys when I invested in ERTS?
AMGN:
Found support on the 10DMA. Looking good.30DMA Crossing under the 50DMA will mean those levels will be super resistant. Would like to break through them this week. Otherwise it’s back to $55 territory to reload. I’m guess a bit of lateral movement for the next few days until a break out. This is a value play though. So we’re stilling in.
GRMN:
Nice day Friday. Bullish engulfing? Fake bounce of the fast stochastics. MACD is scaring. Time to sell into strength? I’m already up good with this one. Trailing stop?
(Here are the time when I forget what I’m doing. Am I trading? Am I investing over a longer time frame. This stock is held in my IRA. While that means I won’t pay tax on the earnings (so trade it), it also means the gains are for the long term so I can afford to use a more conservative trading approach.)
(After hours note: We did really good with this one today. Another big up day. Looking at the 5 year chart, I see no resistance and a lot of room to move. So I want to give it some space. But I will have a trigger finger on the sell button. My MOS calculations put the sticker price on this one between $71 and $84 -need to update- so I’ll definitely be looking to sell there.)
AMD:
What a confused stock. Still scary. A $15-$18 play would be nice. Too bad it will probably make that jump in one day, and so one would have to be way more observant and prepared than I too make that trade.
ERTS:
I’m torn on this stock too. Technicals and news are weak, but I have an 50% MOS at $43, so a bit of support. Maybe my calculatons are bad. I need a close above 30DMA today. Should consider a stop loss. I’m going to watch the daily and try to sell this today.
(After Hours Note: I sold my stake in ERTS, or 50 shares, at $49.00 yesterday. Not too bad. I still think there is a lot of growth potential in the videogames market, and EA is the biggest player. But the Earnest Adams article -saying EA is no longer a growth company-, EA’s misstep with the Wii, and some other negative bits are playing out harder than I originally thought. I’m torn though, because a bunch of negative analysts only leads to upgrades -or bankruptcy, which I don’t see here-. But I shouldn’t be torn. I should be absolutely 100% convinced… or close to. So I’m going to find a different videogames play or wait for a better entry on this one.)
EBAY:
Big bullish engulf Friday. Hit resistance at 200DMA though. Wait for some + MA crossovers.
QQQQ:
Looks like it’s bouncing. Watch that MACD. A close below the 30DMA is bearish.I’m calling a whipsaw.
(After Hours Note: Bounced off the 30DMA. However, we’re looking at a -0.16 open according to E*Trade. Ditto yesterday’s note. I want to see a powerful up day today to regain the trend.)
Full disclosure: I own 60 shares of AMGN, 90 shares of QQQQ, 75 shares of GRMN, and some other IRA money in various index and mutual funds. Use these notes at your own risk.
Tuesday, Jun. 12, 2007
by Jason
