Two Breakouts For Longer Term Trade

PEET and QTM

Bought a bit of both before the market closed as both stocks broke out on high volume and closed near the top of their range on an otherwise truly depressing market action kind of day. While they both may pullback from this point, odds are, they should head higher.

PEET (in at 32.05), QTM (in at 1.98)


Looking at: HPJ (rebuy on a bounce), CLFD (rebuy on a bounce)

Low Risk Buy Points

BIDU 390.37

DDRX: Low 27 range

GMCR 68.25

XRTX 10.71

In the Wrong Stocks??

I will need to take some time this weekend to reassess my portfolio and some trades that I put through. It seems that industry groups and stock favortism is changing with the recent jump in volatility. I do not want to be in the wrong stocks, so it is best that I fix this issue before it becomes a bigger problem.


Battery/Alt. Power Stocks:

Wrong Stock: HPJ (not down bottoming. Will take time to build a base. Rebuy on a breakout pivot once base forms)


Right Stocks: ACPW, POWR, PWER

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Construction/Mining Machinery:

Wrong Stock(s): CAT, JOYG, MTW, TEX

Right Stock: BUCY

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Stock Picks and Trade Ideas for Friday

Market Commentary: The market pulled a fast one on the trading community today. Opening lower, the major indexes caused a hint of selling that began to slowly subside by noon. Todays awe inspiring close was mostly carried on the backs of consumer stocks (mainly retail). As you may have noticed, retail stocks have been some of the top performers (just look at JCG, LIZ, PSUN, etc).


Buy Candidates:

Retail Clothing: DBRN, DSW, JOEZ, PSUN
(arguably one of the strongest groups, as most of its stocks are making new highs)

Media: GTN (add to), SBGI

Paper/Paper Products: BKI, BZ, KPPC

Disk Storage: HILL, QTM, XRTX

Speculative: LEAP, PCS

Battery Stocks: HPJ (pushing its luck), POWR, PWER

Furniture (Retail): HNI, NTZ, TPX, ZZ


I will continue to post more stocks and industry groups sporadically throughout the evening as I am juggling several different tasks....

Short Term Top?

I mentioned a couple days ago that once the VIX hit low 20, a counter trend was sure to develop. And it did. Once the VIX dipped to 20.10, the market started to deteriorate. At one instant we were up 80 or so points. By the close, we were down to -90 points on the DJIA (a 170 point swing in price to the downside). The best strategy is to follow your individual stocks support/resistance levels. If your stocks continue to hold up, hold them. If they are breaking down and hitting stops and mental stop levels, get rid of them. The VIX may bounce up to the 25-26 level before hitting possible resistance. Once that is hit, the markets should bounce from there. On the DJIA, I can see the price hitting 9,800 if the 9,950 level doesn't hold.

Stock Picks and Trade Ideas for Tuesday

New Buy Candidates: MDF (in at 2.20), RWC (in at 3.71)

Sitting Tight...

There is no need to rush in or out of positions. I plan to fully analyze all of my current positions and their support once I see where the market closes. Nothing has changed the primary trend of the market. But once short sellers see a new market high, they like to start shorting top performing stocks. A perfect example of this is DDRX, which took a hit all the way to 28 and rebounded. It is low float and the ignorant short sellers continue to add to their short positions. This will be the fuel that is need to ignite the stock and send it higher.

Diamond in the Rough

HWD is one precious metal stock that I have been following for a while now. HWD and the rest of its (few) peers are part of a relatively quiet industry. But once a catalyst ignites, they begin to move in high strength...

The initial move occured in September. Today's move seems to be a continuation of it and affirms that it should continue to move higher.


Got rid of the chart since it was messing up the way the blog looked....

Digging Deep For Profits: Construction Machinery and Equipment

With more and more investors flocking to gold, silver and precious metals, there has been an increased demand for the machinery that is used to excavate these these valuable rocks. Stocks such as ASTE, BUCY, CAT, JOYG, KHD, MTW, and TEX are making new highs as investors continue to pour more capital in these kinds of plays.

and even tire manufacturers such as GT and TWI are starting to perk up and move upwards.

Retail Stocks: People are still Throwing the Clothing in the Bag...

Studies that shown that during recessions, people are more likely to have urges to buy items and materialistic objects in order for them to feel better (psychological). Although they may not need to make new purchases during troubled times, their brain rewards them for making such purchases by releasing nuro-chemicals such as dopamine and serotonin. This helps relieve the stress from the economic woes.

Top Retailers/retail related stocks


AEO, BWS, DBRN, DSW, FINL, GCO, GES, GPS, JCG, LIZ, LTD, LULU, PSS, PSUN, SCVL, TJX, TWB, URBN

Get Rid of Laggards...

The market is constantly changing. Thus, whenever the market is ready to resume or make a new move higher, more often than not, a new pack of leading stocks emerge. You may find several stocks in your portfolio under performing or lagging behind the market. If this is the case, it is usually best to sell/cut loose these poor performing stocks and replace them with new, better performing stocks. The goal is not to trail or match the indexes. The goal is to beat them. If you are only concerned with matching them, then just buy some market ETF's and call it a day. If you are attempting to outperform the market, then you have to buy the top performing stocks that emerge from the markets positive action.

Example: Nasdaq (+0.81%) v.s. DDRX (+13.6%). While DDRX can pose as a riskier trade, the reward is obviously larger. A stock like DDRX has a chance to continue a strong move. Tomorrow, the market may post a 0.56% gain, while DDRX might edge up another 5-6%. In the end, you might make 1% or so on the NASDAQ, but you may be able to pull a 3% or higher move on the stock.

The Moment That I Realized...

that the markets were in a full-fledged down trend. Here is the original post...

Saturday, August 11, 2007

The Ugly Just Keep Getting Uglier...

Is it just me or does it really feel like the list of playable long positions seems to be growing smaller and smaller with each passing day? There are several indicators hinting that the short side of things is the correct side to play in the mean time. My short portfolio, which at the moment consists mostly of short futures positions in the Dow, NASDAQ and S&P is already up nearly 35%. If this continues, it will easily surpass my top-performing long portfolio. In order to appreciate how much of a change this is, allow me to put this in perspective. This is the first time, since I began trading that my short portfolio has posted such a high gain and in such a small time frame. If the market doesn't climb back up above resistance, we will surely slice through the 200 day Ma.

What I have Learned

...From the Downtrend of August 2007-March 2009...

I learned that the peak of the number of new IPO'S emerging coincides with the peak of the overall market...

New positions tend to start failing. Breakouts no longer work and fizzle shortly after they occur.

The quality of the stocks breaking out begins to diminsh. In addition, laggards that never made moves begin making moves and attempting to make new highs (the doomsday stocks..LCRX and CYMI used to be a pair that showed up).

Traders become antsy and look for other alternatives in order to make a quick trade/buck (such as trying to start trading penny stocks and other stocks and markets that they never traded before (this indicator is more psychological in nature as it shows distressed state of mind and of the U.S. markets in general).

The general public and market is in disbelief. Everyone is still euphoric and thinks the markets can make a new high and will continue to head higher. The TV market pundits (i.e. Cramer) continue to show irrational exuberance (i.e. shouting, yelling, high pitch squealing and hands being thrown in the air). No one believed that the Housing Bubble, and Credit crisis was real until it kicked them in the a$$.

I learned that the market makes its biggest moves to the upside in downtrends/bear markets and its biggest moves to the downside in bull markets/uptrends...

I learned that you should never leave your entire life savings with so-called guru hedge fund managers, who are ex Nasdaq chiefs, with perfect returns for over X amount of years with ties to the SEC...

I learned that when everyone is ready to give up on the markets and jump in front a train, that signals the end of the bear market (take the gloom and despair of March 2009 for example).

I learned that by sitting out of the market when you are uncertain, you can avoid devastating losses and still make a decent return by waiting and watching for setups and sector breakouts, even in a full blown bear market (ex: The run up on the oil stocks and sector breakouts of PDO, MXC and others).

How do I know all this? Because I lived through it and traded through it. I cashed in on the financials by shorting them (sorry MS, GS, LEH, etc, nothing personal, just business as usual) and quickly went to work buying stocks again once the market bottomed in March/April 2009. I learned that you should always listen to your hunches, intuition and experience. Learn from your mistakes. Jot them down and remember them, because the market doesn't allow you to repeat them that often.

Stock Picks and Trade Ideas for Thursday

New Buy Candidates: BEE

New Buys: BEE (in at 2.53)

Added To: ACLS (in at 1.43...original position at 1.28)





*Note: Those following my twitter at http://twitter.com/stockraider will recall that I had already played BEE as a short term position while it was still under 2.

Top Stocks and Industries

Paper/Paper Products: BZ, MERC, VRS

Mail Order Catalog: ATV, FLWS, LINTA, VVTV

Leisure Services: CAR, DTG, LONG, OWW, PRXI

Household wares: LCUT, TUP

Newspapers: BLC, GCI, LEE, MEG, MNI, AHC

Original Truck Parts: ARM, DAN, MOD, TXIC

Data Storage: HILL, HTCH, QTM, XRTX

Construction Machinery: BUCY, JOYG, MTW, TEX

Fiber Optics: CLFD, FNSRD, OCLR, OPLK, OPXT, ZHNE

Retail Clothing: CHRS

Semi-conductor Equip: ACLS, FSII, LTXC, NANO, NVMI

Chemicals: GRA, KMGB, OMN, SOA

Apparel Manuf: FOH, GIII, LIZ

Gold/Silver: MGH, MVG, NSU, RBY, SVM

Radio/TV: EMMS, ETM, EVC, GTN, ROIAK, SBGI, SBSA, TVL

Medical Systems: EDAP, ELOS/CLZR, HLCS

Tech Services: IGTE, INOD

Brokerages: BPSG, EVR, MERR, RODM

Alternative Energy: BIOF, ICO, OPTT, PLUG, TSL

Machinary: AIMC, BLD, IR, MNTX, NDSN, TNC, WPRT

Leasing: R, URI

Stock Picks and Trade Ideas for Wednesday

Buy Candidates: ATV, CATM (current pos., may add), CPHD, FRZ, KFN, KKD, LIZ, MYRX, PUDA, XJT, XRTX (good spot to initiate a pos., or to add to one)



Long Term Trades: MESA (current position as reg. trade and L.T trade)

Hot Stocks...

Hot Stocks: HILL, CAAS, CAGC, CRNT, GY, IVAN, JMBA, LIZ, MNI, NCT, PIR, SCIL, SRZ, SVA, THLD,

Watch the Gap...

Trading mostly NASDAQ listed stocks, I am especially cautious with today's gap up on the index. Any stocks that do not close at the highs will be sold by EOD.

For now, I am not interested in any new positions. I would rather wait and see how the market reacts by the end of the day.

Stock Picks and Trade Ideas for Monday

New Buy Candidates:




New Buys:


Stocks acting well: AM, AXL, CMLS, CPBY, IPXL, MPG, RGCI, ROIAK, SBSA, SCSS, SPRD, TA, UCTT, VG, WWWW, XJT, ZHNE