Monday, January 31, 2011

Chart of the Day

Today's Chart of the Day is ERJ. Consolidating nicely after the breakout from a couple of weeks ago. Volume is beginning to regain strength in the last 3-4 days. Tested the previous highs from November during the consolidation and back up gain.



Take care and good luck!

P.S.: This was the best ever month for the blog with over 15000 pageviews! Thanks for reading!

Long and short setups

Here are some long and short plays that I am adding to the watchlist. All these stocks had relatively high volume today and are at or close to important levels. As always, check for earnings date before taking position in any stock.

ABV - A short at break of 26.41.


AGP - Watch out for break of 52.90.


CPO - Weak close below MA(50). Next support at 45.


FITB - Watch out for break of 15.15. Won't consider it until it breaks this level as the action has been choppy recently.


HLIT - Nice bounce off MA(50). Bullish volume pattern. Above 8.51.


HOG - Consolidating nicely after break out. Might need some more time but looking for test of high.


ITUB - Got rejected at MA(200) again. A short at new lows. Next support at 20.18.


Take care and good luck!

Saturday, January 29, 2011

My story.....Part 2

Last time, I had left you readers with a post on how I stumbled into trading. Let me share with you readers my first experiences with trading now. Here's part one of this series in case you missed it. I highly recommend giving that a read first if you haven't done so already, as that post tells a bit about my background and as I have come to now realize, our trading strategies are very much a reflection of who we are and quite often, teach us who we are.

Let's carry on. So, I decided to get into the markets. I often tell you readers that I have pretty much made every mistake in the book and learned from those mistakes. This post will show you that that line is no exaggeration. You have to remember those were days before Stocktwits and I didn't follow any trading blog. I still remember the first stock I purchased and the reasoning behind it. It was ASTI, a small cap solar research company. Why? Well, oil was going up and everybody knew renewable energy was the big thing. I reasoned that I couldn't go wrong with solar. Specially a company with government contracts and lots of patents. Instead of ASTI, I decided to go with ASTIZ, the warrants because they were "cheaper". Can't believe I was that stupid! I remember selling half of my stock for healthy gains and then keeping the other half for the long run. Did I have a stop loss? Hell no! I was a buy and hold guy ready to invest more if the stock went down. I was going for the home run. 

Then I bought WWAT, another renewable energy company. I saw this company first at 1.80 odd, if I remember correctly, and it had already run up huge by then in matter of months. From 0.50 or something. I would buy it on a pullback. Wasn't I smart? Surely a stock that had gone so high so fast, had to go down. I visited the yahoo boards and this company looked like the next big thing. There were posters with over 100% gains still holding on as this was just the beginning. I saw from the sidelines as the stock crossed the 2 level. Then 2.10. Finally, as it crossed 2.20 with volume (used to see a bit of the charts even back then), I couldn't wait any longer. This was easy money that I was missing. I jumped in. You guessed it right dear readers. I bought pretty much at the top. From then onwards, I was trying to find out the next "important" support level and going to yahoo boards trying to get the latest "information" about the company.

Then there was CXTI. I bought the stock at 0.35. It had plummeted from 6 odd if I remember correctly. Surely the stock was cheap now! So, I got some. 

It wasn't all that bad. I had handsome gains in IDMI and a few other stocks. Without a doubt, the best investment I made back then was NEP, my largest holding. Then came 2008. I had very little clue what was going on except that my account was going down, and going down fast. The bottom line is that my initial investment of 10000 dollars, a princely sum for a grad student, was reduced to 50% of its value in a matter of months. Well, for the first time in my life, I was well and truly defeated. 

I knew I was doing something wrong but I had no idea what. To say that I was discouraged would be an understatement. But at the same time, I had this feeling of getting back at the markets. The markets had taken my hard earned savings and I would take it back from the markets only. The markets owed me. Looking back, this emotion of blaming the markets and getting back at the markets was very wrong and could have proved disastrous. But at that time, it helped. I stopped looking at my account for a few months. I knew that I would be back. But next time, I was going to be better prepared. And the market was going to pay me back.

I will save the rest for another post. The story is just getting started.

Take care and good luck!

P.S.: For those keeping score, I sold the rest of my ASTI and WWAT position late last year for next to nothing to book capital losses. CXTI turned out to be fake. NEP dropped to under a dollar and then rose to over 10 dollars. I sold enough of my NEP position at 10+ to recover all of my initial investment in stocks. I continue to hold a very small position in it in my long term account to remind me of "those" days.

Thursday, January 27, 2011

Watchlist

Here are a few stocks that I will be keeping an eye on tomorrow. I will be keeping my comments on the charts brief as I don't have too much time but the important levels are marked on the charts itself.

ATI - Nice consolidation after yesterday's breakout. Like it at new highs. Huge short interest makes it even more attractive.


ATW - Broke important resistance today on good volume.


CY - Nice move off the consolidation pattern. MA(20) strong support.


RJF - Test off trendline support after the breakout. 36.50 important.


WMB - Look for a break of 27.06.


Take care and good luck!

Gold at important support

Watch out for GLD at 128.72. It is an important support level, and a break of this could see MA(200) being tested. That being said, the momentum lies completely with the bears right now.


Take care and good luck!

Two to watch out for

Here are a couple of stocks that are setting up nicely here. Keep an eye on the volume in both of them as both of them have a bullish volume pattern and relatively volume high could quite possibly signal a  breakout.

MGIC - Watch out for 8.60.


BORN - Watch out for 14.40.


Take care and good luck!

Wednesday, January 26, 2011

Chart of the Day

Today's Chart of the Day is NAK. I was scanning for gold stocks that have held up relatively well during this down move in gold and that's how I met this one. I posted about this one on twitter earlier in the day, so hopefully some of you have already benefited from the move today. Has formed a bullish volume pattern since December. Should meet first resistance at 18.95.


Take care and good luck!

Monday, January 24, 2011

Watchlist

Here are some stocks that popped up in my scans tonight. Three long and one short setup. All these stocks had relatively high volume today and find themselves at or just below important levels.

MGIC - The best of the lot. Nice bullish volume pattern. Watch out for a break of today's highs.


CNO - Nice move off MA(50) on this one today. Wait for a break of MA(20) to see if this move is for real.


BORN - Nice move and a nice close. Forming a bullish volume pattern in the last 10 days or so. Close above an important resistance level today.


PBCT - Finally, the short play. Tried hard for some kind of reversal after a breakdown last week but failed at MA(50). Poor close today resulting in a doji. Looks ripe for more downside.


Take care and good luck!

Sunday, January 23, 2011

Chart of the Day

Today's Chart of the Day is SUSQ. Broke out of a nice bullish flag on Friday on good volume. MA(20) held as support. Watch out for a break of the marked trendline.



Take care and good luck!

Long and short setups

After seeing the market action last week, I think it would be prudent to not be over committed to either the bull or the bear side and be prepared for any eventuality. So, after quite some time, I also scanned for short setups along with the long setups. Here are a few of the stocks that I would be keeping an eye on next week. As usual, it being earnings season, be sure to check for when a stock is reporting before taking any position.

BVN - A steady downtrend with MA(20) acting as resistance. Broke important support last week and followed it up with a poor close on Friday. With gold continuing to look weak, watch out for a break of 40.


APKT - The consolidation pattern broke last week, resulting in a break of MA(20). The stock tried to bounce off MA(50) on Friday but had a poor close. A break of MA(50) will probably see 50 being tested.


SRX - A poor close on Friday but the momentum still lies firmly with the bulls. A close above 26.25 could see start of another move up.


RJF - Broke out on decent last week and followed it up by a day of consolidation. Watch out for a break of 36.42 or a bounce off the marked trendline.


ACI - Failed at MA(50) on Friday. Watch out for a move below 30.75.


IAG - Interesting to see a gold stock actually do well in the last few days. Speaks volumes about the relative strength of this stock. Watch out for a move over 19.50.


LO - Move lower followed by a period of consolidation followed by another move lower. That seems to be the story of this stock. Watch for a move below 73.95.


I will be back later with Chart of the Day.

Take care and good luck!

Saturday, January 22, 2011

My story.....

I remember it like it was yesterday. It was the summer of 2007. Being a grad student, summer times were relatively free. Or at least no classes. I had just finished my Masters and it was on to Phd now. It was a natural progression of things. All seemed good. All seemed right. I was about to get my first paper published. That had been my goal in life for the last couple of years. Get a paper published. Get my name as first author in a paper in one of the big journals. My shot at "immortality". The academic equivalent of having made it. I like to think of myself as a rather level headed person with my feet firmly on the ground. But looking back, its easy to see that I might have been a tad too bullish on life at that point but that's hindsight for you. But the point is that one of the main goals in my life, perhaps the only one at that point, was close to being met and I wanted to move on and look for new challenges.

I had a labmate who claimed to have invested in AAPL when it was below 10 and I have no reason to doubt him. Now that's an amazing profit (even back in summer of 2007) for anyone. But to me, a grad student living in a studio apartment whose life revolved around happy hours, this was the equivalent of striking oil! I had to get in on this. A quick click on the Mac dashboard and I could see AMZN was really rising. If only I had invested a couple of years ago! This was just so simple. What was so hard about it? I did a lot of my shopping at Amazon, and loved it. Surely picking stock winners was the easiest game in the world. But hey, I was smart. I needed to know more.

So, I switched on CNBC for the first time in my life. And then to Cramer. The guy was fun to watch and supposed to be very successful. People seemed to trust him. He was calling for Dow 14000 at year end if I remember correctly (or was it 16000?). Everybody was just so optimistic. I had to get in. I had to get in right away. Forget about US stocks, I was going to go with China. That was the big growth story.
Looking back, pretty much nothing in my life so far had prepared me for what was to follow. I had failed in life before (can't remember when though!) but never in a manner that I would do in the next six months. When I started it all seemed so simple. Little did I realize then, that I was about to take on the most challenging activity I had ever undertaken. And the thing that I would end up getting most passionate about, more than even my research. It all seemed so simple back then.....

More to follow when I get the time and get in the mood.

Thursday, January 20, 2011

Keep an eye on MA(20)

Both the S&P and Nasdaq find themselves at important levels today as they test their respective MA(20)s. The importance of MA(20) for S&P can be seen in the chart below. Since this rally started in September, this level has provided constant support and has breached only once.


Its pretty much the same story for Nasdaq except for one little fact. Its already below the MA(20) as I like this.


Personally, I am all in cash here, enjoying the action from the sidelines but all ready to take sides with whoever wins the fight here, the bulls or the bears.

Take care and good luck!

Wednesday, January 19, 2011

Chart of the Day

Today's Chart of the Day is AMAT. Like the way it is consolidating since the breakout from couple of days ago. Higher lows being formed. Wait for a break of 15.35 on volume before getting in.


Some words on the overall market now. In my opinion, today's action was a lot more bearish than what is suggested by DOW being down 10 odd points. I am still not going short here, for swing trades at least, but a healthy cash position might be the need of the hour here.

Take care and good luck!

Tuesday, January 18, 2011

Watchlist

These are some stocks I will be keeping an eye on tomorrow. I don't have time to comment on all of them individually, but all of them were up on relatively high volume today and they all find themselves at or just above critical levels which are marked on the charts itself. It being earnings season, be sure to know when a stock is reporting before getting into it.







Take care and good luck!

A quick update

Today's Chart of the Day, MNI, posted last night, had a pretty nice day and was up almost 10% today. Hope some of you readers played this one! The stock has a huge short float and could run some.  I would still take some partial profits here.


There will be no other post tonight as I get one year closer to the dreaded 30 year mark today. The other setup presented yesterday, LEN is still in play and I still like it on a break of 21.

Take care and good luck!

Monday, January 17, 2011

Chart of the Day

Let's make it Chart(s) of the Day today. Today, we have two possible short squeeze candidates. Both these stocks are setting up nicely here, have bullish volume patterns, are at important levels and the huge short float makes them possible short squeeze candidates. As always, it being earnings season, be sure to check when these stocks are reporting before getting into them. Here is my general strategy for earnings season.

LEN - Could breakout over 21. 17.39% short float.


MNI - Been consolidating very nicely for quite a while now. Watch out for a close over 5.08. 30.50 % short float!


Here are my favorite sectors heading into next week and be careful of gold miners here.

Take care and good luck!

Reader Requests - Part 3

Here is the third and final part of analysis of reader requests. Here are the links to Part 1 and Part 2. I hope these charts have been of some help to you readers.

CSTR - Not only an ugly move on Friday, but moreover, also an ugly close. Next support at 38.28 and wouldn't be surprise to see it get tested. 


FCS - The regular readers of this blog know that I have liked this setup for some time now. It was in fact, even Chart of the Day recently. It is setting up nicely for another move up. Also works as buy on dips until MA(20) is breached.


COF - Impressive and important move on Friday. The close over 47.71 was important. Looks a tad extended and would love to see a pullback to this level. One to watch out for financial continue to perform well.


ZN - Wouldn't touch it as a long play until it breaks 4.54. The questions is why go bottom fishing when there are so many stocks doing well and setting up nicely out there. Seems to be putting in a bottom but would have to see how it deals with MA(20).


TRW - A promising set up in a good sector. On breakout watch. Expect to see a strong move in this in the next couple of days. Like it more as a momentum trade rather than a swing trade due to the distance of the price from MA(20), which this stock has a habit of testing.


MIPS - Buy on a pullback close to lower trendline which is also supported by MA(20) or also on break of upper trendline. Like the way it has been behaving since the breakout in October. More upside in this one.


RST - Like the higher lows being put in this one and watch out for a break of the upper trendline. But there are better plays than this out there and the gap resistance is always going to be a tough nut to crack.

Take care and good luck!

Sunday, January 16, 2011

Reader Requests - Part 2

Here is the second part of readers requests. For first part, click here.
BEXP - Love the consolidation in this one. On breakout watch.


PVH - Been in a downtrened for over a month. Notice the relatively low volume on the up days during the last week. Wouldn't want to be long this one even if breaks the trendline due to falling MA(20) overhead. Much better plays out there.


ASH - Coming off a nice consolidation. Would like to see a break of the marked trendline on volume.


TXN - Gotta love this one. Nice rounded consolidation. Volume seemed to be picking up on Friday and the close above 34 was crucial. On breakout watch.
GSIT - Overbought. That doesn't mean it wont continue go higher but just that I would trade this as a day trade rather than a swing trade here. Nice close on Friday but the volume seems to be decreasing. Keep moving stops higher if you already in this one. Whatever you do, don't short a stock like this with so much momentum behind it! It will eventually go down but don't try to call the top.


NVDA - See comments on GSIT above. Looks like it has another move up in it yet.


NIFTY - This one could be used as a text book example of a trendline. The same trendline acted as resistance in January, April and September. On finally being broken in September, the same trendline now became support and was successfully tested in October. The trendline was once again broken in November and acted as resistance on December, thus providing a wonderful opportunity to go short. 28 is important support from last March-April and also due to presence of MA(200). One could expect to see a bounce here but mostly, it will be a short term bounce. Keep a close eye on the volume of the bounce if it happens. Don't want to go long here. Best to watch from the sidelines on how the battle of MA(200) turns out and then enjoy the spoils of war with the winner.


Am done for now but there are still a few more charts left. Will post Part 3 sometime later today.

Take care and good luck!