Since we're not talking about specific stocks and just talking theory and mindset, I thought I'd share something I've been thinking.
Rather than saving myself (and monies) for the big moves, I'm thinking it might be worthwhile to go for consistant small gains. $100 a month pays for 20 lunches at work or one month's worth of insurance. $200 covers utilities. $300 is like buying myself a $10 dinner each night. Higher amounts start to cover apartment/rental home utilities, car payments, and others.
Eventually, I'm sure we all have the same goal of attaining "critical mass" where investments cover our monthly expenses and "work" at the office is just a bonus.
I'm starting small. Wish me luck and try not to laugh if you see me joyful for making $3.33 a day.
Monday, April 21, 2008
Friday, April 18, 2008
R.C. Corner
During the first period of a man's life the greatest danger is not to take the risk.
-- Soren Kierkegaard
-- Soren Kierkegaard
Thursday, April 17, 2008
Simon: Trader Chat
there are 2 kinds of people out there...one that things that trading is easy, and the other that thinks that trading is hard...I wouldn't know which group the most successful traders fall into but i do know that there are many aspects of the game you have to accept if you are to become successful. The following is a short list of a few i find important:
1. ESID - Every Situation Is Different. Like life, there are no 2nd change opportunities or "i've seen this before" kind of scenario. No 2 situations are the same. This is why you should never feel 100% in any trade. Unlike many other games, you will never get dealt the same cards twice...NEVER! The moment you think differently is the moment the market proves you wrong.
2. There will be MANY missed opportunities. It is part of the game, especially during earnings seasons. Today had many huge 10% moves up or down...and i bet tomorrow will have just as many. Though hard to keep in the emotions of regrets and GREED, it really is best handled with a "live to fight another day" kind of mindset. The more time spent thinking about it is just more time taken away from searching for the next big move. And there will be another big move...there always is...
3. Don't mistake successful traders with intelligent people. The successful ones have 2 things going for them and 2 things only...They are controlling emotions and managing risk. No need to be smart to be profitable...and doesn't mean you are stupid to be unprofitable. Just means you haven't found your style in playing this game.
4. the market always gets even. cockiness is never rewarded and greedy pigs always get slaughtered. smile but don't gloat...the moment you start boasting about your talents, your portfolio will pay the price.
5. trading is boring. not every minute is exciting and for those who "think" otherwise are just afraid to admit the truth. this is a key in finding your own trading strategy. How much time can you sit at the computer watching graphs get created? 6 hours? 5 minutes? once a week? once a month? Figure that out and you'll know what graphs you should trade off of.
6. Negativity surrounds you. For every opinion you have, there is bound to be another millions of traders who are going against you. Once you enter a trade, you'll start to hear opposition from CNBC contributors, bloggers, and also trading friends....Don't believe anything they say...whether right or wrong, give credit to your opinions first...these trader most likely do not trade in the same time frame or with have the same risk tolerance as you...and most people who bother to mention their ideas are opinionizing just for the sake of argument...there is no spine to their conviction...just talk...
7. Success is not measured in dollars...it is not measured by the amount of money you make...success is measured by your consistently and ability to understand the market. Making money off a trade can be 100% luck. And seeing it right, though not a participant with a position can mean more than the guy who made money off the same trade. Credit is given to the traders who remain successful for weeks, months, years and decades...Time will separate the good from the bad from the lucky....
1. ESID - Every Situation Is Different. Like life, there are no 2nd change opportunities or "i've seen this before" kind of scenario. No 2 situations are the same. This is why you should never feel 100% in any trade. Unlike many other games, you will never get dealt the same cards twice...NEVER! The moment you think differently is the moment the market proves you wrong.
2. There will be MANY missed opportunities. It is part of the game, especially during earnings seasons. Today had many huge 10% moves up or down...and i bet tomorrow will have just as many. Though hard to keep in the emotions of regrets and GREED, it really is best handled with a "live to fight another day" kind of mindset. The more time spent thinking about it is just more time taken away from searching for the next big move. And there will be another big move...there always is...
3. Don't mistake successful traders with intelligent people. The successful ones have 2 things going for them and 2 things only...They are controlling emotions and managing risk. No need to be smart to be profitable...and doesn't mean you are stupid to be unprofitable. Just means you haven't found your style in playing this game.
4. the market always gets even. cockiness is never rewarded and greedy pigs always get slaughtered. smile but don't gloat...the moment you start boasting about your talents, your portfolio will pay the price.
5. trading is boring. not every minute is exciting and for those who "think" otherwise are just afraid to admit the truth. this is a key in finding your own trading strategy. How much time can you sit at the computer watching graphs get created? 6 hours? 5 minutes? once a week? once a month? Figure that out and you'll know what graphs you should trade off of.
6. Negativity surrounds you. For every opinion you have, there is bound to be another millions of traders who are going against you. Once you enter a trade, you'll start to hear opposition from CNBC contributors, bloggers, and also trading friends....Don't believe anything they say...whether right or wrong, give credit to your opinions first...these trader most likely do not trade in the same time frame or with have the same risk tolerance as you...and most people who bother to mention their ideas are opinionizing just for the sake of argument...there is no spine to their conviction...just talk...
7. Success is not measured in dollars...it is not measured by the amount of money you make...success is measured by your consistently and ability to understand the market. Making money off a trade can be 100% luck. And seeing it right, though not a participant with a position can mean more than the guy who made money off the same trade. Credit is given to the traders who remain successful for weeks, months, years and decades...Time will separate the good from the bad from the lucky....
Tuesday, April 15, 2008
They're cheap now, but they'll get cheaper later.
Something to keep in the back of your mind.
Country Wide (CFC) is on today's list of high volume leaders. I just happened to see it this afternoon. The stock is still plummeting. No surprise there. The current share price of $5 can easly lose another 50% (arbitrary %age). Defintely don't buy now hoping to sell in a month. I'm confident however that companies like these will turn around and become strong again in the long run. When it goes big, it will be huge. The catch is that you may be waiting yrs.
I'll be waiting until the stocks start to flatline and prepare for the rise before purchasing for the long term.
Two scary things:
1) The last time the stock was at $5, was back in 2000.
2) The stock was $32-40 for 4 yrs before this recent drop. There's not much volatility. Timing for this stock is everything.
Brian
Country Wide (CFC) is on today's list of high volume leaders. I just happened to see it this afternoon. The stock is still plummeting. No surprise there. The current share price of $5 can easly lose another 50% (arbitrary %age). Defintely don't buy now hoping to sell in a month. I'm confident however that companies like these will turn around and become strong again in the long run. When it goes big, it will be huge. The catch is that you may be waiting yrs.
I'll be waiting until the stocks start to flatline and prepare for the rise before purchasing for the long term.
Two scary things:
1) The last time the stock was at $5, was back in 2000.
2) The stock was $32-40 for 4 yrs before this recent drop. There's not much volatility. Timing for this stock is everything.
Brian
Earnings Outlook
While the market is in the middle of a tug of war between the bears and the bulls, earnings reported from Alcoa, GE, and Wachovia Bank have set the tone for this quarterly earnings reports. With the bulk of the companies reporting earnings starting tomorrow, here’s a possible preview of what to expect…
Financial Earnings – Most financial banks will report a decrease in net income or a loss as was the case with WB. It’s no surprise that banks currently have no means of generating income and it’s prudent for them to clean out their balance sheets. I expect the write downs to be finalized during this quarterly reports and efforts to increase liquid capital through stock sales, sovereign funds & dividend cuts will be made. While downside risk certainly remain for financial stocks going forward, this quarterly report period should be the final period to cause downward surprises.
Technology Earnings – While most technology companies reported good revenue numbers but got punished for bearish guidance in previous quarterly reports, this time around they’ll have to deal with a decline in revenue AND slowing growth in providing guidance. The economic slowdown would seem to deal the biggest blow to technology companies and I expect a massive amount of beatings to come for these stocks. Only bright spot would be for companies that have heavy international exposure as they can benefit from the weakness in dollar. However, going forward, with dollar nearing a bottom and domestic economy falling into a recession, I can’t paint a bright picture for the technology sector.
With financial crisis, rising inflation, decreasing consumer consumption, and overall slowing economy, it’s no surprise to see that the bears are up 3-0 so far after three earnings reports from companies mentioned above. By the end of earnings period, I expect the bears to come out victorious in a lopsided fashion. (Buying puts ahead of these earnings would be a play worth noting.) As for the general outlook for the market, with our recent failed attempt at registering a higher high than January highs, and negative earnings outlook, I’d favor a break of the previous lows and a fall down to 1150-1200 instead of a break of 1400 in S&P500. An increase in volatility will likely persist to the end of April at which time, the Fed will have a meeting to announce what could possibly be the final interest rate cut.
Rino Choi
Titans of Wallstreet
Market Columnist
Financial Earnings – Most financial banks will report a decrease in net income or a loss as was the case with WB. It’s no surprise that banks currently have no means of generating income and it’s prudent for them to clean out their balance sheets. I expect the write downs to be finalized during this quarterly reports and efforts to increase liquid capital through stock sales, sovereign funds & dividend cuts will be made. While downside risk certainly remain for financial stocks going forward, this quarterly report period should be the final period to cause downward surprises.
Technology Earnings – While most technology companies reported good revenue numbers but got punished for bearish guidance in previous quarterly reports, this time around they’ll have to deal with a decline in revenue AND slowing growth in providing guidance. The economic slowdown would seem to deal the biggest blow to technology companies and I expect a massive amount of beatings to come for these stocks. Only bright spot would be for companies that have heavy international exposure as they can benefit from the weakness in dollar. However, going forward, with dollar nearing a bottom and domestic economy falling into a recession, I can’t paint a bright picture for the technology sector.
With financial crisis, rising inflation, decreasing consumer consumption, and overall slowing economy, it’s no surprise to see that the bears are up 3-0 so far after three earnings reports from companies mentioned above. By the end of earnings period, I expect the bears to come out victorious in a lopsided fashion. (Buying puts ahead of these earnings would be a play worth noting.) As for the general outlook for the market, with our recent failed attempt at registering a higher high than January highs, and negative earnings outlook, I’d favor a break of the previous lows and a fall down to 1150-1200 instead of a break of 1400 in S&P500. An increase in volatility will likely persist to the end of April at which time, the Fed will have a meeting to announce what could possibly be the final interest rate cut.
Rino Choi
Titans of Wallstreet
Market Columnist
Monday, April 14, 2008
Sideways is good
The sideways market is great! It's a good time to watch the stocks in preparation for a big move up...or down. Keep an eye out. I know I will be! I don't want to miss another 23% jump in Apple like I did when I was away on vacation. Keep those eyes peeled!!!
Brian
Brian
Thursday, April 10, 2008
Re: Bullishly Bias? - I disagree.
Though there have been some ups and downs within the support and resistant lines, the S&P has been in an overall downtrend since October.
From late January up until now, it looks like a sideways movement.
In the past couple days it's been dropping.
I think even if the S&P will hit Simon's predicted mark, based on peformance so far in 2008, we're in for a drop shortly after.
It's too early to say which direction the market will go until it breaks some trend lines....particularly the ones being formed since March 17th as shown in Simon's graph. I predict it will drop below 1260 before May 10th. Let's make this interesting. If it breaks 1411, I'm buying you dinner Simon. If it falls to 1260, you can buy me one of those red bean paste fishes from Japantown.
Looking forward to it.
Brian
From late January up until now, it looks like a sideways movement.
In the past couple days it's been dropping.
I think even if the S&P will hit Simon's predicted mark, based on peformance so far in 2008, we're in for a drop shortly after.
It's too early to say which direction the market will go until it breaks some trend lines....particularly the ones being formed since March 17th as shown in Simon's graph. I predict it will drop below 1260 before May 10th. Let's make this interesting. If it breaks 1411, I'm buying you dinner Simon. If it falls to 1260, you can buy me one of those red bean paste fishes from Japantown.
Looking forward to it.
Brian
Re: That's Predictable
JP MORGAN:
Recall March 20th when I made some predictions on JP Morgan's stock. 10% gains and losses over 15 day periods. Another words, every two weeks we can expect a change in stock directions up to 10%.
As predicted the stock shot up 10% from $42 to a bit more than $46. It dropped back down, shot back up and is now down again. Unless you really want to go by my 10% rule (which is more of a theory) to guess the bottom (I don't recommend it), don't buy JPM until it starts to move up again.
The "rule" is more about when the stock goes up and down and less about "how much" it will go up or down. Once it falls, it can keep falling. From the shape of the trend since last Nov, I have a strong feeling the stock could drop a lot....30% sometime within the next couple of weeks. If it does, get ready for an equally huge rally back up! I'm keeping an eye on this one!
APPLE:
Ugh! I was watching this stock for a good month and in the past couple weeks while I was distracted with other stocks, Apple shot up....predictibly! This is ruining my day. A good 20% could have been had.
After some sideways movement from late January to late March, the stock broke not only resistance, but also broke the 30 day moving average! And guess what? It popped from $130-$160. That's just a bit over 23%! Where was I during this jump? Vacationing in Hawaii.
I had full access to Internet and didn't spend a moment looking at stocks!!! I should have! How did I forget what Simon said about stock trading that basically got him into it? "You can do it any where anytime." Hawaii shouldn't have stopped me especially since I was online for 2 hrs a day. Somebody slap me.
Brian
Recall March 20th when I made some predictions on JP Morgan's stock. 10% gains and losses over 15 day periods. Another words, every two weeks we can expect a change in stock directions up to 10%.
As predicted the stock shot up 10% from $42 to a bit more than $46. It dropped back down, shot back up and is now down again. Unless you really want to go by my 10% rule (which is more of a theory) to guess the bottom (I don't recommend it), don't buy JPM until it starts to move up again.
The "rule" is more about when the stock goes up and down and less about "how much" it will go up or down. Once it falls, it can keep falling. From the shape of the trend since last Nov, I have a strong feeling the stock could drop a lot....30% sometime within the next couple of weeks. If it does, get ready for an equally huge rally back up! I'm keeping an eye on this one!
APPLE:
Ugh! I was watching this stock for a good month and in the past couple weeks while I was distracted with other stocks, Apple shot up....predictibly! This is ruining my day. A good 20% could have been had.
After some sideways movement from late January to late March, the stock broke not only resistance, but also broke the 30 day moving average! And guess what? It popped from $130-$160. That's just a bit over 23%! Where was I during this jump? Vacationing in Hawaii.
I had full access to Internet and didn't spend a moment looking at stocks!!! I should have! How did I forget what Simon said about stock trading that basically got him into it? "You can do it any where anytime." Hawaii shouldn't have stopped me especially since I was online for 2 hrs a day. Somebody slap me.
Brian
Simon: Bullishly Biased
At the moment, i feel that the markets are bullishly biased...not by a huge amount...maybe 65% bull, 35 % bear is my breakdown. Below is a chart of where i expect the market to go to if the day's gains hold and the market eventually breaks out of the recent trading range to the upside.
included in this analysis are updated reasons for being a bull or a bear in this market:
1. so far every pullback day, even yesterday's are all very controlled. it does not seem to be a panic sell off at all. its more than anything just a frustration sell off. people taking money off the table because of the huge run from the 400 point day and a well deserved rest for the bullish traders who made money last week. this explains the low volume during the past consolidation week
2. bad news comes almost everyday now and none of it has caused a huge selloff, neither intraday nor on the daily chart. traders and investors must be getting used to the news and have priced it all in before placing their money into the market. these investors seem ready to stay for the longrun.
3. today was up...and if the day holds its gains for another 1.25 hours, we will be closing up off a bounce off the 20 and 50 EMA on the daily S&P chart. very pullish signal for technicians..
4. money is moving into the big caps. moeny into the big caps means that we are having institutional and long term buying. traders pick momentum stocks like commodities and tech. There has been moderate movement in commodities and tech, but mainly the money is in the blue chips...good sign that its institutional buyers adding to mutual funds. i call them the longterm bulls...
5. higher highs and higher lows on the daily chart of SPX...can't deny that short term, this trend is up.
6. bigger intraday moves on the upside than downside. slope of angle favoring the upside to the downside.
1. You can't ignore the VIX. We are close, maybe not quite there yet, but i can almost assure you that we will not be making new lows. No way are we gonna go under 18 in a bear market and we definitely are still in a bearish environment overall...just look at the weekly charts and you will know that.
2. Great news have come to the financials with money pumping into C and WM, yet no reaction in the stocks. Financials are still doing poorly. Can there really be a push up without the financials participating? Very unlikely. Look at the past several months and you will see that the financials have only rallied on news...nothing more. without government intervention or catalytic news, they go down or trend sideways. For any push up, there will have to be strong news. Without that, the market will just fall on its own weight, starting with the financials. the longer this consolidation goes, the better it is for shorting financials
3. Lack of follow through by bulls. Bears lack strength but so do bulls. where's the committment?
4. Leaders in recent weeks are from mainly energy and commodities. this is all because of the weak dollar and global demand. they are almost an entirely separate market. Strength in them does not mean that the overall US market is strengthening but quite the contrary. Means that the dollar is weak and people have been putting their money into non-equity investments. This kind of investing cannot lift the indexes in the long run.
We are definitely in the period of "the calm before the storm"...now...will the storm be hugely bullish or bearish?its still really hard to say. But from the action or lack of action in the market, i am very confident that the next move will be big...options Ex next week and of course we are in earnings season as well...financials report next week...all reasons for speculating huge moves to come...good luck and hang on tight!
included in this analysis are updated reasons for being a bull or a bear in this market:
Why Bullish?
1. so far every pullback day, even yesterday's are all very controlled. it does not seem to be a panic sell off at all. its more than anything just a frustration sell off. people taking money off the table because of the huge run from the 400 point day and a well deserved rest for the bullish traders who made money last week. this explains the low volume during the past consolidation week
2. bad news comes almost everyday now and none of it has caused a huge selloff, neither intraday nor on the daily chart. traders and investors must be getting used to the news and have priced it all in before placing their money into the market. these investors seem ready to stay for the longrun.
3. today was up...and if the day holds its gains for another 1.25 hours, we will be closing up off a bounce off the 20 and 50 EMA on the daily S&P chart. very pullish signal for technicians..
4. money is moving into the big caps. moeny into the big caps means that we are having institutional and long term buying. traders pick momentum stocks like commodities and tech. There has been moderate movement in commodities and tech, but mainly the money is in the blue chips...good sign that its institutional buyers adding to mutual funds. i call them the longterm bulls...
5. higher highs and higher lows on the daily chart of SPX...can't deny that short term, this trend is up.
6. bigger intraday moves on the upside than downside. slope of angle favoring the upside to the downside.
Why Bearish?
1. You can't ignore the VIX. We are close, maybe not quite there yet, but i can almost assure you that we will not be making new lows. No way are we gonna go under 18 in a bear market and we definitely are still in a bearish environment overall...just look at the weekly charts and you will know that.
2. Great news have come to the financials with money pumping into C and WM, yet no reaction in the stocks. Financials are still doing poorly. Can there really be a push up without the financials participating? Very unlikely. Look at the past several months and you will see that the financials have only rallied on news...nothing more. without government intervention or catalytic news, they go down or trend sideways. For any push up, there will have to be strong news. Without that, the market will just fall on its own weight, starting with the financials. the longer this consolidation goes, the better it is for shorting financials
3. Lack of follow through by bulls. Bears lack strength but so do bulls. where's the committment?
4. Leaders in recent weeks are from mainly energy and commodities. this is all because of the weak dollar and global demand. they are almost an entirely separate market. Strength in them does not mean that the overall US market is strengthening but quite the contrary. Means that the dollar is weak and people have been putting their money into non-equity investments. This kind of investing cannot lift the indexes in the long run.
Summary
We are definitely in the period of "the calm before the storm"...now...will the storm be hugely bullish or bearish?its still really hard to say. But from the action or lack of action in the market, i am very confident that the next move will be big...options Ex next week and of course we are in earnings season as well...financials report next week...all reasons for speculating huge moves to come...good luck and hang on tight!
Monday, April 7, 2008
Simon: Bullish Bearish
Many reasons to be uncertain after today's market action. Are we setting up for a huge bearish reversal or are be we just consolidating for the next push up? I am unsure...all i can do is name reasons for why i am both Bullish and Bearish
Bullish Signs:
1. very light volume on consolidation, including today
2. no evidence of a lower low or lower high
3. almost all of the gains from the huge 400 point up day last week are still there
4. bullish divergence in the MACD and other oscillators. 1st clear signal of bullish divergence since january
5. despite being real weak intraday, the bears were still unable to pull the market deep into negative territory. in fact, gains were held in both the SPY and DIA
Bearish Signs:
1. VIX is near its recent bottoms. In the past several months, everytime the VIX has hit these levels, a strong pullback came rather suddenly
2. we are still in a bear market. rallies will be quick, powerful, and will usually fail. odds are in favor for another leg down
3. strong resistance is still held at 1375 on the SPX...we are at a similar resistance on the IWM, QQQQ, and DJIA...
4. when looking at individual companies, many of the graphs have had huge runs. they seem to be need of a pullback. without a pullback, i don't see how much further these companies can run.
5. i can't find any great companies to go long on. either they have run up very vertically and overbought, or they are big laggards unable to bounce off their bottoms.
6. doji's or reversal candles have been made in many of the high flyers today. opening big and running up huge to close near the lows of the day seems to be the story for many of the big stocks today.
Bullish Signs:
1. very light volume on consolidation, including today
2. no evidence of a lower low or lower high
3. almost all of the gains from the huge 400 point up day last week are still there
4. bullish divergence in the MACD and other oscillators. 1st clear signal of bullish divergence since january
5. despite being real weak intraday, the bears were still unable to pull the market deep into negative territory. in fact, gains were held in both the SPY and DIA
Bearish Signs:
1. VIX is near its recent bottoms. In the past several months, everytime the VIX has hit these levels, a strong pullback came rather suddenly
2. we are still in a bear market. rallies will be quick, powerful, and will usually fail. odds are in favor for another leg down
3. strong resistance is still held at 1375 on the SPX...we are at a similar resistance on the IWM, QQQQ, and DJIA...
4. when looking at individual companies, many of the graphs have had huge runs. they seem to be need of a pullback. without a pullback, i don't see how much further these companies can run.
5. i can't find any great companies to go long on. either they have run up very vertically and overbought, or they are big laggards unable to bounce off their bottoms.
6. doji's or reversal candles have been made in many of the high flyers today. opening big and running up huge to close near the lows of the day seems to be the story for many of the big stocks today.
Saturday, April 5, 2008
R.C. Corner
Every truth passes through three stages before it is recognized. In the first it is ridiculed; in the second it is opposed; in the third it is regarded as self evident.
--Arthur Shopenhauer
--Arthur Shopenhauer
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