Old Blog Archives

Weekly Watchlist

2007-10-23T17:12:00Z

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Recommendation: Yes, I know. It is a work of art.

Long: Creativity

Short: Hurdles

Disclaimer: I have none today. I am an open book as it is.

Note: Hurdles have been cleared, what a pain in the ass.

Technical Difficulties

2007-10-23T13:41:00Z

My recording software is getting a soft re-boot. Yep, somebody tampered with my recording studio. Don't worry, I have asked my secret agents to check the surveillance tapes last night to see who did it. There will be hell to pay.

Until I find a solution, it is with deepest regret that I put today's video on back order. I can't imagine that it will take too long, but I wanted to give everyone a heads up.

In the meantime, AAPL has lifted the market just as I suspected. There is a monster bid for technology stocks, and we are getting some great moves from the supporting casts such as small cap, financials, etc. You have to buy into this dip. If you are nervous, nibble into it.

Lastly, if you tried to participate in last nights event, I apologize for the lack of technical support, audio stream, and everything else that went wrong. The event was way overbooked (2,700 people) and Webex apparently can't handle that type of volume. The fact that the technology around here makes me look bad is really starting to get under my skin. Anyway, the presentation was recorded, and will be posted on the Investools site later today. Again, my apologies.

Watchlist developing...

Blogasm

2007-10-22T16:55:00Z

I had a request to speak about diversification. Normally, on a Monday special requests are denied. However, it is not like this is a complicated topic...or at least this is not a topic that should be complicated.

How you approach diversity in your portfolio is your own business. But if you are building a portfolio of owning different investments such as ETF's, Equities, Gold, Bonds, etc...try to assign a delta to your portfolio. Confused? If you own 1 share of stock, you have a delta of 1. If you own one share of ten stocks, you have a delta of 10. If you own one share of ten stocks, and one call option on another stock...you get the point. If you are confused as to why many of you lost your ass-ets on Friday, plain and simple- you owned too much.

Diversify.

The last big drop in the market I went out and gave specifics as to how I survive in the market. I opened your eyes to my portfolio specifics. And while I am not about to do it again, I want you to understand the idea behind it. Last week (Monday) I mentioned how I was bearish for the upcoming week, and traded accordingly. I took bearish positions (negative delta) on trades that were highly correlated to the market, and other bearish positions that were going down regardless of the market. At the same time, I still took bullish positions (positive delta) on stocks that were moving higher. I try and stay neutral (offset delta) to the market. This is the only way you will survive as a directional trader. If you own too much, and by design your trades are intended to be profitable moving in only one direction, a day like Friday will eat you and all of your money.

Many of you spend too much time worrying about things like other peoples trading signals, what price pattern it is you are looking at, which strike price to select, how to read implied volatility, etc when you haven't constructed the basic tenets of portfolio management or asset allocation.

Shame on you.

To your defense, I can't make any assumptions when I have no idea what your time frame is, what your financial standing is, your risk tolerance, your investing objectives, or anything else looks like about you. What I do know is this... I don't care who you are or what you are trying to accomplish, you will not last long in the pursuit of becoming a decent trader without creating a firm foundation of these basic principles, which are...

Risk management- Plan your loss before planning your profit.

Diversification- Be bullish, be bearish, be involved in various groups/markets.

Proper Position Sizing- Trade small, trade safe.

Effective Trading Plan- Make sure your plan works, and/or makes money.

Cutting Losses Short- Enter a trade that offers a small loss.

Letting Winners Run- Don't kill your winners.

Curbing Your Emotion- This is a bi product of trading small.

Since I have spent the last ten years of my life developing and optimizing all of the above, I am able to do this (see below) on a day like today... or any other day for that matter.

Recommendation: Give your account the same foundation so you can participate in the activity above.

Long: My rules

Short: My emotion

Disclaimer: If you got emotional and closed good positions this morning, or shorted "mother market"... again, shame on you.

Update: If you took any part of this post personal, don't. You know I am not in the business of attacking, just trying to get a message across. If I were mad, I wouldn't have addressed it at all.. When all else fails, "Fresh Tactics."

Crash? What Crash?

2007-10-19T19:49:00Z

PLEASE!!! My inbox just went nuts with e-mails comparing today's 2.5% drop in the Dow, to 1987's 22% drop in the Dow. Are you kidding me?!

Gang, the Dow would need to drop 2,600 points to be in the same ball park.

Comparison Denied.

Recommendation: If you want to see what it was like to trade through a "Crash" I can start to liquidate my account on Monday.

Long: My account. I want to keep it.

Short: Weak Comparisons

Disclaimer: Thank you to diversification, I left my trading station for the majority of the day.

Broken Fear Gauge?

2007-10-19T17:14:00Z

The VIX looks rather flaccid for a 22 point drop in the SPX. Look at the reaction, or lack thereof...

You can't tell me that the market isn't more fearful of higher energy prices. Toss in a few earnings disappointments and we should be well off into the 20's on the VIX.

Or perhaps we shouldn't...

The market as a whole is too overly optimistic anyway.

I am surprised that I didn't see more implosions in my long positions today. The only ones I have been surprised about were SII, SLB (small position over earnings) and FLR.

How can I forget the nice surprise in HANS? I cancelled the "HANS Across America" tour and now millions are pissed at me that they are not getting a refund.

I liked CF today...a good ol' blog favorite.

How about the upset I called on the Marketcast last night? Rutgers beat South Florida, and I have footage of the victory...

Thanks to Agent Scully in the Rutgers Nation for sharing these pics.

I am about ready to call it a day. The wife has left me all alone for the weekend, and I am in a bad mood anyway. Sorry for the under-delivering of useful and witty content today, I'll be back with a vengeance next week.

Recommendation: Shake off the bad day today, and get back anything that was lost next week.

Long: Community Support

Short: Ungratefulness

Disclaimer: Thanks again for everyone's support with this competition. Hopefully we pull together a victory.

HANS Across America

2007-10-18T19:27:00Z

You must admit, the HANS trade was so money. If you didn't heed my pounding of the table on owning Hansen, you missed out on a free 54.5% increase in the stock since the official reco in August.

So the question now becomes, "what do I want to talk about today?" Other than being donkey punched by China, nothing. Today was the reason I wanted to scale back my position sizes in China last week. I guess I can redact yesterday's statement and today state that I am glad I did.

In the effort of keeping my emotions sidelined, I am trying to focus on happy thoughts, such as TBSI, OYOG, ISRG, RIMM, JEC, ALXN, PCLN, CNQ, BEAV, CTRP, TIF, HANS (of course) and finally, good ol' MON.

BTW- ANDE finally broke out for anyone that gives a $hit.

I won't forget to highlight a few shorts I am proud of...mainly JCP, GLYT, GCI, JCG, MTG, ZION and NCS.
Aside from that, I got nothing. I am scouting out a few more trading ideas for tomorrow, so keep your eyes peeled. Many of the watchlist ideas are panning out pretty well, so hope you were paying close attention.

In closing, I want to reference the "competition" one last time. Although I am flattered, please don't go overboard. Thanks to everyone who has voted, I appreciate all of your support.

Recommendation: Get yourself some HANS!

Long: HANS

Short: Effort & Homemade Images

Disclaimer: I paid a freelance artist for the HANS Across America painting. I got robbed.

On the Matter of Hopes and Slopes...

2007-10-17T22:39:00Z

Recommendation: Rumor has it that I have been mocked in pursuit of the best blogger crown. We all know the fate of those that mock my presence.

Long: Reputations

Short: Choosing words wisely

Disclaimer: The competition will eventually submit to the power and will of the Option Addict.

Excuses...

2007-10-17T17:01:00Z

Sorry I am late, blogger has been giving me hell today.

That was a mean U-turn that the market made today. Remember that 20 day SPX chart I shared on Monday? It marked a weekly top, no doubt.
Despite the exfoliation of profits in my calls today, China has kept me in the black. I have to give a nod to PTR, SNP, FXI, LFC, YZC, FSLR, BCSI, CHU, CMG, CNQR, CTRP, MTW, NVDA and CNQ. I also have to give a shout out to all my shorts for today's turn around, especially AOS, ZION, NCS, CPA, AVTR, GLYT, JCP and a few others.

By the way, I like how MCRS is setting up. I might add instead of subtract in front of earnings.

As I pondered today's topic, I looked no further than the topic of patterns. One of the most predominant patterns I am seeing across the market is the cup and handle. If you have read this blog for a decent period of time you will know that I am not a big fan of this pattern. However, rather than speak in biases, I will teach facts and you can decide on your own.

The pattern falls into the trend continuation category, which means upon breakout, prices will advance in the direction of the prior uptrend. The time frame is ideally for the pattern to form and complete within 6 months on a daily chart. The cup will be a "U" shape (not a "V") that occurs near or at the top of an uptrend. The handle should occur just off the second top of the "U" shape, and normally completes within a month. As with any breakout, volume is expected on the breakout.

Target price is measure by the depth of the cup, from top to bottom. Expected time frame is measured by how long the pattern has taken to form.

Here are a couple examples to watch...

BEAV

AXE

REMINDER- FREE ADVANCED OPTIONS OPEN HOUSE!!!

Want to learn more about the world of advanced options? The Option Addict will be hosting a free open house to all that want to learn more about advanced options. The presentation will be two weeks from today (October 22nd), and I would love to see everyone that is interested in attendance. Click Here to enroll for this presentation. Once you are there, click on "Enroll" to register. You do not have to be an Investools student to attend. Once you have enrolled, you will receive confirmation and instruction of how to join the event. Make sure you sign up now, before it fills up!

SECOND REMINDER- PLEASE, CAST YOUR VOTE!!!

I am still in the running for top business blog, top video blog, education blog, and podcast blog. I sure could use a vote since the voting ends this Friday.

All you need to do is click here, to sign up.

Once you do, Click here to cast your vote.

Recommendation: A win for me, will mean a win for all of you. Trust me.

Long: Today, it's fajitas.

Short: Operating machinery, such as a trading blog.

Disclaimer: If you don't vote, I will track you down with a dose of the following...

Watchlist Follow Up

2007-10-16T16:07:00Z

As mentioned, I wasn't able to fit all my ideas into a 10 minute video. I like to have a list of stocks that are trading at support or resistance levels. I watch these stocks for breakouts, which will normally occur within 1 or 2 weeks (some are already underway). A few of these I have been in for a while, or have recently moved into. Here are the tickers...

Support (Bearish)
HUBG, ROH, JCOM, FAF, LFG, MTG, AVY, VFC, AVTR, BWS, JCG, ATI

Resistance (Bullish)
HRS, ATU, CNX, BUCY, AXE, COL, COP, HES, ANW, AXS, TIF, FMCN, JRJC

Recommendation: This was easier than producing a video.

Long: Celebrity appearances in my comments.

Short: Celebrity appearances on my doorstep.

Disclaimer: This might be all for me today... Forecast is partly over-booked due to celebrity status.

Tuesday, October 16, 2007 at 02:51 PM

2007-10-16T14:51:00Z

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