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Thursday, January 29, 2009

Taking Stock...

Ok, I know it is Super Bowl weekend but I do have a duality idea for this blog.
Sports and Stocks. And one resolution I will try to keep is, at a minimum, a monthly (last weekend of the month) review and post of stocks and investing.

So, here it goes...

Two weeks ago I put together my first post regarding stocks and my basic strategy along with a January watch list.

So, How did I do?



My watch list beat the DOW and NASDAQ index for the month :-)

I was lucky enough to purchase two stocks which did well. :-)
At this point, I would like to thank all you hard core gamers who do not know what a recession is. :-)

And you may notice that I have multiple listings of GIGM, GME, and one (ITI) which I did not originally purchase. So, I will explain...

Part of my strategy is that I have a marker for +/- 20%. If the stock hits either mark, I generally sell. (Basically take the money and run or cut my losses)

GME crossed the 21% marker so I sold. Afterwards, it ended up going as high as 26% before falling back down to it's current level.

I still have GIGM but I will have to watch it more closely. It almost hit the 20% mark but did not and has fallen just a bit since then.

Earlier this week I was scaning the list and noticed some interesting things about ITI.

> It had a significant drop-off in the middle of the month but had since recovered nicely.
> The company had recently paid off a significant amount of debt early.
> Although we are in a fiscally challenged economy, they had recently one a couple nice size contracts for services.
> I did not see any indication of pending or significant layoffs.
> The company was doing reasonably well over the past few quarters.
> I did not see anything which would indicate a bad earnings release due Thursday evening.
> And the stock was in an interesting pattern, showing good increase in money flow (people putting money into the company's stocks, rather than taking out), a rising strength index, and an very interesting ascending triangle pattern.







Here is a definition of an Ascending Triangle pattern:










The ascending triangle pattern resembles a narrowing triangle with a horizontal line of overhead resistance for the stock and an ascending trend line or rising trend line beneath the stock. The overhead resistance temporarily prevents the stock from advancing higher, while the rising trend line beneath the stock signals that buyers are still present. An upside penetration of the upper horizontal trend line is a technical buy signal for a stock breaking out from an ascending triangle pattern.

So, I purchased ITI with my proceeds from GME a day before their earnings release. ~ $1.30 a share.
So far, the pattern and strategy seems to be going as expected. I will have to wait and see just how well it works.



I'll be putting together another watch list for my next post.

2 comments:

Gimpdiggity January 31, 2009 at 2:08 AM  

I don't know much about stocks, but it's good that you did well with your watch list.

If I were to buy stocks, I'd buy it in Microsoft...because I buy so many Xbox games that I'm sure that I'd be putting money back in my own pockets!!!!

Doug January 31, 2009 at 7:02 AM  

Hi Gimp, Thanks for stopping by and hope you are winning the battle of the colds.
Your idea is definitely another solid investing strategy.

Buy what you know.

As Warren Buffet says: "if you don't understand a company’s operations it is not even worth your time." He calls this the “circle of competence”.

I often rule out selections from my screen results simply based on this idea alone.

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