Money for nothing

So here is an explanation (to date) on what happened . .

Many believe that the glitch was triggered by a series of events that began when the NYSE slowed down trading of a number of stocks, including Procter & Gamble.

Shares of P&G fell 10% at around 2:45 p.m. Thursday, at which point the stock hit what's known as a "circuit breaker." The stock stopped trading on the NYSE for 80 seconds, and trades opened up on a number of competitors' electronic exchanges.

But the circuit breaker mechanism that was designed to cool traders' heads had the opposite effect: The slowed trading occurred at a time that investors were growing increasingly worried about Greece's debt issues and other economic factors. The Dow, which was already down about 200 points at the time, quickly dropped about another 200 points in the 15 minutes between 2:30 p.m. and 2:45 p.m.

"The problem is that when [the NYSE] slowed down, it effectively took their traders out of the market at a time when everyone else wanted to sell," said James Angel, a professor of finance at Georgetown University.

In other words, when the NYSE paused its trading, the off-exchange computers found no bids, or offers to buy. The computers, which were looking for the best bid, were tripped up to believe the best bid was $0. The high-speed trading computers are designed to add a penny to each trade to make a commission on every deal, so the computers placed bets at a penny higher, or 1 cent.

"Sell orders became desperate and went straight to their competitors' exchanges, which weren't slowed down," said Angel. "Since there were no other buyers, some computers had entered orders at a penny, so some stocks traded all the way down."

That's when at least 296 stock prices saw enormous price changes. Nasdaq has said it will cancel all trades that were executed between 2 p.m. and 3 p.m. ET, in which the stock price traded more than than 60% off of the stock's price at 2:40 p.m.

Nasdaq coordinated the cancellations with other U.S. stock exchanges, and said the decision could not be appealed.

I have not yet been able to find out exactly how many trades we are talking about, just the number of stocks involved.

And I still do not like the fact that some get to keep these “false profits” so long as you do not get more than 60% return on your money. If you mad 61% or more from the “glitch” then it is not fair and your are out-a-luck.

Sheesh, what a racket !!!

So this got me into thinking . . .

A) Do the brokers still get to keep their 1 penny commissions?

B) Then I got into thinking about that this would make a great movie and I was reminded that something similar had already been done, but for the life of me I can’t seem to remember it. – Maybe you folks can help me out with this one… I seem to remember a movie where the main character discovers a glitch where the company he is working for drops fractions of a cent from paychecks and other transactions. He then throws in a little program to capture all the fractions and send him the check He quickly becomes a millionaire and eventually gets the attention of the company he works for. I think it was a Woody Allen or Dustin Hoffman movie but – who knows.

C) Then I was thinking of a song to commemorate all this and the first thing that popped into my head was Dire Straits Money for Nothin’

D) Here is my version of money for nothing, so far.


I want my SEC!

Now look at them yo-yo's that's the way you do it

You watch the porn on the trading screen . . .

That ain't workin' that's the way you do it Money for nothin' and your commissions for free

Now that ain't workin' that's the way you do it Lemme tell ya them guys ain't dumb Maybe get a blister on your little finger

Maybe type a billion with your thumb

We gotta program circuit breakers and trade custom commodities

We gotta collect these commissions and void these zero dollar trades

See the little trader with the earring and the makeup
Yeah buddy that's his own hair
That little traitors got his own jet airplane
That little trader he's a millionaire

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Who Ya Gonna Call?

For investment advice?









Yeah, I know, you feel that they have all your money and bank accounts already but...

How about the Federal Government.

The SEC to be exact.

It seems that the SEC has a new investment site called investor.gov up and running which is really pretty good.

It's not flashy. It has the look and feel of a monolithic government building.

But it does provide really good basic information, in a well organized and "one-stop" format, on the following:

How to start planning.
How to choose good investments, firms, and brokers.
How to keep what you got.
In other words avoid scams, fraudulent investments and advice.

In light of all the recent economic downturns, investment schemes, and news about people loosing life savings; it is nice to see the SEC provide a site filled with valuable information and education regarding savings and investments.

They even have a section dedicated to retirements and seniors.

And it's all free. With no sign up, registration or anything except an Internet connection and your thirst for knowledge required.

The idea is simple.
The site well thought out and easy to navigate.
And fits in perfectly with their posted mission statement.

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.

Which is exactly what the SEC is supposed to do.

Well done.

Happy Trick or Treating !!!

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July Updates - End of Month

I should probably title this DON'T DO WHAT I SAY !!!

Once again, my bench beat my starting lineup.

But on the up side, both my lineups once again beat both the DOW and NASDAQ monthly returns.

And to top it all off, I also kept a July MSN 50 list; which also lost to my lineups !!!

Nya Nya ;-)























Stay tuned for the August Watch Lists!!!

Oh, and just in case you could not tell...

It's football season once again ! Hurray !!!

GO SKINS !!!

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Taking Stock in Fathers Day

So, the other night my wife and I watch our first movie over the Internet via Netflix.

It worked out pretty well and I was actually impressed with the ease of service and viewing.

Oh, in case you are interested, we watched Bounce.


We watched it on her HP Entertainment PC which got me into thinking that I've been meaning to save up some dime and get myself an entertainment PC capable of playing games as well.


In fact I have had my eye on this one. It is an HP HDX18t laptop, but it may take me a while to save up enough dimes to actually purchase one.

But hey, it would be sooo cool.

Then my mind wondered over to other items I've been looking at recently.

Such as Blue Ray players. There are actually 3 that come to mind.


The Samsung BD P3600 has great features, like..
Network capability which will give you access to services such as Netflix and Pandora.
Good speed, display and tracking of graphics.


The LG BD390 is perhaps equally fast and feature rich but is generally a bit more expensive.



Then there is a blue ray device which would not only let me watch blue ray movies on my wide screen TV but also allow me to play video games as well.

That would be a Sony PlayStation.








Other, perhaps less big and less expensive "stuff" I've been thinking of and looking at lately have been Cell Phones, Cameras, and MP3 type devices that I could use to plug into my car stereo.

For right now, I am going with the smallest and cheapest route for the MP3 and that is the good old USB memory stick.

But since this post is, in part, about Fathers Day; lets think a little bigger...

Apple makes some really cool, hip, handy and useful electronic devices. Specifically the iPhone and iPod.




The iPhone 3gs comes out on June 19th just in time for Fathers Day. (Gee, what a coincidence...)
And runs on the AT&T network.






They also make the iPod touch. I just wish it had a camera.










There are other phones such as the LG enV3 which run on the Verizon network which I also like a lot.







Most everyone I know, except my oldest son, is on the Verizon Network and getting an LG would make sense since then I could call, text and email with most of my contacts at no extra charge.

Except Eric, he's such a rebel...


Of course I have mentioned a ton of stuff here in the post. Yes, I could talk about even more, but these are the things, the stuff, I've been looking at lately, dreaming about; but not being able to afford just yet.

So, if you are like me, perhaps an alternative to buying these products for Fathers Day, would be to buy the stocks. This could be a unique gift idea.

So, with that in mind, here is my Fathers Day Stock List.

Stocks such as LG, and Samsung are difficult to invest in. They are not traditionally listed on the NYSE. So one alternative is to try and buy through a broker such as Etrade. They have recently expanded to international trading markets.
Another is to invest in an ETF such as:

iShares S.Korea Index - EWY
Rounding out the rest of the list are:
Sony - SNE
Netflix - NFLX
HP - HPQ
Apple - AAPL
AT&T - ATT
Verizon - VZ
and a place where you can buy each and everyone of these products...
BestBuy - BBY


Happy Trading and Happy Fathers Day!

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WHO cares and What else I look for...

- WHO announced that the H1N1 had reach Pandemic Proportions.
Actually they also previously said that the H1N1 was close
to Pandemic Proportions.





- Pharma companies such as SVA and Novartis announced that they were
producing vaccines.

- SVA is up 19.7% for the week.
- NVS is up 6% for the week.



OK, so now we know:
That WHO cares enough to announce a Pandemic.
The stock market loves hype.
I sometimes like to invest on hype. :-)

But most of you probably already knew that.

So, what else do I look for?

In addition to patterns, various companies (as a result of my multiple screens), I also look for particular stock indicators.

As with patterns, yes I do look at the particular "value" of these indicators but, I also look a trends.

Relative Strength (RSI): This, as the name implies, measures the strength of the stock at a particular point in time and is based on buying and selling activity.
RSI is plotted on a scale from 0 - 100. Normally anything above 70 is considered overbought and anything below 30 is considered oversold.

Moving Average Convergence Divergence (MACD): A trend momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

These are perhaps the two that I look at most and no, I do not do any of these calculations manually. Yuk :-(
Most indicators can be plotted using any number of free charting tools such as those found on Yahoo and MSN. Yeah! :-)

Two other indicators I look at are: Volume and Money Flow.

Volume: Plots the number of shares or contracts being traded. This can also be compared to average daily volume and 'on balance volume' which attempt to spot trends of buy vs selling.

Money Flow: The MFI is used as a measure of the strength of money going in and out of a security and can be used to predict a trend reversal. The MFI is range-bound between 0 and 100 and is interpreted in a similar fashion as the RSI. The major difference between this and RSI is that MFI also accounts for volume, whereas RSI only incorporates price.


So, How does this work in practice?
Well, lets go to the video tape... or in this case our classic chart example from last week (MVL).

Below is the MVL chart starting at the end of the "W" reversal pattern. As I mentioned in my previous post, this is classic text book patterns and it is really nice when all the stars align and, of course hindsight is 20/20. ;-)

It gets more difficult to do this in real time and when not everything lines up so perfectly.

And, as always, nothing is ever guaranteed to work every time all the time. These patterns are based on law of averages and probability. But Hey, it does (trend) to work more often than not.

Until next week... Happy trading!

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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.

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OK, So what makes me an expert....

The Internet... LOL
Honestly, regarding stocks, I have about a half dozen screens that I've put together (on free sites) that I run once a month. From there I come up with a short list of stocks based a couple of factors like:
Frequency (how many times the same stock shows up on different screens)
Note Worthy News (mentioned in other articles, product announcements, etc)
Key Financial Indicators (PEG/Ratios, Debt Ratios, Estimates, %ownership, etc)
And yes interesting Patterns (I'll admit it, I dabble in pattern investing from time to time)

So, How have I done with my January Short List?

Note: I certainly do not have enough money to invest in all these. I usually pick one or maybe two (if any at all). As of right now, the market is too scary for me to invest a lot of money for a really long time. So, I have been investing a little for a short time. And yes I did invest in two which I may sell to collect my gains and possibly invest in my upcomming February short list.

Which ones did I pick? Fortunately they are still both gainers. The deciding factor in this case was an article which I read that basically said "the word recession is not in electronic gamers vocabulary". So I took a chance on GIGM and GME.

And how have I done with Fantasy Football?

I'll save that for another post... ;-)

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