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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Weekly Tracker

OK, so lately I’ve noticed that I have been posting a lot of “off topic” posts on my blog.

Not that this is necessarily bad, I do like reading and tracking a lot of “local stuff” going on in and around DC , also “gaming” which I wish I had more time to do, and I do have a lot going on with kids and family; but this is supposed to be more about two of my favorite things… sports and stocks.

Maybe I should start up a blog about “everything else”. But then again, I have enough trouble keeping up with just this one blog. Maybe I should make it an open forum where anybody can start a thread about “stuff”. And maybe I am just rambling, not making any sense and shouldn't worry about this.

So, before I completely sabotage this post, and blog, let me try to do the following.
A) Come up with more posts about sports and stocks…
B) Save this post by trying to make it in some ways; more about “a)”…

With that said…
Last week I published my June Watch list.
And my record to date is not all that bad.




So far, I have not invested in any of them. Instead, I had a stock from May Watch lists, UEPS, which was showing a very interesting pattern.


























At first I thought it was yet another “W” pattern that seemed to be so prevalent in my June research that I decided to invest on what I thought could be the second leg of the pattern. Well, that did not happen. What did happen was something that usually sets up over a much longer period of time (weeks or months) called a triple bottom.

This too can be a reversal pattern, so instead of selling UEPS and going with one of my June picks, I decided to hold a little while longer and see what happens.

As you can see by the result so far, it did “pop” back up and this week has been bouncing steadily between 14 and 14.25. I think I will see if this is yet another holding-pull-back “pennant-flag pattern” and is poised to go up again.

But, if it does not do this within the next couple days, I think I will take my 8ish% profit and pick something from my June lists.

Which brings up a point and question that others have asked me lately and that is why I am not holding on to stocks that I buy for the long term? After all isn’t one of the reasons why people invest is to build up “nest eggs”, “cash”, “net worth”, “savings” over a long period of time?

Yes, it is.

- It can also be about investing in ideas, products, companies that you believe are good or well run.
- It can also be strictly about “making money”, regardless of anything else (like ethics)….
- It can also be “fun”.
- It can also be, as the resent economic slide proves all too well, risky, frustrating, and volatile.

I still do invest for the long term.
I have a 401 which I contribute to automatically from each paycheck.

I do invest in the stocks I write about in this blog because:

- It is fun and challenging; and I do want to make at least some money.
- The companies on my watch lists, due to my varied stock screens, are usually well run and span a diverse range of size and sectors.
- I used to invest with the buy and hold strategy, but as this downturn has done with so many portfolios, I ended up loosing quite a bit and, for a while, pulled completely out of the market. That was not fun, nor very challenging…

So, since January, I’ve decided to modify my strategy a bit and play the volatility.

Yes, one does end up paying more in taxes from any short term gains vs long term (greater than 1 year) gains. And it can be quite a bit riskier. But so far I have nearly doubled my investment.

Some might say it is luck. Maybe…?
Some might say it is timing but, I am not necessarily “timing” my investments for the typical “buy low sell high”.

Rather, I try to “time” my investments before they “pop” up as a result of a pattern or event.

I invested upon trends and events; not only a particular stock pattern or event, but also in market trends and events. Some I take advantage of, some, I do not.

Trends and events I have taken advantage of:

- Strong gaming sales, despite the recession, during the holiday months. GME up 22% in less than one month time period.
- Hype in the market about “pandemic” stuff. QDEL up over 25% in less than 5 days.

Trends and events I’ve not taken advantage of:

- Recent run up in oil stocks. TGE (January Watch list member) up 133% YTD – most of it within the last 2 months!
- Other Pandemic Hype: (SVA) A Chinese bio-pharm company from February, up 115% YTD.
- Gun hype: Shares in Smith and Wesson – at one point up 190% this year alone. Now only 86%.

And one trend I still do not completely understand …
ARGN – A consumer auto parts company, a member of the March Bench, up 111%.

I’m sure there are more trends and events out there and there will certainly be more.

So, I will be doing a Weekly Tracker post to help focus on events and trends with my watch lists and the stock market overall.
I also invite anybody who might have an idea regarding or information regarding this topic to chime in with their thoughts.

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