Tuesday, December 30, 2008

We've Come a Long Way

Doesn't it seem like yesterday when the Dow Jones Industrial Average hit 7400, and the world was wondering when the sky was going to hit the ground? I actually never thought in those terms at the time since I was busy making some of my largest gains of the year in various equities.

But as the market began to recover, I noticed that people were not so eager to jump back in to a market that had left some totally devastated. I can't blame them with all the talk about hedge funds and naked shorting running rampant under the seemingly blind SEC. The retail investor, it seemed, was going to have to take things into their own hands and out-smart the wall street big shots.

Well, we may not of turned the tables in the larger sense, but we have certainly taken more control of our own financial well-being with some very prudent trading. I like to think of us as a new class of investor testing the waters of a new market: a market that has been erased and is being rewritten on a base of new hope and inspiration.

I don't want to sound like a motivational speaker, but sometimes I can't help being optimistic. If we are careful with our buys and find the right entry, and then find the right exit with a stop-loss in place all the way, we should be able to build some wealth out of all this. But that is the key: entries and exits.

I let Stock Assault 2.0 find the potential equities, and then I do my stuff. Your "stuff" may be quite different. From what I have read, many of you are thoughtful investors, and have a lot of insight into this game. I'll help as much as I can with what works for me, but you have to find what works for you. Let Stock Assault 2.0 do it all for you, if you wish, and learn along the way. We have come a long way, but we still have much ahead for us.

Have a good New Year!
- Roger

Sunday, December 28, 2008

Trading Update

A quick update on my money management venture: it should be no surprise that last Monday I took a position in both DO and MO. These are a technical hold for me going in to the weekend. I bought 4670 shares of MO at 14.60 and 1212 shares of DO at 56.25 and I really like the upside to both.

There are so many picks to choose from and every once in a while I like to ride a few of them out a little longer than what would be considered as swing trading, but that is just me. I could of easily cashed-out on Friday with a combined 5.4% gain, but, like I said, I see a lot of upside to both.

We'll have to see how this works out for me, but I am confident. The market itself seems to be making no major statements right now in the light of the current conditions. I see more of a normalized pattern as the weeks go by, and I see a future for oil related equities as the production cuts play out, especially going into the summer.

Have a good one...

Sunday, December 21, 2008

Analyzing Possible Picks

In preparation for Monday's trading I went back to the last three days of Stock Assault picks in order to see if I am too late to catch a ride on one. I analyzed ELY, CVX, DO, TTWO, CEC, NWL and MO. I first looked at the market's interest in the stocks by seeing the volume of their last trading day versus their 90 day average. ELY volume was up 58%, CVX up 44%, DO up 31%, TTWO up 159%, CEC down 4%, NWL up 45% and MO up 33%.

There is certainly a relationship to be drawn from volume and pricing, and it can be bearish, bullish, or neutral. When volume is way up, and the stock price is going down, then we have a confirmed bearish relationship. I found this in ELY, CVX, TTWO and NWL. I did not find this in DO, CEC or MO. If you look at chart #1 for all of these equities, you will see this volume-up price-down pattern four those four stocks.

On chart #2 you will see that slow stochastics confirms by the downtrend in %K. These will not be buyable until we see a %K bottom, confirmed by an upturn. However, you will notice on chart #2 for on DO,CEC, and MO we have an upturned %K on MO and CEC, but not DO. In fact CEC is overbought and due a pullback. MO looks like a buy here, and DO is a strong buy here.

I will be looking to see how Monday starts, but with the news of OPEC choking production to raise oil prices, the eventual outcome will be much higher oil, making DO a good hold for a while. MO looks good to go also. Of course, I'll be waiting to see SA picks for Monday also. Anyway, just trying to give you some insight as to how I sort through things.

Have a good one,

Friday, December 19, 2008

Cash-In Time

My limit sell on BAX filled for 54.00 making for a nice one week gain of 8.67%. I think I’m going to let “Pete’s” 68,197 dollars rest over the weekend. He still can’t believe I took his 25,000 and turned it to this in just this month.

I saw resistance at 54.50, and knew it would be a ceiling or a break-out at that point, so I played it safe with his money. I’ll spend this weekend looking at Stock Assault 2.0 and studying charts for my next pick.

Have a good one,


Charts I Use

Attached are screenshots of my favorite charting tools. I use everything from Amibroker to StockShare V2. As you can see, I was studying BAX hard today before selling. Studying charts for things such as trend lines, etc. is a form of technical analysis. Another method of analyzing stocks is called fundamental analysis and involves things such as insider trading and news announcements.

Have a good one. - Roger

Thursday, December 18, 2008

Picks Going Strong

The first of the week I picked up 2340 shares of BAX for Pete at 49.69 and I am still riding it. Still a lot of room to run on this one. One bad habit I have is not spreading my funds over at least a couple of stocks to kind of diversify my holdings. This is really a good idea for new investors, as it lessens your exposure to potential downside.

Personally, I am still riding the HIG train. I don't know when this one will end, but I will start getting cautious around 22.00 when it's close to half its book value. The market itself seems a little unsure of itself amidst the auto industry bail-out talk. We'll just have to wait and see how it all plays-out.

Have a good one.
- Roger

Monday, December 15, 2008

Inverse ETFs are Impressive

On the 9th I took my money-managed funds and purchased 447 shares of SRS @ 80.45 and purchased 339 shares of SKF @ 106.25. For simplification of terms, let's start calling my fortunate friend "Pete". What a run. Ever notice the peak in trading the first 15 minutes of the market's open?

After having had an excellent run with Pete's money and not wanting to be long in an inverse ETF over the weekend, I sold quickly on Friday fetching 104.15 for SRS, and 140.53 for SKF. That's a gain of 29.46% and 32.26% respectively and I owed it all to Stock Assault 2.0. I actually would have never traded those otherwise.

Pete started me out with $25,000 and as of this morning, the 15th, I have turned that into $58,163.00, give or take, in only 10 Trading Days. that's a profit of 132% in 10 days . Project that over a year, and you can see that there is some real money to be made.

Please remember this tip for inverse ETF's : it is not wise to carry a long position over a weekend. I close every position in a long inverse EFT the same week I open it. Trust me on this one.

Have a good one. I know Pete will.
- Roger

Tuesday, December 9, 2008

Trading Update

I sold JNJ at 58.13 for a gain of 3.8%, leaving me a new balance of 36,045.95 for my friend. I was pleased to see some inverse ETF's in today's picks, so I split the balance plus margin between two, SRS and SKF.

I thought I would explore outside of my favorite ETF, and it appears to be paying off. I will close these positions at the end of the day or at the first sign of a bullish recovery.

Have a good one - Roger

Wednesday, December 3, 2008

Margin: Friend or Foe?

Since I began writing about my trades with the funds of a friend, I have been talking about using margin to leverage my purchases, but I must warn those of you that are not familiar with these types of trades that the use of a margin account can be very dangerous.

While allowing you to double your returns on a trade, it can also double your losses and should not be used lightly. For me, the sweetest leverage is to go long in an inverse EFT that trades at 2X the inverse of the index it represents plus margin.

This gives me what I would consider a leverage of 4X. This was how I was able to grow that 25,000 so fast on the first day. I'll talk more about inverse EFT's another time, but for now just remember that margin accounts can be your best friend and your worst enemy at the same time, so be very cautious if you use it.

Have a good one,

Tuesday, December 2, 2008

Another Good Day

My second day of money management included the Stock Assault pick JNJ which I plugged into my equity grading program to yield a 83 which put it into the A+ category, closely matching the Diamond Edition grade.

I looked at my charting software to see a nice "head and shoulders" pattern formed, putting me at the base for a nice run, so I put in a limit order of $56.00 at market open which filled giving me 1215 shares for a margined 68,040 play.

JNJ closed the day at $56.83 for a modest 1.48% gain. Since there is plenty of room to move up the neck of this pattern, I am holding to see what tomorrow brings.

So far, what started off the week as $25,000 finished Tuesday as $35,073. Not a bad two days for my little venture.

Have a good one.......

Monday, December 1, 2008

My First Trade With Another's Funds

As promised, I am documenting my trades as I invest for a very fortunate friend. I convinced him to let me have $25,000, as this is the minimum for my broker to allow day trades. I don't believe in day trading, but if I get stuck in something, I want to be able to get out of it quick, especially with someone else's money. So, with margin, I approached the day with $50,000 to invest.

Stock Assault triggered no trades today, which is excellent because the futures called for a blood-bath. Since I don't short stocks I was only left with inverse EFT's to choose. The most wildly swinging index, IMHO, is the Russell 2000 (RUT) and the best EFT's for that is the UWM for a long play, and TWM for a short play as it is the inverse. This means that as the Russell 2000 goes down, TWM goes up at 2x the amount. Sweet.

So I put in a limit order this morning of 112.23 which immediately filled giving me 445 shares. Well, late in the afternoon, I sold those shares for 132.56 for a gain of 20.33 per share, or about 9046.85 dollars. So my first trade was net 18.09 %. What a way to start the week off! My friend, of course, is very happy making a little over 9000 dollars when the Dow was down over 600 points.

I won't disclose our arrangement just yet, because we really don't have one, but he has promised to take care of me. He really has no choice since the money is sitting in my account. I'm looking forward to putting a new lot of 34,046 dollars to work tomorrow on a Stock Assault pick.

Have a good one!
- Roger

Sunday, November 30, 2008

Profit Taking or Just a Down Day?

Often times when a finance site posts a story on a big down day with no apparent news to explain it, the term "profit taking" is thrown around as a catch-all phrase. Seriously, the real profit taking is done towards the close of the previous day's action and the down day that ensues after is merely a knee-jerk reaction as the market contracts in a normal fashion.

As we approach the dawn of a new and expanding market recovering from the worst days, we will see several contractions. The size and length of these will be directly proportional to the size and breadth of the preceding days of expansion. There will always be some profit taking along the way, but a down day is just simply that. Let's not label it the same way every time there is no news to explain it, other than the normal cycle of the growing market.

Have a good one,

Sunday, November 23, 2008

Holding on for Hope

Have you ever bought a stock, saw it plunge and then hold on to it for months waiting for it to rise from the ashes? At what point do you let it go?

Well, I have done that very thing before many times in my early years of trading. It took a long time for me to realize that dead money is just that: dead. It cannot do anything for you while it is sitting still.

I learned to cut dead money loose so that I could make it work for me somewhere else. True, some stocks will rebound and I'm not saying sell for a loss, but the grip of death on a stock that has went sour must be broken.

Remember that the money you are losing can be easily regained on a stock on the run. Hope is a good thing. Sooner or later, however, you must move on for better opportunities. Make your money work for you.

Have a good one,

Tuesday, November 18, 2008

My Venture into Money Management

A long time friend of mine recently sold his interest in a large business for several million dollars. Although he is partial to real estate, he has agreed to let me invest some of his funds in my brokerage account.

He has long followed my trek into stocks, and Stock Assault, so now I get to prove that there is money to be made in investments other than real estate. A lot of it, in fact. I think he is going to be pleased with the results.

I will document every step of it here on the blog. My buys, my sells and the reasoning behind each. I also am going to teach him my methodology and empower him to do the same thing so that one day he will feel comfortable investing by himself. So far the greatest thing he has heard from me is the word "stop-loss." It's very comforting to someone with a lot to lose.


Sunday, November 16, 2008

Clarification on Equity Grading System

It was recently pointed out to me that my little grading tool was giving some low scores to seemingly solid stocks. I should have noted that the scores produced are only valid on a month to month basis and are intended for swing trading only, and not long term.

Also, I would like to thank all of you on the feedback I have been getting. It is very encouraging to know that people are actually seeing my posts. My goal is to help people to make a little money in these crazy times. Any suggestions or comments are always welcome.

Have a good one,

Wednesday, November 12, 2008

Gauge Your Entries and Set Your Stops

When I am confronted with multiple picks and their price, I see two things.

1) I see stocks that are ready to run.
2) I see the closing price from the previous day.

Before the market opens I do several things. I go to Yahoo Finance and I look at the stock futures. This tells me if the market is tending to open higher or lower. I look at the news of my picks on their page. I open my streaming quotes and look at the pre-market action on my watch lists, which have my potential buys for that morning.

If Stock Assault gives me, let's say, stock ABC at a price of 18.99 , then I look at the bid / ask prices going on in pre-market action and how many shares, if any, have already been traded. If the futures are somewhat stable and stock ABC is at a pre-market ask price above the previous day and the bid is at or above the same, then I know I can place my order with confidence.

If I see futures really negative and stock ABC is showing pre-market ask and bid below the previous day close, then I will wait and let it run lower with the market before I get in. If I see thousands of shares traded pre-market at lower pricing than previous day close with highly negative futures, I won't even consider a position with ABC yet.

Gauge the market before hand and pick a good entry point. And, as always, place a stop-loss on all your buys reflective of your tolerance. Too tight of a stop will cause you to pre-maturely sell and too loose of a stop will cause you pain.

On most stocks I use a 10 percent stop and those that I see with a more steady nature on a good looking trading day, I may go 5%.

Have a good one,

ADX as an Indicator

ADX stands for Average Directional Index. It doesn't give buy or sell signals, it simply tells you the strength of a trend regardless of its direction. You'll often see it plotted with two other indicators: the negative direction indicator (-DI) and positive direction indicator (+DI).

I generally ignore the DI indicators and focus on the ADX line itself. A move below 20 indicates shows a weakening trend and a move above 30 or so indicates a developing strong trend. When the line moves sideways below 20, I stay away from those lamers.

I like to see a line above 40 as these trends are winners, assuming an up trend. Just remember, the ADX does not give you the direction of the trend, only its strength.

Have a good one,

Tuesday, November 11, 2008

Updated Equity Grading System

Sorry for the previous post with the spreadsheet on my personal grading system. It wasn't really a finished piece of work but now I have a more automated version that does all the computations for you.

Just plug in the numbers and it will automatically generate a score for your equity. I have removed the %K stochastic because it has nothing to do with the quality of a stock.

It simply measured the oversold, overbought aspects at any given time. This automatic spreadsheet simply helps you see the quality of a stock based on its performance. I hope you find it useful.

Have a good one,

Attachment: Rogers_Equity_Grading_System.xls [View on Google Docs]
Don't have Excel?
Use Free OpenOffice.org

Sunday, November 9, 2008

My Personal Grading System

The attached spreadsheet shows a supplementary grading system for picks that I use. It in no way replaces the grading system developed by the pros at Stock Assault and is presented for educational purposes only.

Use Yahoo Finance key statistics to obtain the following information on an equity: Operating Margin %, Return on Equity %, Price/Book Ratio, Shares Short Ratio to Prior Month (just take the shares short and divide by the prior month's shares short), Debt to Equity Ratio and the %K value of Slow Stochastics (just use your favorite charting program, I use Amibroker or look for my older posts on how to do this).

You'll notice that I assign point values for the grades A to E. I add up the total points and compare to the ranges at the top to get the total grade. For negative margins, earnings or growth just use the values in reverse and subtract the appropriate value.

For example, I was evaluating a stock with a negative quarterly earnings growth of 60%. I divided the 60 by the "A" range value of 19 to get a rounded value of 3 which I multiplied by the point value of 5 to get a negative 15.

This is how I evaluate picks in supplement to those of the software. Just thought I would share it with everyone.

Have a good one,

Attachment: Rogers_Grading_System.xls [View on Google Docs]
Don't have Excel?
Use Free OpenOffice.org

Thursday, November 6, 2008

There's Always Diamonds in the Ruff

Rough times, that is. Even when the market tries to take back some the gains, there are always some stocks waiting to be found. I never would have found today's gem if it wasn't for Stock Assault. A stock trading with a forward P/E of 2.34, a price/book of .78 (that's right), operating margin of 38.11%, short interest down 63% from the prior month and mutual funds
buying the crap out of it by a 99 to 1 margin.

Let's get ready to rumble! Hope everyone took note of the sell issued on HIG. That was the perfect call and a perfect exit. I keep finding myself more amazed at the power of StockAssault as time goes on.

- Roger

MACD as an Indicator

The Moving Average Convergence Divergence (MACD) indicator is a helpful tool for comparing the short-term momentum of a stock relative to its longer term momentum. Two lines are used: the MACD line and the signal line. The MACD line is the difference between two exponential moving averages, usually the 12 and 26 day. The signal line is the 9 period moving average of the MACD line.

When the MACD line crosses above the signal line, it generally signals a buy, and crossing below a sell. Many times you will see this laid over a MACD histogram that simply graphs a line chart showing the difference between the two, with bars avove zero indicating a buy "zone". This is just another of many technical indicators you can use when evaluating stocks.

Have a good one,

Monday, November 3, 2008

Friday's Diamond Edition Pick Windfall

Those of you who took Friday's Diamond Edition Picks are seeing over 40 % returns today. One of these hidden "diamonds" HIG, has room to run as the book value is 55 dollars, and it's only trading around 14. What an oversold gem this turned out to be. Whoops, now up over 15 dollars at a 50 percent gain as I type. Let's see how far we can go today. This is just another example of the power of AI and a killer stock app.

Have a good one,

Specific Settings

I have often mentioned slow stochastics, but have failed to give the specific settings that I use. They are as follows: %K (15,3) %D (15,3,3). For parabolic SAR I use an acceleration of 0.032 and a max. acceleration of 0.2. I hope this helps so that you can be seeing the same things I am.

On a side note, it looks as though we are seeing a market in recovery. Often times the stock market leads a general economic recovery by several months. Let's hope that this is sustainable and I think it will be.

Have a good one,

Tuesday, October 28, 2008

Markets Surge Forward

Wow! What a day. The 2nd biggest ever and I really expect to see more as the days go forward. Those smart enough to have taken advantage of the discounted prices saw their fortitude flourish today as the buyers overwhelmed the sellers by far. When you have many buyers and few sellers, people end up paying a premium. Those who didn't sell know they are holding what will apparently appreciate even more. We will see some profit taking in the following days, but I believe the bear is loosing some bite.

Have a good one,

Relative Strength Index as an Indicator

Most widely termed RSI, the relative strength index is another way to measure the overbought or oversold status of an equity. It compares the amount of recent gains to recent losses and a value above 70 is generally considered overbought and less than 30 oversold. I prefer stocks on the oversold side because the are due for a pop to the upside, so this tool can be used to filter your picks also.

Have a good one,

Monday, October 27, 2008

Parabolic SAR as an Indicator

Parabolic "stop and reverse," or PSAR, is a very useful and accurate indicator during a trending period. Outside of a trend, it is kind of useless. Since we look at getting in before the trend begins, its more of an "after the fact" confirmation but makes a very good exit signal. I will be getting into more technical indicators, their benefits and their pitfalls in the upcoming weeks.

Have a good one,

Quick Analysis

One quick way I use to sort through many potential stock picks is to go to Yahoo Finance and look at the following:

1) Price/book ratio. The lower the better as far as value goes.
2) Shares short less than previous month. The lower the better as far as people betting against the stock.
3) Slow Stochastics. I'm looking for %K crossing above %D and as close to 20 on the oversold side as possible. I wrote more about this in an earlier post.
4) PSAR. I'm looking for parabolic SAR below the stock price.

All of these together make for a quick way to analyze several picks to narrow down your choices.

- Roger

Friday, October 24, 2008

A Panic Day

Today may be one for the record book. As stock futures point to a blood-bath today, one must wonder were the bottom truly is. If the Dow Jones industrial average falls 1,100 points before 2 p.m., the market will shut down for an hour. If this level is broke between 2 p.m. and 2:30 p.m., the halt will last 30 minutes. Trading would stop again if the Dow falls by 2,200 points. If the Dow falls by 3,300 points at any time, trading would be halted for the day. Let's watch the carnage unfold.

Try to have a good one,

Thursday, October 23, 2008

Insider Buys as an Indicator

I believe that insider buying, as well as institutional buying, is as good of an indicator as many technical ones. Setting aside stock repurchase plans often used to reassure investors and support stock pricing, one can see the purchase of an equity by the owners of that equity as a very bullish act since those on the inside often have privy to information that may lead them to think the stock is headed higher. Also bullish are mutual funds accumulating a position in a particular stock. Fund managers definitely buy what they think is going higher. You can see insider purchases on several websites including Yahoo Finance, and institutional buying can be seen at www.thebuylist.com.

Have a good one,

The Ride Continues

Anybody getting a little sick of the rollercoaster yet? While the market is poised for yet another rebound today, you might wonder how long this action is going to last. With 3rd quarter foreclosures up over 70 percent the news keeps getting a little more scary as Halloween draws closer, but is this anything new? Just keep focused on the value being created and let Stock Assault 2.0 do all the work.

Have a good one,

Friday, October 17, 2008

Beyond Stock Charts

There is a level of study that goes far beyond stock analysis in the traditional way. There is a level of A.I. that incorporates common sense reasoning and actual processing of "thoughts" that rival that of a human being.

Imagine a thinking computer program watching the behavior of stocks, analyzing all possible outcomes instantly, pattern recognition that no humand can do and choosing consistent winning trades. Well, if you own Stock Assault 2.0 that's exactly what you have.

I don't get paid to say that either. I was such a satisfied customer that I decided to contribute posts like these to their blog to help explain Stock Assault 2.0 to new customers. That's just a fact and I stumbled onto it myself by accident. If you want to know more about the theory behind A.I., you can start with a Book called "Commonsense Reasoning" by Erik Mueller. It's very interesting.

Have a good one,

Thursday, October 16, 2008

The Rollercoaster Effect

Sometimes we feel like we are on a gut-wrenching ride at an amusement park when we invest at the bottom of what appears to be the worst downturn in memory. The many ups and downs we experience as the market tries to recover tends to leave us uncertain as to the validity of our decisions to invest. Rest assured that the value created by the recent market slide will pay off in the end. Just be prepared for the dips and peaks along the way.

Have a good one,

Monday, October 13, 2008

Time to Play!

"I have seen the enemy and it is us." Don't really know who said that, but it's a great quote. Maybe we have begun to see a new bottom forming and the future points to an extremely bullish opening.

I think the worst is over leaving us with an excellent chance to buy some really good stocks at a really big discount. We will, most likely, see many ups and downs from here on, but the ups will win out over the downs. Time to jump back in and start making some cash. Have a good one.

- Roger

Friday, October 10, 2008

No Bottom in Sight

At least not yet. The market is set to plummet again today as the world markets took a dive during the night. This could get very ugly folks and I hesitate to actually call the bottom, but it could be as low as 7500 for the Dow.

All resistance has been broken for a while now and panic selling is rampant. Unless you are long in an inverse ETF, it's best to watch from the sidelines until the blood dries.

On a brighter note, this is going to create a lot of wealth for new investors as they will be getting in at very discounted prices when this is all over. And it will be over soon, so sit back and watch the show; you won't see this many times in your life.

Try and have a good one,

Monday, October 6, 2008

Look Out Below!

The market is falling, and I mean free-fall style. The so-called bail out package has done little more than bring the seriousness of the financial situation into greater focus. I believe we have only begun to see the true ramifications of these last few years of bad debt in the markets.

But, on a brighter note, there are always some things that prosper when things go bad: they're just harder to find. I normally would suggest standing on the sidelines until this market corrects, but if you can choose wisely, you can still find value out there. Just be extremely careful, and if you can't afford to loose it, sit it out until we see some stability and a hint of recovery.

Have a good one (if possible),

Friday, October 3, 2008

Still Waiting

I suppose today we will find out if the so-called bailout bill passes the house. Either way, we are still in for a rocky ride as the market tries to find its footing in all of this mess. I still think there is real value out there, one just has to be careful and research their picks.

One way I find value is to look at a stock's P/E multiple to price. If a 18 dollar stock has a P/E of 6, then it is trading at 3X it's price to earnings ratio. Stocks with the lower multiple tend to be the best value. Anyway, expect a sharp rally when the bill passes. Have a good one.

- Roger

Tuesday, September 30, 2008

Ouch! That Hurt

What a day. The Dow down 770 in a record setting sell-off as the house votes down the bail out lan with a revote not occurring again until Thursday. Stock futures point to somewhat of a rebound this morning, but that can turn on a dime as the day goes on.

The market is a mess right now, but I actually enjoy sell-offs, to some degree, as it always me to buy more at a very discounted price. I keep a little "sell-off" fund set aside just for moments like this. Although yesterday's market action was a little extreme, this type of erratic movement will be the norm until this plan is passed in the house.

- Roger

Sunday, September 28, 2008

Beware of Penny Stocks

I thought I would mention my personal views about penny stocks, although there is a well-stated statement on the home page of Stock Assualt. Have you ever heard of "pump and dump"?

That's essentially what penny stocks are about. I get faxes at my office, from time to time, about monster stocks ready to explode. If you ever receive one, throw it in the trash immediately. Someone is sitting and waiting for a flood of buyers to come and drive the price up so that they can dump it for a huge gain, leaving the unsuspecting buyers "holding the bag".

When you hear the term "bag holder" posted on forums, they are talking about people on the bad end of a dump, or people with a bad deal in general. The AI of Stock Assault 2.0 will never get you into a penny stock, but will always choose valid companies ready to turn upwards in price.

That in itself is extremely reassuring to me, especially the part about impending price appreciation. That's what we are all in this for price appreciation. Have a good one!

- Roger

Friday, September 26, 2008

It Is Still Up in the Air

The government bail-out plan is still undecided even after announcing an agreement yesterday. The republicans have left the table and are not going to rejoin talks this morning.

Well, well, what a twist. I personally got barbequed the other day during a meeting by someone that thought that we "rich people" that invest in the stock market shouldn't be bailed-out by the poor working people.

Wow. What wild misconceptions exist about this entire stock market dilemma and the cause. Excuse me now while I go count all of my money.

- Roger

Monday, September 22, 2008

The Cream Always Rises

To the top, that is. I waited a couple of days on the last set of picks until the market pulled back which it definitely did on Monday. I looked for the stocks that were up for the day and I quickly narrowed my 45 or so picks down to about 6 which was just enough to apply my filtering method.

This time,however, I found some strong turns upward on the %K of slow stochastics which really made it easy. Although bumpy times are ahead, there are always stocks that will out perform and clearly rise to the top!

- Roger

Lock in Profits with a Trailing Stop

One way of protecting you stock purchase is with a stop order, also known as a stop-loss. This is a standing sell order where your broker will sell your stock at a price (the stop) that you specify if it drops to that.

A variant is the trailing stop order. This type of stop-loss "follows" behind the stock price at a specified amount or percentage and increases as the stock price increases. For example, if you have a 5 percent trailing stop, the price at which the stock is sold is 5 percent less than its highest peak and not 5 percent behind the purchase price.

This is a good way to lock in profits as your stock rises and a good way to cut your losses if it turns south. Too tight of a stop on a wildly fluctuating stock might cause your stop to be executed too soon and too loose of a stop may cause extra losses.

I generally don't go more than 5 percent on a stop order while some people on a pretty stable equity might go as little as 3 percent. It's up to your risk tolerance and the volatility of the stock that you have purchased.

Have a good one,

Batten Down the Hatches

We're in for one heck of a ride this week as the market tries to figure out what's going on with the bail-out plan announced last week. Congress still has to approve it and that could be a choppy deal in of itself.

It's hard to completely remove emotions when it comes to trading but now's the time to practice a little discipline as we are going to see tremendous swings up and down. Just stay calm and remember: calmer seas are ahead of us, we just have to deal with a few tempests along the way.

- Roger

Friday, September 19, 2008

Tips for Sanity

Don’t drive yourself crazy by watching the quote feed from your broker throughout the day. This was one of my biggest problems when I first started trading. I would buy a stock, then open up the streaming quotes from my broker and watch the stock prices every minute throughout the day.

Often times I would see my stock dip a couple of percent, panic and sell it, then find that it had closed ten percent up. Stay calm and let your sanity stay intact.

The only thing you should really be looking for once you buy a stock is the sell signal generated by your Stock Assault 2.0 software or once a decent profit has been reached in your mind. Don't get too greedy, the market can turn on you. Have a good one!

- Roger

Ban on Short Selling

A ban on short selling financials plus a government rescue plan equals possibly the biggest day we have seen in years.

Short selling is when a person borrows stock from their broker, sells it, and then buys it back at what is hoped to be a lower price. They then repay the number of shares back to the broker and pocket the cash difference.

I never did believe in short selling because the very action itself drives down the price of a stock and it is very risky since it can really hurt you if you are forced to buy back or "cover" at a higher price. Watch today, because it is going to be a whopper!

- Roger

Thursday, September 18, 2008

Cash Injection

Thursday looks to be a big day in the market as the world's major central banks got together and put $180 billion into money markets.

This will help to shore things up a little but we will still see some big up and down days as the market tries to find footing in the midst of the current financial upheaval.

There are still some excellent buying opportunities out there and I believe we will have an edge with Stock Assault 2.0 in our arsenal.

- Roger

Volume as an Indicator

One way I like to judge the interest in a stock is to look at the daily volume vs. its 50 day moving average. This can work both ways, however, in relation to buying pressure or selling pressure.

If you see several days (at least 2 or 3) of volume above the 50 day MA (Moving Average) and the stock price is rising, you are seeing an equity under-accumulation which is a good thing.

Conversely, if you see the same thing with the price going down, you are seeing an equity under-distribution which is not so good unless you are short (not your height, but another way to trade which I won't go into right now).

Have a good one,

Wednesday, September 17, 2008

Investing In Uneasy and Chaotic Times

It seems hard to stick with investing your money when the financial world seems to be falling apart. Let me stress the following:

1) Market Volatility Could Be Far Worse. In historical perspective, the market isn't bouncing as much as it has at other times in the past.

2) Embrace your Fear. Your first reaction in times like this is most likely to sell all and stick it in a savings account. Try turning that fear toward other areas. Keep in mind that volatility is part of life and you actually have an edge in this market with the Stock Assault 2.0 software.

3) Look at the Upside. Tremendous buying opportunity occurs directly after a huge sell-off. You'll see more picks after a day like we saw on Monday. Oversold equities are not sustainable at these prices. They will trend higher which equals more money made.

4) Let Stock Assault 2.0 Do the Work. Artificial intelligence does not know fear. Take advantage of the picks during these times and reap the rewards. Keep your chin up everyone.

- Roger

Tuesday, September 16, 2008

My Plan Of Action

My SA software fired off 33 picks today. I don't plan on buying 33 stocks, so I must put my filtering process into work. I began by looking at which stocks were below 20 on the slow stochastic %K. This quickly narrowed my picks down to 5. For me, I need to narrow it down to about 2 since I only have about 10k to invest (including margin).

This is the only program, by the way, that I am actually OK with using a margin account. The 5 I was left with were C, IRM, LNCR, OMC, and VAR. Next thing I need to do is open up Yahoo Finance and check the scoops. Citigroup (C) said their exposure to Lehman was "modest."

Hhmmmm..... just mentioning Lehman soured me. During these very chaotics times, anything matters and that tid bit of information was very useful. Normally standard this depth of research isn't required. Scratch 1. Iron Mountain (IRM) is in business services. Headlines are good - new facility, great financial and 4 buy recommendations from analysts. I'll keep this one.

Lincare Holdings (LNCR) is in home health care. Wow, this company looks really good - keeper No. 2. Omnicom Group (OMC) is in advertising. No bad news, good financials - keeper No. 3. Finally, Varian Medical Systems (VAR) is self explanitory. Another good looking company! Keeper No. 4.

I'd like to buy all 4 of these oversold gems, but best of all, my Stock Assault 2.0 software fired them off as buys. Anyway, this is just an example of how I processed through 33 picks to get 4 I was comfortable with.

Honestly, there were actually 10 or more picks that looked as good, but fell just a few points shy of my 20 stochastic mark. Well, let's look for a strong market this week. Good luck to all.

- Roger

A Better Mouse Trap?

You wouldn't believe all the stock pick software I've been through:
AmazingStock Trend Signal, Automatic Investor, High Growth Stock Investor, OmniTader, Precision-Trade-Pro, Stock-Signal-Pro, StrataSearch, Blocks, TradeRadar, Stock Neuromaster, Telecharts, Metastock, Amibroker to name a few.

Actually, I think that of the names mentioned, all except the last three are more of charting tools. I have studied and researched until my eyes were sore, looking for the "Holy Grail" of stock picking. I was either getting in trades too late, exiting too quickly or even worse, flat-out losing more than I gained. Picking winners was more of an accident than anything else, it seemed.

That's when I started learning technical analysis and market movements. I actually got pretty good at it and thought, "if I could teach a computer to automate this stuff, I could let it do all the work." I was actually studying Artificial Intelligence in computer applications and I ran accross Stock Assault 2.0.

I tried it and I finally had found exactly what I was looking for. I had really found "a better mouse-trap" so to say, but now I was actually catching better trades with minimum draw-down on both sides: winners and the occasional loser. There is no such thing as the "Holy Grail" in stock picking ... nothing is perfect. But as far as I can tell, honestly, the Stock Assault 2.0 software is the closest I have found.

- Roger

Further Filtering Beyond Stochastics

Sometimes there is a need to further narrow one's buy candidates even further than what an oversold stochastic shows. One way is to look at the P/E ratios of the companies. This is the ratio of the stock price to its per share earnings.

I view low P/E companies as undervalued and therefore better candidates. I also like to look at the book value of a company. This is the theoretical value of the shares if the company was liquidated. If the stock price is less than the book value, I see it as undervalued. These should help to further narrow your choices when faced with many picks. Happy trading.

- Roger

What to Choose

If you’re like me sometimes, when confronted with a large selection of buys, I have a hard time choosing which stocks to buy. I have a quick way of filtering down the picks:

Look for the stocks that are the most oversold. There are many free charting sources out there like the ones on Yahoo Finance. I use slow stochastics, not so much for the crossing of %K over %D, but for the overbought-oversold indication. Choose stocks that are below the level of 20 on the %K, as these are the ones most oversold and ready for a bounce.

Also, although A.I. is a wonderful thing, one thing it cannot do is read the news. You must stay on top of the current market events. For example, part of my 9/10 picks included a financial related stock. I immediately disregarded it for obvious reasons in the headlines. Well, that’s a start. I’ll give you some more tips as time goes by.

- Roger