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,
Roger

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