Monthly Archives: July 2008

Why stops are important

Posted by K on July 28, 2008
General / Comments Off on Why stops are important

Recently i began using the stop loss rule because this apple stock i own is driving me insane.

I bought DDM at 61.70  and i figured out it’s volatility through Average true Range (ATR) was around $2.40      61.7-2.4= 59.3

I decided to give it a little more space so i set $59.

with 15 shares i held at 61.7 i spent $932.5 ($7 commission included)
i sold with a stop rule in effect at $59  so that is  $878 after commission is deducted.

I ended up losing $54.5 or about 5.8%. I’m fine with that as long as it keeps me out of trouble.

Remember!
Disciplined Traders Use Stops and Never go against their own rules.

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Is Dow Jones ready to recover?

Posted by K on July 19, 2008
Market Analysis / 2 Comments

Almost a Month ago I wrote a post about how the dow had yet to bottom. See: The Dow Jones Industrial Index has not yet bottomed ,at that time the index was at 11,842.  A week later I followed up with a prediction that the Dow Jones Industrial would bottom at 10,800 (See:Prediction: Dow Jones Industrial bottoms at 10,800.)

On July 15,2008 the Dow Jones Index fell to 10,827 to make a new 52-week low. That new low came very close to my prediction and soon after it began rebounding. Since the weekend came and I found some time to go and revisit the chart for the dow I now think that the index has bottomed out and should begin to climb.

I believe the market will begin recovering because of a few reasons.
1. 10,800 is a very strong support zone going back to 2006
2. Oil prices have recently fallen from $146  to $128 (maybe that  bubble is deflating)
3. The chart shows that the sellers are moving out and more buyers are beginning to take over (green and red lines almost crossing. Green is buyers, red is sellers)
4. At the end of the chart is the amount of money being put in the market. Since mid May it was in a downtrend which meant people were taking money out of the market and now it has broken out of the trend.

As you will see in the chart below however, today’s action is within the downturn trend line and it needs to close above 11,500 or we might not have hit recovery period just yet.

Without further adieu i present to you… the Dow Jones Industrial Recovery Chart.


At this point i have invested in stock symbol (DDM) which has the top 30 Dow Jones Companies.
It goes mostly parallel to the Dow Jones Industrial Index. You can check out my current holdings at my Covestor page.
If you have any comments feel free to post them.

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Dug is up 20% in over a week

Posted by K on July 16, 2008
General / Comments Off on Dug is up 20% in over a week

Many of you might have read my previous article where I question whether the oil bubble was ready to burst.

Previously: Is The Oil Bubble Ready To Burst?

Since July 7, 2008 until July 16, 2008, (DUG) has gained well over 20%. This is certainly not a burst of bubble but it is interesting to see whether it’ll sustain for a longer term.

If you invested on (DUG) or have any comments please feel free to comment.

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Is The Oil Bubble Ready To Burst?

Posted by K on July 07, 2008
Market Analysis / Comments Off on Is The Oil Bubble Ready To Burst?

Bubbles Always Have a Limit where they can no longer grow and sustain the hype.

I have seen oil run up like many of you have but without owning a car it hasn’t hurt my wallet yet.

I’ve been thinking of investing in an oil shorting stock (Exchange traded Fund in this case.)
Symbol: (DUG)   which bets that oil will go down. The ETF that bets for oil is (DIG) and the top 10 holdings are listed below.  DUG basically almost shorts all those companies and more.

Top 10 Holdings For Dig
Security Description Weight
EXXON MOBIL CORP COM STK 25.21%
CHEVRON CORP COM STK 10.87%
CONOCOPHILLIPS COM STK 6.96%
SCHLUMBERGER COM USD0.01 6.45%
OCCIDENTAL PETROLEUM CORP 3.81%
DEVON ENERGY CORP(NEW) 2.62%
TRANSOCEAN INC. (NEW) COM 2.40%
HALLIBURTON CO COM STK 2.36%
APACHE CORP COM STK 2.35%
MARATHON OIL CORP COM STK 1.9

Source: ProShares

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Here is my usual chart showing the trend reversal the past few days.

It broke through the 50 day moving average and might make a modest run.


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An interesting chart showing that the oil price has touched base with the total oil consumption just like the 1980’s bubble.
Source: SmartEconomy
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Disclaimer: I have not invested into DUG yet but it is getting very interesting.

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