Why Not To Use Stop Loss Order
I'm busy investrader trader. I work full time so it is not easy for me to trade throughout the day. Thus, from time to time (read: sporadically), when I'm going to the meeting with an open order, I need to minimize damage to my portfolio in case something was happening to the stock while I was not looking at its chart. During those times I use stop-loss orders. Stop-loss orders are dangerous and I want to share with you something about them.
A stop order (also stop loss order) is an order to buy (or sell) a security once the price of the security has climbed above (or dropped below) a specified stop price. (Note that both bid and ask prices can trigger a stop order.) When the specified stop price is reached, the stop order is entered as a market order (no limit). This means the trade will definitely be executed, but not necessarily at or near the stop price, particularly when the order is placed into a fast-moving market, or if there is insufficient liquidity available relative to the size of the order.
I filled an order for 400 PFE at $17.90 (its support). I set a stop-loss at $17.78-- I like to take tiny losses. While away, look what happened:
For a fraction of a second, the price fell to $17.75! Coincidence? This is what happens when others set stop losses and the movement is bearish-- they are being taken out within fraction of a second. More importantly however, stop losses can be seen by market makers and they sure know how to make your life miserable.
Regardless, my stop loss order was not taken out and I'm still in this trade.
Best of all, just see what happened right after:
Apple Poised For a Big Move $AAPL
I have been watching Apple Inc. ( $AAPL ) form a symmetrical triangle for the past two months. This is a Continuation Pattern, which means that the triangle is used as a way to head higher if the trend has been upwards and with AAPL it has been.
A symmetrical triangle is generally regarded as a period of consolidation before the price moves beyond one of the identified trendlines.The sharp price movement that often follows a breakout of this formation can be captured by traders who are able to identify the pattern early enough.
The Symmetrical triangle pattern needs to have a few things working for it and we will check them off here.
1. Trend Should be at least a few months old: Check !AAPL is from march to december.
2. Duration of pattern should be at least 3 weeks old: Check! This pattern is 6 weeks old.
3. Breakout occurs between 1/2 to 3/4 of the way through the pattern: Check! It's about 3/4 of the way.
So now that we checked a few major points off let's look at a price target. We take the distance from the widest end of the triangle and in this case is around $20.
From the breakout at around $200, this being a bullish trend apple has been in we add $20 to the upside and put it at ~$220 for a potential breakout target.
There are a few hurdles here for AAPL though the $207-208 area is major resistance so if it can break that $220 is well in sight.
I bought a January $230 Call option at 0.23 to prepare for the move instead of putting major capital in the stock
Here is the chart (Click to Enlarge)
Update: I tried posting it last night but my host was down so i gave up. $AAPL is currently at ~$207.50 (in between the resistance I mentioned)
I have also sold my Call options for a hefty 140% Profit from yesterday's buy-in price, if Apple breaks above 208 I might be re-buying some.
Merry Christmas!!
8-20-2009.. another repeat of 7-13-2009 ?
If you have been following my current picks page you might have noticed that most of the symbols received buy signals on 7-13-2009 which is when the March rally was coming to a correction but then bounced. Will we have another case of this with 8-20-2009?
I was hoping we wouldn't that is why I posted those charts yesterday thinking we had topped. Well my automated strategy was saying otherwise and I completely Ignored it.
Normally I would just update the current picks page but this time around I have decided to make a blog post.
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Market Indices and other important Quotes
(Note: I understand you can’t purchase an index so bear with me these are just signals)
|
Symbol |
Buy Date |
Sell Date |
|
$SPX |
8-20-2009 |
|
|
$INDU |
8-20-2009 |
|
|
$COMPX |
8-20-2009 |
|
|
QQQQ |
8-20-2009 |
|
|
IWM |
8-20-2009 |
|
|
SPY |
8-20-2009 |
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Rest of the Symbols (More will be added per request)
|
Symbol |
Buy Date |
Sell Date |
|
IYR |
8-21-2009 |
|
|
AAPL |
8-20-2009 |
|
|
DRYS |
8-14-2009 |
|
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SDS |
8-20-2009 |
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|
SRS |
8-20-2009 |
|
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SSO |
8-20-2009 |
|
|
SKF |
8-20-2009 |
|
|
UYG |
8-20-2009 |
|
|
URE |
8-21-2009 |
|
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JNK |
8-21-2009 |
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HYG |
8-7-2009 |
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REW |
8-20-2009 |
|
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QID |
|
8-20-2009 |
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QLD |
8-20-2009 |
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XLF |
8-20-2009 |
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DIG |
8-20-2009 |
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DUG |
8-20-2009 |
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SMN |
|
8-20-2009 |
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VXX |
|
8-19-2009 |
The VIX ETF signaled a sell before the rest of the signals came in the following day. That is interesting.
-K
Two picks: AIB and AMD
This is my first blog post here. As a friendly note, I assume no responsibility or liability for your trading and investment results. Do not forget, this website is solely for entertainment purpose only.
Today the trading day started with generally high buying demand and ended the same. My two picks for today are: AIB and AMD.
| Company | Buy Date | Sell Date | Buy Price | Sell Price | Gain/Loss |
|---|---|---|---|---|---|
| AMD | 5/18/09 | - | $4.1399 | - | - |
| AIB | 5/18/09 | - | $2.89 | - | - |
All indicators aside, I think AIB is one of the financials that is undervalued. According to Zacks.com, in its first quarter trading update, AIB "announced that operating profits before bad debt provisions were higher than the year-ago quarter, reflecting strong performance of its Capital Markets and Global Treasury divisions." That not to say that they do not have problems- they still experience declines in operating profits, net interest margins shrink, etc. The point is not many institutions are problem-less. As of the close today, the stock is at $2.90 so it is still a penny stock. Most likely it will be a longer term play for me.
AMD is a pure technical play. It has a major support somewhere between $4.07 and $4.12 (as indicated on the graph below). I bought it at $4.1399 hoping that it will break its trend of fluctuating and find its way up. It did surge, but not as high as I was expecting. The bears and bulls are still fighting. Depending on pre-market, I will most likely sell this stock in order to break even (including commissions).
Stock Alerts of the Week May 11 – May 15 2009
WoW what a sea of sell signals there was this week. This is the longest sell list I have seen.
Of Course this meant BUY for the short ETF's which you will see below with exception to ICE (not a short ETF) which seems to be in its own little world up in the ICE(y) north pole.
Picks of the week of May 11th to May 15th 2009
|
Symbol |
Buy Date |
Buy Price |
Sell Date |
Sell Price |
|
$SPX |
5-13-2009 |
905.40 |
||
|
$INDU |
5-13-2009 |
8461.88 |
||
|
$COMPX |
5-12-2009 |
1743.52 |
||
|
IWM |
5-12-2009 |
50.82 |
||
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SPY |
5-13-2009 |
90.01 |
||
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IYR |
5-12-2009 |
34.00 |
||
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AAPL |
5-12-2009 |
129.71 |
||
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BBT |
5-11-2009 |
25.02 |
||
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BCS |
5-12-2009 |
16.87 |
||
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BAC |
5-13-2009 |
11.95 |
||
|
ICE |
5-12-2009 |
93.28 |
|
|
|
ING |
5-13-2009 |
9.56 |
||
|
FAZ |
|
5-14-2009 |
5.81 |
|
|
F |
5-12-2009 |
5.77 |
||
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SDS |
5-13-2009 |
59.68 |
||
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SRS |
5-13-2009 |
22.81 |
||
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SSO |
5-13-2009 |
25.02 |
||
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SKF |
5-13-2009 |
47.37 |
||
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UYG |
5-13-2009 |
3.92 |
||
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URE |
5-12-2009 |
3.97 |
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URG |
5-14-2009 |
1.04 |
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UNG |
5-15-2009 |
16.19 |
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JNK |
5-15-2009 |
33.60 |
||
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HYG |
5-13-2009 |
76.52 |
||
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FSLR |
5-13-2009 |
187.05 |
||
|
V |
5-12-2009 |
65.85 |
||
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ICO |
5-13-2009 |
2.93 |
||
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TZA |
5-13-2009 |
28.36 |
I hope you are enjoying the picks so far. Without suggestions and comments I cannot improve this blog so I strongly encourage comments.
-K
Stock Alerts of the Week May 4 – May 8 2009
Last week's picks have so far turned out to be good. DRYS is up almost 30% since signal.
Let's move to the score card. 5 positive gains of over 10% each. BAC signal got changed to a buy from a sell just 2 cents difference, and $BKX is acting up in my charting software so I will just eliminate it from watchlist.
Picks of the week of May 4th to May 8th 2009
|
Symbol |
Buy Date |
Buy Price |
Sell Date |
Sell Price |
|
QQQQ |
|
|
5-7-2009 |
34.29 |
|
BAC |
5-4-2009 |
8.82 |
|
|
|
REW |
5-7-2009 |
48.31 |
|
|
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MOV |
|
|
5-5-2009 |
8.98 |
|
DRYS |
|
|
5-8-2009 |
8.36 |
|
URE |
5-8-2009 |
3.70 |
|
|
|
CFX |
|
|
5-7-2009 |
8.50 |
I hope you are enjoying the picks so far. And just let me know about any suggestions on the comment box
-K
First Forward Testing of the system a Success [MOV]
Forward testing is when you use a strategy and instead of back-testing it with previous data you actually test it going forward and preferably with real money.
For my new system MOV became that victim stock to be tested.
I first got a buy signal on April 17 2009 (Bought on the 20th at market open), i got in at 7.67.
I got a sell signal on May 5th 2009 and I sold at 8.81 with a market order.
I got about 14% profit on a 19 day long trade.
I don't have a chart to post with this one but just wanted to say this first forward testing trade worked well.
Here's to more good trades.
-K
Stock Alerts of the Week April 27 – May 1 2009
As I stated in my latest blog post I wanted to begin giving stock picks based on my trading system.
I have created a page above with all the picks and wouldn't mind people asking for symbols to put on watch list.
I will also try to post a week in review with the signals given out for the week.
Here are the picks for April 27 to May 1st 2009
|
Symbol |
Buy Date |
Buy Price |
Sell Date |
Sell Price |
|
$BKX |
4-27-2009 |
34.54 |
||
|
BAC |
5-1-2009 |
8.84 |
||
|
DRYS |
4-30-2009 |
6.72 |
||
|
ICE |
4-29-2009 |
84.14 |
||
|
ING |
4-29-2009 |
8.34 |
||
|
UNG |
5-1-2009 |
13.72 |
||
|
ICO |
4-29-2009 |
1.90 |
As always these are picks but I am not responsible for any financial losses you make following these picks. I wouldn't mind a share of your gains though.
-K
SKF down to earth ready to refuel?
On Friday March 6th I made a new blog post calling SKF (UltraShort Financials) Overbought.
Now, 10 days later I want to put my opinion down in writing. SKF went from over $260 to $126 (so far) that is more than 50% off (around $13.40/day for past 10 days).
When I first posted my opinion i was being generous and looking at $182-$186 for the move down to earth.
There was an important fib retracement at $155 and one at $120.
Being a recent fib retracement follower I have a position in the $150-155 range, toady SKF didn't go as low as $120 or i would have doubled down.
If this is the short term bottom for SKF the move up seems to hit $213, I am not good with timing the market with dates so i don't want to give misleading info.
to recap.. SKF trying to refuel? Buy at $155 or $120 with a target at $213
I am including a visual as always (Click to enlarge)
Disclosure: As i stated in my post I have a position at $150's range and was looking to double it at $120.
-K
SKF (UltraShort Financials) Overbought?
I hope you saw my post about my February performance. Most of my gains were thanks to shorting the financial sector via SKF.
I have still kept an eye on the ETF after selling it and is now is extremely overbought on many levels. I had a target of $250-255 for it but I did not hold my shares past $200. Now that my target has been reached I am looking for SKF to come back down to earth, I am looking for at least $182-186 range.
With the market crashing down so fast there is not much incentive to go more short as I am sure SEC has plans for a no shorting rule or at least something to stop the bleeding. That concludes this post and I will rest my case by providing you the chart which I am basing my case on.
Below I am attaching a chart showing the RSI being overbought but also SKF itself going over the Bollinger bands that I use.
If you are looking to buy into SKF (besides trading it for quick scalps) then either stay away from it or just take the chart into consideration. (Click to Enlarge)
As always, I merely post my opinions on here so I am not responsible for anyone's financial decisions.
Have a good day,
-K
TSO Watch (in the near future)
TSO watch for a bullish harmonic pattern in the future (March-April maybe?)
Drawing fib on it in january there was a harmonic bearish pattern from 15-29th. That completed and stock fell temporarily then 2 weeks from earnings prices usually go up in buy the rumor sell the news.
If from 19 to 13 drop is as low as it will go right now then i have 2 choices for the highs.
(a) 61.8% is $16.83 Target then reverse to $10.87 which might prove a good entry for the next wave up.
(b) 78.6% is $17.84 Target then retrace to $11.85 which might prove a good entry for the next wave up.
This sets up a large bullish pattern which is "harmonic" to see if it holds.
Keep in mind I am using 60mins and not daily observation but 10.78-11.85 is the Possible reversal zone for TSO.
Here comes the chart (without dates below because I don't want you thinking at those certain dates the prices will match up. (Click to enlarge)
Hope you enjoy and always feel free to leave a comment.
-K
UYG short term bounce next week?
If you looked at my previous post I called for a break of support for S&P 500.
I didnt really set a target below but Matt Trivisonno had called this low back in October.
768.67 - Coming Soon to a Screen Near You … a screen about 18 inches in front of your face that is. 768.67 was the S&P 500 intra-day low on October 10, 2002. That was the day that the last bear market ended.
Since that Call was made almost 5 months ago and things have gotten even worse now.. I don't think the bear market will end here.
The interesting stock of the day is UYG
I have been looking at Fibonacci numbers lately and UYG has 2 targets which it hit. One was at $2.39 and the otheer at $1.95.
I loaded up at 2.43 with an idea of doubling down at 1.95 but missed the the boat.
If 1.95 is really a reversal zone there are a few projected upside targets. Probably strongest resistance will be at
$2.61 (38.2% fib value)
$3.05 (61.8% fib value) also that would fill the gap-down UYG had on February 17 which could mean UYG then is free to begin another leg down to -zero-.
If i were to be bullish on this ETF (which I am not at the moment) other resistances above are $3.37 and the extreme $4.29. I do not see these last 2 prices near term however.
Here is the chart to show you what I am looking at. Note: projected upside values are not shown. (Click to Enlarge)
Sources:
Matt Trivisonno (768.67-Coming Soon to a Screen Near You)
Investing in a Bearish Market
During hard times like the ones we are seeing now with the economy, one thing i am beginning to like is Ultra Short ETF's. They are basically bets against certain sectors or indexes. There are also ProShares which bet for the market to go up.
One of my latest moves into ETF's is buying (SKF) Ultrashort Financials on August 14, 2008 . As you can see from the table i have provided (hopefully it displays decent in most readers) I am looking at the Point & Figure Patterns for the Top 40 stocks market cap wise in the financial sector. FRE and FNM are not up at the top but have been talked a lot about in recent news.
Before i get you confused as to what the signals mean I will provide a brief description of each, courtesy of stockcharts.com
- The double bottom breakdown implies that the buyers who were supporting the price are no longer able to create demand that is more than the supply, and prices are breaking down.
- A triple bottom breakdown is similar to a double bottom breakdown except that the price at which the breakdown occurred is a price that the chart retraced from two times before. The breakdown below this level implies that the sellers are now creating more supply than there is demand and therefore the prices are breaking down.
- A double bottom followed by another double bottom, or three bottoms, each lower than the previous is recognized as an descending triple bottom breakdown. The idea is that supply is continuing to outstrip demand on an ongoing basis.
- A bull trap is a triple top breakout followed by a reversal. The breakout is possibly due to buy stops being hit just above the resistance level, and the quick reversal suggests lower prices ahead.
- The high pole warning is given when a chart rises above a previous high by at least 3 boxes but then reverses to give back at least 50 percent of the rise. The reversal implies that the demand that was making the prices rise has given way to supply pressure. The pattern is a warning that lower prices could be seen in the future.
- Bullish signal reversed pattern is a series of rising tops and bottoms that finally soaks up all demand and the double bottom breakdown at the end signals that now supply is outstripping demand.
Enjoy the table I have created. As you can see many bearish signals were given on August 13 so I went ahead and bought SKF on Aug 14 at $123.50.
|
Top Bearish Financials |
||
|
Symbol |
Signal |
Date Signal Spotted |
|
Triple Bottom Breakdown |
August 6, 2008 |
|
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Double Bottom Breakdown |
August 7, 2008 |
|
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Double Bottom Breakdown |
August 8, 2008 |
|
|
Double Bottom Breakdown |
August 11, 2008 |
|
|
Descending Tripple Bottom Breakdown |
August 12, 2008 |
|
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Triple Bottom Breakdown |
August 13, 2008 |
|
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Spread Triple Bottom Breakdown |
August 13, 2008 |
|
|
Double Bottom Breakdown |
August 13, 2008 |
|
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Bull Trap |
August 13, 2008 |
|
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Bearish Triangle |
August 13, 2008 |
|
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Double Bottom Breakdown |
August 13, 2008 |
|
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High Pole Warning |
August 13, 2008 |
|
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Bullish Signal Reversed |
August 13, 2008 |
|
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High Pole Warning |
August 13, 2008 |
|
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Double Bottom Breakdown |
August 14, 2008 |
|
|
Double Bottom Breakdown |
August 14, 2008 |
|
|
Double Bottom Breakdown |
August 18, 2008 |
|
|
Double Bottom Breakdown |
August 18, 2008 |
|
This is the longest post i've written and I'm sure some of you want to ask questions or make comments, please let's discuss.
Neutral Tandem (TNDM)
(TNDM) provides tandem interconnection services principally to competitive carriers, including wireless, wireline, cable, and broadband telephony companies in the United States.
This stock looks good technically and should head north for the short run at least.
As of closing June 16, 2008 the stock is at $19.19 and that will be my hypothetical buy price.
The stock's basic fundamentals:
52wk Range: 16.51 - 23.00
P/E (ttm): 63.75
VisionChina Media (VISN)
(VISN) VisionChina Media provides advertising to the Chinese people through digital media and even on buses and public places.
The stock is in my short term watch list. I will list a few con's and Pros. I considered buying at $15.91.
Pro:
- Olympic Games comping up. Vision China is going to ave increased revenue for next quarter mostly due to the Olympic Games August 8-24, 2008
- The stock went from $9 at end of March to $23 in Mid May and as of June 11,2008 was at $15.91.
Cons:
- Has a huge P/E of 130.
- Chinese stocks are Very Volatile (hyperbole, I know)
UPDATE: June 16, 2008
(newratings.com) - Analysts at Sterne Agee initiate coverage of VisionChina Media Inc (VISN) with a "buy" rating. VISN initiated with a buy rating.
