|
|
understanding the stock market, trend trading stock
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: When using stops, do you strictly enforce the levels you set? When is a stop a firm sell?
A: Stops are not exact science. What we try to do in setting stops is pick a point below a support level where we feel the stock will hold above as long as the current trend or move stays in place. With that said, the key is whether the current move or trend does stay in place. That means the stock can actually trade below that stop level intraday and then recover and still be in good shape. What we do intraday is look at how the stock is trading versus the market. Is there anything impacting the stock that is not in the overall market (e.g., earnings, SEC investigation, etc.) or on the other hand is the stock acting immune to what is impacting the market? We are never too ready to jump out of a position if overall the market action and the action in the stock suggests an orderly pullback is still underway. If it is, even if it undercuts the stop we will see if it recovers. Indeed, we will sometimes give a stock a day to jump back into the trend if the volume was not bad on the day it sold down and was going to close below the stop point. Then there are always the days when a stock gaps lower and gives you no chance to get out on the way down. With those we will see if we can get a reflex bounce up toward support for an exit point.
Then when the market gets choppy or it looks as if a move is rolling over, we will tighten the stops more, ready to take money off the table if the stock violates key levels such as the 18 day MVA that it has been using as support on the move higher.
In short using stops is not a simple equation. As we have discussed in the past they are imprefect mechanisms even if you set them ahead of time. A stop loss can hurt you bad if a stock gaps down and you get traded at the low of the day as your stop loss is converted into a market order. Then you invariably get the situation discussed above where you set a careful trailing stop and the stock undercuts that level intraday. When setting a stop with a broker, ask yourself at what point you want to sell the stock regardless if it bounces back or not. In other words, if it gets to this level I want to cut off the loss because I don't want to lose more and risk it not coming back. Then don't worry about it. Same with trailing stops. Ask yourself if you are willing to capture the gain at the trailing stop point and bank it even if the stock comes back. Otherwise you drive yourself nuts with second guessing. We watch the market so we can make decisions about when we want to actually cut off the trade. We set the stops carefully below support levels to try and make it as automatic as possible, i.e., when it hits there we are relatively comfortable something is changing. We will still, however, look at the overall stock action and market to make the final determination in those situations where we are able to watch the market.
ONLINE SEMINARS LIVE OR NOW ON CD!!
To take advantage of market direction and trends, to underdstand why the market moves as it doess, and knowing how to turn up or down cycles to your money making advantage, you need to have the knowledge of what to do and the confidence to do it. Our seminars take you step by step through what drives the market up and down, how to recognize when change is occurring and when you should act, and how you to invest to take advantage of that knowledge. We don't really care which way the market goes, we just want to be able to recognize it and then take advantage of it with stocks, options, or both. Our seminar series shows how to put practical understanding of the stock market to use to make monthly income and build (rebuild) retirements and college funds. There is an incredible wealth of knowledge, years of experience, and 'how to' plans of action in these seminars. As one graduate put it, "I had no idea how little I knew about market direction and the reasons behind it until I took your course." Our graduates over the past year and one-half have made the bear market in stocks their own private second bull market because they learned how to and when to enter the downside and make dramatic profit from what most investors dread. Have the knowledge to take advantage of any kind of market as well as the confidence to act when you see the action unfold. We cover it all from trends, to accumulation/distribution, patterns, stocks, buying and selling options naked, covered, or creating spreads. Go to
http://www.stockseminarsonline.com
and look for the link to the CD seminars or the next live series dates where you can learn and ask questions from the comfort of your home without having to incurr costly travel expenses and time away from work, costs and time that very few can deduct from their taxes . This is Jon Johnson's internet site for online seminars and they get you up to speed on how to deal with up or down markets. Hope you check it out.
THE PLAYS:
Good moves: AVID
New Plays:
Downside:
ZION (Zions Bancorp--$38.26; -0.45; optionable): Regional bank
http://biz.yahoo.com/p/z/zion.html
STATUS: Put. ZION has formed its own little head and shoulders pattern as regional banks cointinue to suffer aftr the last Fed rate cut makes it harder for the smaller financials to make their same margins despite what may seem intuitive. Looks ready for a quick test lower to the October low. With the option price and delta, we can make a nice gain on this weakness.
Volume: 607.576K Avg Volume: 938.409K
BUY POINT: $37.97 Volume=850K Target=$35 Stop=$40.75
POSITION: ZNQ MH - Jan. $40p (-56 delta)
http://www.investmenthouse.com/ct/zion.html
CONTINUING PLAYS:
Upside:
Play Date: 11/13/2002
BER (W.R. Berkley--$37.32; +1.32; optionable): P&I Insurance
http://biz.yahoo.com/p/b/ber.html
STATUS: Cup w/handle. BER tested back to the 200 day MVA, held and then shot higher Tuesday on a big volume surge. Accumulation is solid and money flow is shooting up ahead of the price move. Looks ready to move with the passage of the homeland security bill.
Volume: 844.7K Avg Volume: 218.409K
BUY POINT: $37.55 Volume=306K Target=$44 Stop=$35.65
POSITION: BER DG - April $35c (66 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/ber.html
Play Date: 11/05/2002
CVD (Covance--$23.12; +0.11; optionable): Research services
http://biz.yahoo.com/p/c/cvd.html
STATUS: Breakout. Holding above the 10 day MVA, testing it again on the session low (22.70) before moving up fractionally. Volume jumped up Tuesday on the gain, indicating that the stock is ready to move again.
Volume: 368.4K Avg Volume: 387.454K
BUY POINT: $23.65 Volume=581K Target=$28 Stop=$21.75
POSITION: CVD ED - May $20c (68 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/cvd.html
Play Date: 11/09/2002
NWRE (Neoware--$16.85; +0.56; optionable): Networking hardware
http://biz.yahoo.com/p/n/nwre.html
STATUS: Cup w/handle. Started up off the 10 day MVA Tuesday but no real volume yet. Looks very ready for the next move.
Volume: 387.032K Avg Volume: 694.09K
BUY POINT: $17.77 Volume=900K Target=$21.35 Stop=$16.53
POSITION: QQA CC - Mar. $15 c (74 delta) and/or Stock
http://www.investmenthouse.com/ct/nwre.html
Play Date: 11/18/2002
POSS (Possis Medical--$14.1; -0.05; optionable): Medical appliances
http://biz.yahoo.com/p/p/poss.html
STATUS: Testing the breakout. A hammer doji that tapped the 10 day MVA on the low (13.85). Volume moved up to above average levels on the session. It looks ready to make its move. Accumulation since March is positive at 9 to 6.
Volume: 137.56K Avg Volume: 82.409K
BUY POINT: $15.01 Volume=127K Target=$18.45 Stop=$13.75
POSITION: UPQ DV - April 12.50c (70 delta) and/or Stock
http://www.investmenthouse.com/ct/poss.html
VSEA (Varian Semiconductor--$26.89; -0.42; optionable): Chip equipment
VSEA (Varian Semiconductor--$26.42; -0.47; optionable): Chip equipment
http://biz.yahoo.com/p/v/vsea.html
STATUS: Reverse head and shoulders. Very nice doji rigth on the 10 day MVA as volume has backed off well below average the last three sessions. We really like this pattern and VSEA looks ready to make the move for us.
Volume: 700.545K Avg Volume: 1.043M
BUY POINT: $28.03 Volume=1.4M Target=$33 Stop=$25.96
POSITION: UES BE - Feb. $25c (66 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/vsea.html
WATCHLIST/ CONTINUING:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 11/01 BO 457.69 -1.32 457.5 485 6.9M 0 449
Current. A doji right on the 10 day MVA looks promising.
ABFS 10/24 Test BO 27.8 -0.79 31.05 37 156K 475K 28.88
ADI 11/06 Test BO 28 -0.4 26.5 32.45 4.6M 5.8M 26.97
APH 11/16 Rv H&S 42 -0.97 42.69 49.94 238K 300K 39.7
ARTI 11/02 Cup 16.26 -0.24 14.85 17.75 241K 150K 15.15
AVID 10/30 cup hdl 18.72 +0.6 15.65 18.51 777K 177K 16
BBOX 11/14 cup hdl 45.23 -0.67 47.15 55 266K 550K 43.85
BDK 10/26 DB hdl 43.63 -2.25 47.61 55 2.3M 1.2M 45.55
BER 11/13 cup hdl 37.32 +1.32 37.55 44 845K 306K 35.65
BG 11/07 Test BO 24.86 -1.04 25.35 30 160K 425K 24.25
BOH 10/26 cup hdl 30.01 +0.1 29.94 36 132K 427K 29.25
BRCM 08/17 Test 50 15.66 -0.51 19.2 19.8 12M 9M 17.25
BRL 10/29 Put 57.26 -0.94 57.35 54 292K 750K 59
BSTE 09/30 cup hdl 27.54 -1.22 31.25 35.94 1.2M 652K 29.74
CDWC 10/31 cup hdl 52.68 -0.64 53.81 62 1.2M 2.8M 51.74
CENT 10/15 Test BO 20.21 +0.95 18.55 22.25 202K 192K 19.05
CLE 10/26 Test BO 23.8 -0.86 25.05 30 330K 505K 24
CLE 09/07 DB hdl 23.8 -0.86 22.41 25.94 330K 365K 24.05
COLM 11/13 DB hdl 41.33 -1.54 41.96 48.45 347K 389K 40.95
CREE 11/07 Test BO 20.76 -1.42 19.15 24.45 4.7M 3.9M 18.25
CVD 11/05 Test BO 23.12 +0.11 23.65 28 368K 581K 21.75
DVA 11/02 cup hdl 25.76 -0.09 25.11 30 496K 520K 23.35
ELAB 10/14 BO 22.9 +0.4 23.05 27.65 1.4M 225K 22.35
ESPD 10/16 cup hdl 13.3 -0.45 12.75 15.3 441K 265K 13.24
EXBD 11/11 cup hdl 33.45 +0.3 34.65 40 210K 528K 32.22
GRMN 11/06 cup hdl 23.1 -0.03 22.34 26 170K 198K 22.04
HD 09/16 Test 50 24.91 -3.69 34.55 38 54M 10M 32.13
HYSL 11/06 Test BO 27.75 -0.19 28.11 33.75 304K 636K 25.94
IBM 11/11 Test 50 78.37 -0.81 78.45 82.45 6.9M 12M 77
IMN 11/12 Test BO 40.02 -0.62 41.78 48 390K 700K 39.85
INTL 10/26 cup hdl 26.62 -1.02 26.75 32 208K 507K 25.94
ISIL 11/02 Test 50 17.05 -2.81 18 22 12M 3.5M 16.85
ISSX 11/04 BO 21.18 -0.82 22.15 26.5 1.3M 3M 20.05
JOSB 11/13 Test BO 24.95 -0.86 25.51 30.45 194K 250K 23.35
KLAC 11/05 Test BO 36.79 -0.64 37.86 45 15M 20M 35.21
KLAC 10/19 BO 36.79 -0.64 33.05 38 15M 1.9M 34.94
KR 11/09 Put 14.95 +0.2 13.98 12 4.2M 6M 15.01
LBIX 10/14 cup hdl 3.8 +0.04 3.22 4.35 59K 145K 3.32
LGTO 11/04 BO 5.13 -0.21 4.65 6.25 923K 1.2M 4.45
LUK 11/16 cup hdl 38.3 -0.34 38.51 44.45 68K 125K 35.81
MSFT 11/13 Test BO 54.83 -1.02 56.15 62.55 38M 50M 54.25
MSFT 10/16 Test BO 54.83 -1.02 52.35 56.45 38M 50M 54.25
MTB 11/18 Put 78.91 +0.17 78.45 74.22 258K 500K 81.45
MXIM 11/09 Test BO 36.35 -0.7 34.25 41.25 11M 12M 33
NBIX 10/08 Rv H&S 45.84 +0.14 44.85 51.75 465K 1.1M 44.94
NWRE 11/09 BO 16.85 +0.56 17.77 21.35 387K 900K 16.53
OMX 05/28 Test 18 5.3 -0.09 7.65 11 723K 1.9M 6.60
PCLE 10/17 BO 12.91 -0.38 11.51 13.82 795K 800K 12.94
POSS 11/18 Test BO 14.1 -0.05 15.01 18.45 138K 127K 13.75
PPDI 10/19 Test BO 29.65 +0.05 30 35 629K 1.4M 27.9
QCOM 11/07 Test BO 37.01 -1.38 34.78 40 18M 18M 36.25
QLGC 11/07 Test BO 39.26 -2.16 41.4 50 16M 25M 39
QQQ 11/02 BO 25.65 -0.4 25.96 28 88M 90M 24.55
RGIS 11/14 cup hdl 29.26 0 30.35 33 178K 525K 28.23
RGIS 10/26 cup hdl 29.26 0 29.75 33 178K 525K 28.35
RGIS 10/03 cup hdl 29.26 0 28.84 33 178K 525K 28.35
RINO 10/24 Test BO 15.48 -0.42 17.35 20.75 100K 225K 16.06
RINO 08/28 cup hdl 15.48 -0.42 13.8 20 100K 300K 16.06
ROOM 11/07 Cup 67.36 +0.8 65.25 75 1M 1.2M 60.68
RYAAY 11/18 Test BO 43 -0.05 43.55 50.35 214K 425K 41.25
SFAM 11/02 BO 5.74 -0.12 6.09 9 508K 400K 5.42
SNDK 10/30 cup hdl 21.82 +0.11 21.76 26.25 3.2M 3M 20.24
STCO 11/04 Test 18 11.48 -1.06 12.95 15.95 104K 135K 11.95
STI 11/18 Put 59.08 -0.56 59.49 56 874K 1.5M 60.85
STN 10/05 cup hdl 18.18 -0.06 17.62 21.45 246K 600K 17.65
SYK 09/23 cup hdl 65.7 +0.69 60.55 69.63 650K 1.1M 64.55
SYMC 10/21 Cup 40.97 -1.16 39.35 42.55 2.5M 5.5M 40.55
SYY 11/04 Test BO 31.72 -0.01 32.55 37 1.8M 4M 30.27
SYY 10/23 Test BO 31.72 -0.01 31.75 37 1.8M 4M 30.75
TRB 10/26 Test BO 47.15 -0.3 49.06 56.35 726K 1.5M 45.63
TSCO 10/16 Test BO 41.2 -3.06 39.05 46.85 749K 235K 39.55
VIP 11/09 Test BO 30 -1.45 30.06 35 266K 285K 28.45
VSEA 11/16 Rv H&S 26.42 -0.47 28.03 33 701K 1.4M 25.96
VZ 10/10 Test 50 37.99 -0.63 34.75 42 7.5M 10M 37.35
WCN 11/11 Test BO 35.22 -1.13 37.25 44.55 209K 425K 34.64
WEDC 10/19 BO 9.45 +0.3 9.45 12 84K 142K 9.15
WFR 11/14 cup hdl 7.5 -0.19 8.05 9.94 103K 325K 7.25
WOOF 11/16 cup hdl 15.8 +0.2 16.25 19.48 86K 175K 15.11
YHOO 11/04 BO 16.75 -1 17.08 20.55 11M 20M 15.95
ZION 11/19 Put 38.26 -0.45 37.97 35 608K 850K 40.75
ZMH 10/05 A Wedge 41.13 +0.25 39.68 47.55 671K 1.8M 40.35
Good Investing!
Jon L. Johnson and your Technical Traders Report Team
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP. or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners in Online Investment Services, LP. or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
|
understanding the stock market
trend trading stock
|
