Invest and Trade Profitably with Jon Johnson

Education Center

When you indicate a “buy” point in your report that is identified as a “downside” play, does this refer to short selling the stock at that “buy” point? Since you have a buy and sell point, I was under the understanding that it was a buy point to short-sell the stock and buy it later at the lower price target. Is that correct?

August 30, 2000

We usually are buying puts when we play the downside as we like to trade options on many plays as our total risk is defined going into the trade. Thus on a downside play that has a ‘buy point’ that is referring to buying the put option. We have looked at changing the ‘buy’ point […]

Can you clarify for me the following? 1. Do you collect the dividends paid on a stock when you short sell the stock? 2. Do you collect the dividends paid on a stock when you buy the puts for the stock? 3. What is the best source to find out what the ‘owners of record’ date is to be eligible for a dividend payment?

August 30, 2000

You are looking into dividends no doubt in part to the proposed elimination of the double dividend tax. That will allow dividends to become something worth capturing as the modest gains will not be eaten up by your income tax rate. We have considered a dividend capturing service for quite some time, and if this […]

You said in one of your past reports that the 10 and 18 day MVA acted as resistance in continuing downtrends. Regarding the consolidation or pullback you expect the next week do you consider these levels as necessary to be tested before a possible break higher? Could you please tell me where I can consult [to find] these MVA levels for different stocks.

August 30, 2000

The 10 and 18 day MVA tend to act as resistance for stocks in continuing downtrends and they also act as support for stocks in continuing uptrends. As we have indicated in several individual stock write-ups on the way up, stocks that breakout often make that initial rally then come back and test the breakout […]

Please advise if your use of stop loss orders are for the closing price (the closing price is below the stop) or are in place to be triggered at any time the price falls below that stop.

August 30, 2000

Very good question. In most instances we use what we call soft or mental stop points. That is, in most situations we do not set a stop loss order into the system but instead keep up with the stock’s trade during the day. The reason we do that is even though stocks have definite support […]

How can volume on a given day mean anything more than the number of people playing the game on that particular day?

August 30, 2000

At the lowest common denominator that is what volume does tell you. What makes volume more meaningful is its change from day to day or week to week. If the market is making a move higher that means there are more buyers in the market than sellers. On a move lower there are more sellers […]

A question regarding revisted stocks. When a stock that was a previous play that hit the buy point, if we already purchased this stock the 1st time and it comes up as a revisited play, would that be an add to point if it hits the buy point listed on the revisited play. Would that be a strong stock that is testing the breakout?

August 30, 2000

Good question. There is more than one point to buy a good stock. Contrary to what some investment advisors think, a great stock will give you more than one entry point. Stocks run higher then test the moves continually. They breakout, run, test back, run some more. We can use those tests as entry points […]

What does “hedge” mean?

August 30, 2000

Think of the old phrase ‘hedge your bets’. When you hedge you are taking steps to mitigate the risk in the event you are wrong. There are many ways to hedge based on what type of investment made and what type of risk you are concerned about. One of the most common in the investment […]

In discussing some recent plays you state that money flow is way out ahead of price. How do you determine this?

August 30, 2000

There are many measures of money flow calculated by several different services. Bloomberg has a proprietary measure that subscribers can take advantage of for about $1500 per month (along with a TON of other features). There are also many places on the web where you can chart money flow measures. Others such as TC2000 have […]

There are times when a stock breaks above resistance (say the 50 or 200 day moving average), but you caution that it has not yet broken through convincingly. I was wondering if there is a certain percentage breakthrough that can generally be relied upon, or is higher volume always a necessity? What about instances where there is a move above resistance which continues for days even though volume is average?

August 30, 2000

Volume gives a lot of meaning to a move. It is the easiest, safest measure of a move’s strength. Thus when you see a key resistance level broken on volume you can take more comfort in that being a solid move with enough backing to make it stick. If volume is not there and a […]

Log In

Forgot Password

Search