Education Center
I don’t know when a play is complete…for example, the other day, you mentioned a stock WM, telling the stop figure, the buy figure, and the target figure. The first and second day it did nicely, then it stated to fade. Do I stay, giving it a chance to hit target, and yet possibly having it go down further to the stop and losing money, rather than taking a small profit? In other words… when do I get out?
WM was a breakout from a 5-month cup with handle pattern that made the breakout on huge volume 8 sessions ago. The stock ran up to 30.38 and then has pulled back the last two sessions on much lower volume, holding above the pivot point and the 18 day MVA. This is known as a […]
If one buys a stock at $30.90 then it drops to $30.00, goes to $31.00, goes to $29.00, to $31.38, to $30.50, but does not advance much over the purchase price, or just stays a bit below it. For how long does one hang on to such a frustrating stock, after all the indicators said it was a good buy? 2 days, 2 weeks?
If the play is a breakout play from a solid pattern but then just hems and haws and goes nowhere, we will consider exiting the play. After all, we were looking for a strong breakout move, and if the move stalls out in a hurry without making a decent advance, it may not have the […]
My strategy in trading since 1997 was to buy LEAPS on stock in a strong uptrend and hold them until the stock closes below its 18 day moving average. I had great success doing this simple strategy. It was a strategy that was unemotional that told me when to get out. Since April of 2000 I have not found any stock that has been moving up in a strong uptrend. Those that seem to be breaking out and moving up seem to just fizzle out causing me to stop out. Since receiving your newsletter I have found a few potential candidates (EBAY, LOW, etc.). When you are buying the stock in your newsletter are you playing the stock on the breakout and selling as it peaks, then buying again at support etc.? Or are you holding these stocks longer term? Does the strategy I used from 1997-2000 still work and I just need to find the right stocks? Or do I need to become a shorter term play in these markets?
A great question for these markets. We are seeing many stocks that are in great patterns with great fundamentals that are breaking out and moving higher. When the market is improving and moving into a new bull phase, leading stocks in great patterns are the best place to be. We have a pretty good idea […]
If a stock makes a nice advance, but it is on less than average volume is that a bad sign that maybe the run is over? This is after a nice breakout and a pullback. Also if a stock breaks out on heavy volume and say does a pullback then resumes again making some gains then say breaks out on heavy volume again, how do you know when the base starts? I know it’s not wise to buy into the 4th or 5th base breakouts. I understand the base is supposed to last at least 7 weeks, but I don’t understand when to determine when the base starts.
Stocks can move up on below average volume and just keep on going. Most of the time, however, the move can get into trouble. If a stock is heading to a new high but volume is low, that is a topping sign on that run. Think of it this way: a stock is like a […]
ANSS…nice call…bought the stock today @ 16.32. Read your comment to buy @ 17.08 on 176,000 shares. Huge volume today in excess of 300,000. My question: you have a target of 20. Do you wait ’til 20 to sell? Or do you take partial profits here? I don’t know how you guys handle a breakout. Does the stock more than likely have to retest the breakout level, which in this case is 16.95? Input would be much appreciated. Also, related question: many times you have the stock a buy “on the breakout” to a certain level BELOW your target. Does that mean you sell the stock at that level regardless, or is it just a level at which you no longer want to buy the stock because the risk/reward is not that good?
Thanks. ANSS had a great move that we could not resist either. The stock raced almost to our initial target in one session. Strong moves like this can lead to some selling early the next session as the market maker was selling stock like mad at the close and will most likely need to replenish […]
I notice that when you recommend options to be bought on a stock you usually buy in the money options. Is there a reason for this? I haven’t had a lot of luck with options, they usually didn’t get up to my price and either ran out or I paid too much and time wore them down. Doesn’t the same happen to in the money options?
When you buy out of the money options, you are paying for time value and volatility; there is no intrinsic value, i.e., the part that is in the money. It is all speculative. In the money options have intrinsic (or ‘book value’) as part of their price. If you buy out of the money and […]
Is there anyway that you could put just one or two stock in the daily with entry point and target price without all the option terms. I am small investor, and don’t understand all the option terms. I only need 1 or 2 stock per week. Seems all the stocks you mention are for option traders.
We put both stock and option information in as well so stock traders OR option traders can take advantage of the trade. Option moves are mainly keyed off of the underlying stock’s movement. We say stock and/or option because that is a choice: you can trade the stock alone, the option alone, or both the […]
What do you mean by “aggressive” play? What do you look for in order to buy into the stock as an aggressive play and what are your rules for loss stops?
An aggressive play is one that is either a play before a stock breaks some resistance point (i.e., on a breakout) but still has good potential to move higher, or it is one that has already made a good move but could add to the position on further momentum. For example, if we see a […]
I am confused, to put it mildly. I just read that Buckingham Reasearch has downgraded NVDA from a strong buy to accumulate. Why ???????????????? It has so much good stuff going for it. I don’t understand this at all.
Questioning an analyst? Well . . . . good for you! It was downgraded from strong buy to accumulate. We were looking for why, but did not get the full scoop. Most likely: valuation as the stock flirts with new high territory again after beating the street, reporting a 41% increase in net income and […]
My broker tells me he can’t do a stop loss on an option. Do you have any information where I can find/research a broker that offers a stop loss on an option?
Stop losses on options are something the individual broker or ECN provides. The options exchanges do not have any mechanism for stop losses similar to those on stocks. It is usually left up to the brokerage to have a system to do that. As far as full service brokers, I have been able to put […]
