Breakout Trades

Here are some stocks that are making new highs. I have the symbols and the buy-limit prices. Initial stops should be 20-30% below your buy price and when the stock moves in your favor and starts making new highs move the stop to 5% below your buy price. Use these stocks as a starting point and you can always add additional filters to narrow the list down.

DCTH---2.75
EGO --- 9.75
UVE---4.75
HEAT----7.50-7.75
GFI---13.50-13.75
KOPN----3.50
CATT----8.25
MYRG---18.25
SA----24.50
ANV---6.75
PAS---25
ARQL---4.75-5

There were 47 stocks that showed up on my list and many of those were Gold stocks. Please note that majority of these stocks are small caps and when they move they move fast which is like a double edged sword.

Another way to play this is with options especially for stocks that have decent daily volume > 1M. You can buy options 6-9 months out with the strike price that is closer to the buy price.
For example, you can buy Jan-10 15 calls at 1.85, so your risk is $185 on 1 contract (100 shares) and if the stock closes above 16.85 by Jan 10 you'll make money. Let's say that the stocks moves up from here then the option will gain value too and you can sell the option later on for a profit. If by October-November the stock does not move up or declines from the current price, you can still sell your option for some loss. This is just a directional play and there is more to options than this. No matter what happens you want to sell the option by November.

Here is a very good blog if you'd like to learn more about options.

http://blog.mdwoptions.com/options_for_rookies/

Update on RGR, SNS, SMSI

I'm moving my stops on these 3 stocks.

RGR: Close below 10
SNS: Close below 8
SMSI: Close below 7

Friday Update

As I have been telling anyone that listens to me to buy stocks. We are in a bull market and very few are believing. If you are bearish, this is how you could end up at the end.

Buy stocks but put a stop....just in case.

Back from vacation

The market has held up pretty well. 880 was re-tested and we bounced nicely from there. I'm expecting a big rally soon that could take us to 960. I'm still long SNS, SMSI and RGR. I have a tiny profit in SMSI and bigger losses in the other two. I'm still holding those here.

I had a chance to look over many charts and one of the things that I noticed is that many stocks when they make a new 52-week high usually re-test the previous high. For example, let's say a stock's previous 52 week high was $10 that happened 6 months ago and this week the stock closed at $12 making a new high. The stock usually goes down to $10 atleast 1 more time before it resumes it's move up. I had a chance to talk to few other traders and they have noticed this pattern too. If you look at SNS, it is right at its previous 52 week high.

Off to Vacation

Going on a vacation. Will be back on 30th. I won't be posting any picks this weekend.

Learning New Things Everyday

When I ran the scan I looked for stocks that had average volume > 200K. Now I am looking at all the stocks that showed up on my scan and the best performers have average volume > 400K.
JRCC, TSL and GTLS are the top 3 performers......Maybe I need to change my scan to include stocks over 400K in average volume.

Sold 1/4 of ES at 920....stop moved to 900 on 1/2. Even if I get stopped out the worst oucome is 100 points. If we get to 960 before 900, the profit will be 200 points.

Wednesday Morning

Futures are up in pre-market. I'm long SNS, SMSI and RGR. CMED never went past last week's high so I'm not buying that. I think we'll see 960-880-960-940-1020 in S&P before we enter the second part of the bull market.

Tuesday Morning

Bought RGR (8.99) and SMSI (12.01) as they are trading above last week's high. Will add more once it gets to the trigger price.

Monday Update

Markets rallied huge today. I was reading on another blog (can't remember the name) that the insurance on CDS has fallen significantly. This is good news for the market and I expect to see new highs soon. I bought SNS at 10.40. The other 3 stocks never got to my trigger price...hopefully it will soon. I'll be buying the first 3 that gets to the trigger price. I haven't traded stocks for a long time and hate to keep track of more than 3 at a time.

Buying SNS here.....Volume picked up during the day. Stop 25% from the trigger price and will evaluate it at the end of the week.

I'm taking SNS off the recommended list due to lack of volume.

I posted this in the Comments last night.

"Futures are down right now and broke the low from last week. If we see a continued sell-off overnight we could possibly see 760 before the rally resumes. It is too early to tell and we could see buyers come in later tonight".

Futures have bounced rather nicely.....let's see if this continues.

Indian markets were up 20% and had to be closed. An open, stable government in India will help many US companies as it makes it easier to do business there. My current target is 960 in S&P and will evaluate as new developments occur.

Stocks for the week of 5/18

Here are the stocks that have the potential to run up from here. You want to buy ONLY if the price gets to the trigger price. Stop is 25% from the trigger price and target is where you want to take the profits. This may take weeks or months to get to the target price but should not take longer than 3 months. If it does there is something wrong with it.

Most of my picks are geared towards weekend investors, people that have a regular job and are willing to take some risks to make some extra money. Only try this with money that you can afford to lose and HONOR YOUR STOPS.

S&P futures managed to close above 881. A close below 876 will change the current support to resistance. Nasdaq was relatively weaker in the first part of the week but has demonstrated some strength in the past two days. I'm still bullish until we close below 876 which will change my bias to neutral.

I find it easier to tell what the general market is going to do rather than what an individual stock is going to do. This may be the reason why I like to trade futures than stocks.

Here are some of the stocks that showed up on my scan. These are swing trades that are supposed to be held for weeks to months. I will post the trigger price, target and stops over the weekend. Till then you can start looking at the charts.

SMSI, ARST, CMED, ABG, SNS, CPF, SWIR, SPAR, BGFV, CLMS, MPWR, GTLS, FIRE
BOOM, DM, CRYP, APOG, HGG, BJRI, JRCC, RGR, TSL, NMM, TCBI

5/15

It is very important that we close above 881. If we close below 876 the next stop will be 800. Bears are trying their best but the buyers are coming at 881.

Market found support at 881 this morning and was up for most of the day. It closed right in between the high and low of the day. The buying did not look convincing but it was still an up day. Nasdaq showed some strength and that's what we need if the market is to go higher from here. Some of the blogs that I follow are bearish and I hate to be on the other side of those guys but I need to follow my own system.

One of the stocks that I had initially recommended was MED but took it off my list due to lack of volume...and today the stock skyrocketted.....In hindsight the volume wasn't too bad. I expect S&P to be in the 880-960 range for the next few months.

I still do not think that we are going much lower (I know we all have different opinions and that's what makes the market). 881 on ES was tested 4 times and the bears could not break it, so I think that we will see 960 soon. I would not be surprised if we see S&P in the 880-960 range for the next few months. If we close below 880, the next support is 800 and 760. If you look at the daily chart of SP, it has bounced everytime since breaking the 4 day low. We broke the 4 day low today so I'm expecting an up day tomorrow.

The chart shows what happened in the past after SP broke the 4 day low. The only difference now is that Nasdaq is weaker than it was in the past.

S&P is down the last two days and many people think that we have seen an intermediate top. I still believe that we'll see 1000 before 800. Nasdaq has been relatively weaker the past few days but S&P has been holding up well. Nasdaq rallied 30%+ from the low and S&P rallied 25%+ from the low. This sell-off is limited to Nasdaq and once it finds support we should go higher. We need to see more than one true selling day for the trend to reverse.

I'm still buying break-outs here.

There are 3 stages of a bull-market.

We are currently in Stage 1, this is the stage where there are many doubters but the market keeps roaring ahead. Even though the fundamentals look bad and we have hundred reasons why the market should not go up, it goes up. It is not good to fight this trend. The ideal strategy is to buy break-outs because there many not be pullbacks to buy.

The second stage is where the majority are on board. We see sharp retracements during this stage and failed break-outs. The ideal way to trade is to buy on pullbacks. I usually like to buy the pullback to the 65 W MA in the S&P. For some reason the 65 W MA provides serious support.

Stage 3 is similar to Stage 1 when everyone is a bull. Everyone starts talking about the market and how they are making a killing. This is the time to start taking profits and tightening the stops.

Here is the model that I developed. The blue line has rallied 10% from the low, this indicates that we are in a new bull market. Currently the best strategy is to go long stocks. We may see some pullbacks along the way but it seems the worst is over.