Articles from Mar 2006

The quest for edge

The million dollar question facing strugling traders or beginers is how to find an edge and Michael Taylor has some sound advise based on his personal experience of playing golf.
Isn't it amazing that it took trading to teach me that "magic" next level? In fact, learning to trade has been eerily similar to my golf experience. Reading trading books and studying the best charts for many endless nights than I care to share. Searching and searching for that one thing...that one edge that would take me to the next level.

I assumed that talent and a perfect edge is what would take me to the next level both in golf and now trading. Thankfully, I have finally found the one thing that can take you to the next level. And I'll even be so gracious to share it with you...

Don't follow the gurus

There are more gurus than traders. So which one should you follow ? There is some sound analysis here.
Can analysts, experts and gurus really give you an investing/trading edge? Should you track the advice of as many as possible? Are there ways to tell good ones from bad ones?
In summary, recent research indicates that the average "expert" has little to offer individual investors/traders.
Finding exceptional advisers is no easier than identifying outperforming stocks. Indiscriminately seeking the output of as many experts as possible is a waste of time. Learning what makes a good expert accurate is worthwhile.

The 100 fast movers

AIRM AKS AMN ANDE ANDS
APFC ATHR AVM BID BITS
BKHM BONT BWNG CCOI CDE
CENX CHAP CLZR CYBS DRQ
DRRX DXPE EDAP EMIS ENG
ERS EVST EZPW FNSR FTEK
FTO GEMS GLBC GMTC GPI
GRA HANS HBX HL HYTM
ICE ICTG IFSIA IIG IIIN
INTN IPSU IRIX IVAC KKD
KNOL LMLP LPSN LVLT MED
MEND MFRI MGAM MGN MTW
MYG NCTY NEU NG NICH
NOIZ NTCT NTES NUAN NUE
NVAX NVDA OATS OPTC OS
PEIX PRLS RACK RMBS RMTI
RTI SIL SKX SLW SMSI
STLD STXN TFR TIE TWTC
TWW TXCO USAP USEG VIMC
WTSLA WTZ XNPT XRTX ZOLT

25 fast movers

Not a recommendation. More positions you have in these stocks more likely you will be beating the index.
ANDE
APFC
AVM
BWNG
CHAP
DXPE
EDAP
ERS
FNSR
GLBC
GMTC
IIG
IIIN
INTN
IVAC
KNOL
LVLT
MFRI
MGAM
NCTY
NVAX
RMTI
SMSI
TWW
VIMC

What is on move

Commodities. Every thing in commodities is on fire. Look at the sector moves- Gold, silver, copper, iron, aluminum and oil and gas. The other sector shaping up well is Casinos.
There are number of individual stocks at good buy points. Look at NVAX, SMSI, MED,GRS and so many others (total breakouts in scan= 232). I also noticed some sector rotation from large cap to technology.
Update Chasing the move on commodities here may not be helpful. If you were positioned ahead of time in to it, then only you would have benefited from it. Many of these stocks had breakouts a month or 15 days ago which was the ideal time to get in to them.

Take old turkeys advise



If you have conviction about market direction, do not get shaken by action you see today. Take the Olde Turkeys advise, "It's a bull market"
The players who plonked down a few billions yesterday are not looking for chicken shit.

Why it's important you see the big picture

I always keep an eye on the macro analyst. I seldom trade based solely on these kind of analysis, but it helps to keep the mental pantry well stocked. One of the analyst I track regularly is Mark Boucher. In my opinion his book- Hedge Fund Edge is a must read for every trader.

We live in interesting times. Ones that I believe more than ever REQUIRE a full understanding of the big picture macro environment and its vulnerabilities. The most massive fiscal and monetary stimulus since Hitler has been injected into Japan, a major economy with global implications. The most massive CONCERTED GLOBAL central bank stimulus program since WWII is winding down. In my opinion, there has never been a time in my life when understanding the macro situation has been more critical than in the period of the next few years ahead.

There is a new blog on Wall Street- (hype alert)

The gold rush is on for Wall Street blogs.With the amount of advertising dollars at stake, new funded entrants are entering the field. There is a new hyped entrant- Dealbreaker
DealBreaker is an online business tabloid and Wall Street gossip blog. It seeks to cover the personalities and culture that shape the financial industry, offering original commentary, news and entertainment.

Here is what the celebrity editor has to say it is going to be about.


What? You were expecting flashing lights? Big ticker symbols scrolling across the middle of the page? Serious commentary? Stevie Cohen on a stick?

We don't really do that. But here's what you will find: posts about the precise size of the guitar collection on Paul Allen's yacht spaceship, posts about the disparity between what Aswath Damodaran thinks is the dark side of valuation and what we think is the dark side of valuation (hint: high-quality cocaine), banker body counts (thank you, John Mack), interviews with people about how much money they make and whether they sometimes buy things just so they can throw them away, sightings of Eliot Spitzer, pitchbook origami, fun with league tables, and so on. And occasionally we'll break news or do something that's otherwise useful. Which will be entirely an accident. We apologize in advance.


Update The funniest part on most blogs is in the comment section. In case you missed read this.

When a market makes a multi year high .......................

Gold touched a 25 year high , and silver nudged a 22 year high as the US dollar slipped and the silver price benefited from investors buying the metal ahead of an expected launch of a silver-backed exchange traded fund in the US.

Silver topped $11 an ounce for the first time since 1983 Wednesday, and gold rallied on demand by investors seeking better returns than stocks or bonds.

Silver has surged 58% in the past year, and gold reached a 25-year high last month as investors bet precious metals will outperform stocks and bonds. Commodities climbed an average 5.23% a year from July 1959 through 2004, compared with 5.65% a year for stocks and 2.22% for bonds, according to a study by the University of Pennsylvania and Yale University.

"In bull markets, everything makes an all-time high, and silver is going to do so again in the next 10, 15 years," says Jim Rogers, chairman of Beeland Interests who also co-founded the Quantum hedge fund with George Soros.

This bull has legs


Today's action was impressive. So next two weeks are going to be interesting. I have over 300 stocks in my breakout scan today. Those who were fully invested reaped the max benefit out of this. As the rally will run through the earning season there will be some rockets taking off post earnings.
Most of the time I look at two weeks horizon for planning, that way it is easier rather than having a very long view on market.For next two weeks the trick will be to be present in as many runaway moves as possible to milk the up thrust. Ultimately stock selection can make a lot of difference to final performance. The metals sector looks to be idealy positioned for runaway move currently.

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