I believe we're at the final stages of the bull market that started on March 2003 and took the S&P 500 from a low of 780 to 1247 points. I don't know if it will take days or weeks or even months but there are several signs that a long term bear market could unfold again.
I've seen (or at least studied) many bull and bear markets since stock market history began and they all have pretty much the same behaviour when they come to an end. At the final stages of a bull market investors pick up the forgotten stocks, those that were left in the ground as others rose immensely.
Those stocks deserve their place in the sun too, but there's not much time now. So they will rise fast before everything falls appart and the general market starts trending down.
I'm not particularly interested on the specifics of each stock, since they are acting as a group and will continue to do so, based almost exclusively on mass behaviour.
You see, now everything's gone up, the energy bubble is now completely unfolding and getting to an end too, so big and small speculators as a mob will jump on these liquid and low priced stocks. I see 20 to 100% upside potential in each one of them in a few weeks time.
SUNW fully qualifies, it is one of those abandoned angels. I will buy SUNW for the 3 Stocks on Fire Portfolio at today's open.
Interesting pick, David.
I don't know what these news will do to the price of the stock, but probably nothing negative.
Interesting to see how much it'll rise today. ;)
News:
Sun surges ahead of Google announcement
October 03, 2005 17:06:21 (ET)
SAN FRANCISCO (MarketWatch) -- Sun Microsystems Inc. shares climbed almost 7% Monday on speculation about what the computer server and software company has in store for a new partnership with Google Inc.
Sun (SUNW, Trade) issued a media alert saying Chief Executive Scott McNealy and Google Inc. (GOOG, Trade) Chief Executive Eric Schmidt will host a press conference on Tuesday at the Computer History Museum in Mountain View, Calif., to outline what Sun called a "collaborative effort" between the Silicon Valley icons.
Sun representatives wouldn't go into details about the event, but it has garnered more attention as it comes just days after Google said it would work to deliver free wireless Internet access to San Francisco.
Google will need technology partners to make its offer a reality.
One possibility is that Google could be buying Sun servers to run the Wi-Fi network. Software could also on the table, based on Schmidt's background and ties to Sun.
Schmidt, a former chief executive at Novell Inc. (NOVL, Trade), formerly worked at Sun, and led the group that developed the Java programming language when he was with the company.
Shares of Sun closed up 26 cents to $4.19, while Google stock was up $2.22 to $318.68.
David, what do you recommend we do if the recommendations for the day gap up at the open like today's SUNW (+7%) and CMGI (+8%)? I like it when you say things like "I will buy at the open if there's no gap up" or "below $4" etc. because it gives us more of a sense of how to best place our orders (all part of the learning process). I'd also love to know what process you follow when placing -your- orders, regarding limit prices, etc. I'd be delighted if you could add that ("recommended limit order price x", or "buy below x price") to the updates when buying new stocks for the portfolio.
Irod,
When david says he'll Buy at open, he typically buys at whatever price he can get in.
If you ever have a question as to what he paid, click the 3 stocks on Fire link in the menu to the left of this screen and it will show his buy price:
http://www.3stocksonfire.org/3stocksonfire.php
In this case Sunw opened at 4.40 his buy went off at 4.41
But his point is a good one, I always find it difficult to time my trades properly, and very often end up buying higher than I want to :-[
I have been playing with limit orders quite a bit, but without a technical base to attempt to align my trading price with, I often find I miss the buy and end up chasing the stock. Never nice when it is moving fast. Conversely, if a stock is moving, I very often see that and by the time I get in, it reverses direction and pulls back (as just happened right now with CMGI) leaving me looking at red from the outset - also not very nice. I suppose the important thing is not to get emotional or annoyed about it, pick your ideal position and then accept that this is a position trade - if you made the plan right then it should gain much more than its intraday movement. However, any advice at picking intraday buying targets would be much appreciated :D I guess it also helps a lot to have level 2...
SUNW is a good pick.
Its business is improving and it has a lot of cash. Also it has year-end rally the last three years.
High is about $5.5 and low is around $3.50. I bought 30k shares on August 26 at $3.65.
2003: 10/01 $3.25 -> 01/26 $5.76 3 months
2004: 08/12 $3.30 -> 11/30 $5.50 3 month
2005 08/24 $3.50 -> 12/31 (?) $5.60 3 months ( ?) (60% gain).
MXO has the same price pattern in 2001, 2002, 2004, 2005. Year-low happened in October and made 100% gain by year-end.
2001: $7.33 (08/02) -> $3.50 (10/02) -> $7.10 (12/12) 100% gain from low
2002: $4.75 (08/26) -> $1.80 (10/16) -> $6.00 (11/25) 233% gain from low
2004: $5.75 (10/11) -> $2.81 (10/31) -> $5.25 (12/31) 87% gain from low
2005: $6.10 (08/07) -> ? -> ? (may see low in $3 range or may not).
I bought small amount at $4.15 and wait for its earning report. Will buy big if it dropped to $3.00.
ScottishTrader - if you find that you often buy higher then you want to then just do not be is a big hurry to buy but let a stock come to you. All you risk is missing an opportunity and they come every day. If you are buying for longer term holds then it is not so important but if you are shorter term then you want to buy as close to support as you can. If you chase a stock then it is good to take some profits along the way then buy back as it pulls back.
As an example look at SVA with the official buy at $3.75 when the candle was above the top Bollinger band and over bought. The trade worked in the long term but the safer buy was to wait for support as it came at $3.05 so 23% better price and if the stock dropped below support you could get out with little loss. A stock does not always bull back to major support but look how many times SVA pulled back to the 9-day EMA so there are many chances to buy near support with a stop just below. To practice this just buy smaller sizes.
(http://xs49.xs.to/pics/05402/0410sva.jpg)
In regards to SUNW it gapped up which makes it in the shorter term a higher risk trade and it has resistance right overhead so much better trade if it pulls back to support or consolidates enough for the Bollinger bands to catch up with it,
(http://xs49.xs.to/pics/05402/0410sunw.jpg)
If you are planing to hold for a few months then it is not so important but at some point before a stronger market rally the market is likely to pullback for a few weeks and often the momentum stock can pull back quickly,
You never loose money by missing a trade and you keep it to use for a better set up.
Thanks for the advice, metro,
Am currently working on all of this, and SVA is a prime example of a stock that you could either chase or wait until it pulls back to support (which it appears to be doing now). Another part of my problem is that I don't have any streaming real-time data, which makes predicting short term moves random at best, plus the broker I go through in the UK charges me exhorbitant fees (£15, ie. $25) per trade, which means that I have to make each trade count, and kills profit on small buying and selling of dips and peaks. I'm working on this one at the moment, and hopefully should get myself a better broker soon (aussietrader just gave me some good advice on this :) ) I think that this, along with a better trading platform with more market data would make a big difference, and it is only recently that I have realised just how much.
I made several poor trades last week, doing just what I described above, and on analysing my performance over the weekend learnt some very important lessons. Now I have to work on the discipline to follow these lessons.
Thanks again for the advice :D
ScottishTrader: Maybe this link could be usefull to you?
Try it out.
Good luck.
http://www.level2quotes.com/
(the press release)
http://www.sun.com/2005-1004/feature/index.html
Sun and Google Expand Technology Reach And Global Opportunity
Multi-year, Strategic Agreement Promotes Java Technology and Google Toolbar
MOUNTAIN VIEW, CALIF., - October 4, 2005 - Sun Microsystems, Inc. and Google Inc. today announced an agreement to promote and distribute their software technologies to millions of users around the world. The agreement aims to make it easier for users to freely obtain Sun's Java Runtime Environment (JRE), the Google Toolbar and the OpenOffice.org office productivity suite, helping millions of users worldwide to participate in the next wave of Internet growth.
Under the agreement, Sun will include the Google Toolbar as an option in its consumer downloads of the Java Runtime Environment on http://java.com. In addition, the companies have agreed to explore opportunities to promote and enhance Sun technologies, like the Java Runtime Environment and the OpenOffice.org productivity suite available at http://www.openoffice.org.
"As a leader in free and open source software, Sun has long recognized that network innovation is vital to the evolution of the global economy," said Scott McNealy, chief executive officer, Sun Microsystems. "Working with Google will make our technologies available more broadly, increase options for users, lower barriers and expand participation worldwide. Free and open source technologies, such as OpenOffice.org, OpenSolaris and Java, have never been safer or offered more choices."
"Google and Java are two of the most widely recognized technology brands because they provide users with online tools that enhance their lives on a day to day basis. The Google Toolbar offers useful Internet search services while Java enables richer interactive content. We look forward to exploring other related areas of collaboration," said Eric Schmidt, chief executive officer of Google.
If this sucker goes to three, im sure Dave will sell this, and it would sting bad. Im already hurt buying on the news, must have got in on this babies high, once again. However, this news is great? and i would think the stock should see increases. Just dont know how far down the road. I have learned the hard way not to read yahoos message board. Stocks seems to do the exact opposite from what those kids say is going to happen. They are saying sell on SUNW so that must mean good things lol.
Google dropped 2.41 %
MSFT dropped 2.04%
What a volatile market lol
The news isn't great, the news just gave me a bad entry point !
My friends, let me tell you something: if in order to win in the stock market it would only take to know how to read, a lot more people would be rich ;D
If it were this simple:
Good news => stock goes up. Bad news => stock goes down, the stock market would be an easy game, wouldn't it?
And it isn't easy, go ask the 70 or 80% that end up losing their money.
Ok, enough of this, since I bought on the news too, but not because of the news. In fact, the news just hurt me, it made me buy higher than I wanted.
Anyway, I still love SUNW at this point, even more than if it continued moving higher after the gap up at the open. The stock made a breakout and a retest today, and it closed the opened gap. It is perfectly ready to advance tomorrow, in fact I have little doubts it will do so.
My short term target for SUNW is $5.40.
Here are the Quotes:
The Google toolbar will be downloaded by tens of millions of people as a result of this partnership," said Google chief executive Eric Schmidt at a press conference announcing the collaboration. The additional downloads should result in new pageviews and advertising revenue.
Sun chief executive Scott McNealy predicted that the Solaris operating systems and the OpenOffice productivity suite too could be bundled in a similar way to increase their appeal to users.
"We both just turbocharged each other, " McNealy said. "We believe the toolbar and Java runtime can do that. As we add open Solaris and OpenOffice technology to the environment, we think that this could be a big deal." (McNealy)
Gary Edwards, a software consultant and designated representative of the OpenOffice.org community project, said that while Sun is the greatest benefactor the open source community could ever hope for.
McNealy said the Google Toolbar download option will be available on java.com in a few weeks, if not days.
Edwards: "There will be a lot of money flowing both ways if we do this right. We'll use their advertising, and they'll use our technology"
Here is the GOOD NEWS GUYS
For Sun, Google's help in distributing OpenOffice.org will support Sun's StarOffice suite of office applications.
Sun sells StarOffice 8.0 for $69.95, and the company provides migration tools for businesses that want to migrate from Microsoft Office. Sun claims 52 million downloads to date.
I'll continue holding SUNW whatever happens today. I just wouldn't like to see it close under $4 again but I don't that will happen before my target at $5.40 is reached.
People are already talking bearish on the SUNW - GOOG deal (read Making sense of the Google-Sun deal Commentary: This isn't the deal to spur the bulls (http://www.marketwatch.com/news/story.asp?guid=%7BACF25CB1%2D70E7%2D4773%2D8B80%2D50DE65AB528A%7D&siteid=mktw&dist=)). That's fine by me, since the deal wasn't at all the reason I bought SUNW.
Making it simple here, I don't think the stock will break $4, and if it does that, it will be dead for a long time. I will hold to sell on two occasions:
1) At my profit target which is $5.40.
2) Whenever the stock is set to close below $4.
In the meantime I'll keep on holding.
I don't think it is much useful for trading purposes to read the news on these very liquid stocks. The market probably already knows everything that there is to know and that's all reflected on the stock price. It is an efficient stock, so one has nothing to gain from reading the news on these extremely liquid plays.
Technical analysis is the key here.
Technically, SUNW is bullish for as long as it closes above $4, it will turn very bearish if it ever closes below that support level (prior resistance). The stock made a bullish reversal candlestick pattern, which is called the hammer. The stock opened unchanged, then traded lower during the session, but bargain hunters, bottom fishers or whatever made it recover almost all its losses by the end of the day. That will put some doubts on the bears minds and will encourage bulls to buy the stock. A white candle today would confirm the bullish candlestick pattern.
We'll see. My trading plan stays the same:
QuoteMaking it simple here, I don't think the stock will break $4, and if it does that, it will be dead for a long time. I will hold to sell on two occasions:
1) At my profit target which is $5.40.
2) Whenever the stock is set to close below $4.
It feels like my play on the liquid garbage was wrong, so I have to manage my losses, trying to lose small when I'm wrong and win big when I'm right.
SUNW's session was awful and I'm prepared to take a small loss on this trade. But I don't want to be indisciplined, so I need to give the stock (and my trading plan) a chance.
So, for tomorrow, the plan on SUNW stays the same:
1) Sell at the target of $5.40 (further and further away)
2) Sell if the stock is set to close below $4 (closer and closer)
The Bear Market isn't giving any chance. My plan on the liquid garbage was totally wrong, and I'm paying the tuition fee (you really need to have strong and specific motives to buy a stock in a Bear Market).
It looked like SUNW was about to close below $4 so I sold it at $3.98 before the closing bell. It ended up closing at $4, but that's not important, this was a bad trade since the beginning (and usually good trades are profitable right from the start).
I took a 9% loss on this one and I'll move on, good luck to those who continue to hold.
I bought SUNW on October 11 at 4.01 (posted on the Stock Picking Board) on the pullback to the top of the Ascending Triangle. Stop: a close or obvious late day tank below 3.81, the late September low. Risk: a loss of 5%.
Since my entry, SUNW has been playing Ping-Pong between its 50 and 200 DMAs, which are inverted, but close to making a bullish cross. The 200 is at 3.94; the 50 is 3.89. SUNW has held the 50DMA on a closing basis.
Yesterday, SUNW closed at 4.03, back above the top of the Ascending Triangle (4.00-4.01).
I don't want to see it close back below that, and I definitely don't want to see it close below last week's lows (3.88), which also would be a close below the 50DMA, so I'm raising my stop to a close or obvious late day tank below 3.88. Risk is reduced to a loss of 3.5%.
Quote from: Melf Elf on October 25, 2005, 07:07:53 AM
I bought SUNW on October 11 at 4.01 (posted on the Stock Picking Board) on the pullback to the top of the Ascending Triangle.
I'm raising my stop to a close or obvious late day tank below 3.88. Risk is reduced to a loss of 3.5%.
Sold SUNW at 3.87. Loss: 3.5%
SUNW traded today as low as 3.85 and now is back above my stop. It's currently BID 3.88...ASK 3.89. I don't care. :'(
I didn't wait for the close because SUNW closed back above the top of the Ascending Triangle on Monday, and now has taken out last week's 3.88 low. I don't like it. :'(
Sold.
I'm still holding. $ 3,84 is my low. Do not have time to update the chart, will try tomorrow.
Amarens
Quote from: Amarens on October 27, 2005, 02:41:42 PM
I'm still holding. $ 3,84 is my low. Do not have time to update the chart, will try tomorrow.
Amarens
SUNW ended up closing better than I thought it would, at 3.90, especially in yesterday's nasty market. Possible bullish hammer, and the 50/200 DMAs are close to making a bullish cross. I probably would have been fine holding onto it with my original stop below 3.81. I got impatient with the three down days after the close at 4.03 on Monday.
Good luck with this one!
Horrible market, wasn't it. Everything is in the red (went down) :'(
Except for CNXT. I did not sell with David. I do have a little more patience and I set my low different and followed my plan. After hours up after great financial results. Will take a small profit today instead of a small loss :) Have to look at the positive site! ;)
Sure hope for a better day today over all.
This is my chart (guess if I look more exact low is at $ 3.82)
Thanks for keeping me updated on your thoughts.
Amarens
Quote from: Amarens on October 28, 2005, 04:53:27 AM
Horrible market, wasn't it. Everything is in the red (went down) :'(
Downright wicked, which influenced my decision to sell SUNW. >:D
QuoteExcept for CNXT. After hours up after great financial results. Will take a small profit today instead of a small loss :) Have to look at the positive site! ;)
Great! It's up 8% in pre-market. Hope you make some $$$ on CNXT.
Quote
This is my chart (guess if I look more exact low is at $ 3.82)
I show the low at 3.81 on September 28.
Changed Ticker Symbol
SUNW is no longer valid. It has changed to JAVA