According to the article Riding the Storm (http://www.3stocksonfire.org/trading/index.php?topic=4158.msg39936#msg39936) I will sell QQQQ (Nasdaq 100 tracking stock) short tomorrow around the open. As always, 6.66% of the 3 Stocks on Fire Portfolio.
Being short on the SPY and QQQQ will make me always alert to the general market trend, as I will update this analysis everyday.
Probably tomorrow we'll have an higher open, with people feeling better for the new year, and that will be a perfect short term selling opportunity. Anyway, rebounds will come along the way, but I'll keep monitoring the position for hold shorts/buy to cover decisions.
David:
If you are going to short QQQQ what strike and expiration date are you suggesting or
even better, what specific symbol will you book???
THX
jorgegr
Quote from: jorgegr on January 03, 2006, 09:06:22 AM
David:
If you are going to short QQQQ what strike and expiration date are you suggesting or
even better, what specific symbol will you book???
THX
jorgegr
I will sell the stock short (QQQQ), not buy a related put option.
Today I have made some contrarian posts as it is good to look at both sides but also as I think that it is too early for the market to make much of a pullback. The 4 year cycle is not quite here and the earnings will start in a few weeks.
I may turn bearish when I see less great stock charts and more failed rallies or maybe when the OEX traders turn bullish.
The QQQQ were at the 38% retrace after a low volume pullback at the end of the year. This did not hurt the buying pressure really as you can see the positive divergence on the on balance volume.
It is possible this will turn out to be a bull flag but we need to see the stochastics break the trend line. Like others the 50-day has held up.
To me the general feel of the market only helps in that it makes me more of one way to the other so now I am bullish and am not shorting anything but swings in the DOW futures. Many stock pulled back in the last few weeks and have build nice little bases so we may have a decent market for a few weeks.
Fortunately we are not like mutual funds who can not change their position quickly - Most of us can change out positions easily if the markets break up or down..
(http://xs62.xs.to/pics/06012/qqqq0301.jpg)
Metro, you may be right in the microscopic sense, but what makes a great trader is an ability to see things on a grander scale. Would you rather make a decision and then wait for 3 months and cash in 50%, or rather fidget momentarily and lose 15% (like I used to recently)?
Walmart lost ground today. Just wait and see consumer agility reports to come out in late January-February. Although you can make money in the short term long, it will be a short while before the bears wake up.
QQQQ just made us a precent today to be shorted at a more favorable price. :)
From today's market action, we will see bullish trend for the week.
January effect will take place as many tech stocks sold off last month.
May be, better time to short the market is next month.
Unless the comany earnings are really bad during upcoming earning release season,
I will not short any stock. I see too many good stocks to own at this price level.
I too think that the time to short is not ripe. Though it seems that the big money is selling to the retail.
In confusing times like this I would either add some resources/biotech [read defensive], or sit out. Willing to miss the boat if my neck is on the line ;)
Hi David,
Market breadth has improved markedly ( these last two days ). New accumulation in many stocks is ocurring now! The markets are poised for significant breakouts!!!!
Shorts will likely be slaughtered! It pays NOT to be short at times like this in the markets!
willey
QuoteQuote Willey: Shorts will likely be slaughtered!
Well, not if they have their stop losses in place, they'll just suffer a trading loss :'(
Anyway 2006 certainly has started with a bang and a lot of charts continue to look good and breakout. David's article regarding his bearish attitude is still very much valid and we should all maintain the usual caution whilst going long or short.
For the QQQQ, it has broken out of short term down channel nicely, it would appear to be setting up another go at 42 resistance, the question will be if it can breakout at 42 or whether that resistance will hold. If you are in bearish mode shorting around there with a stop just above the spike high of 42.31 (and above upper bollinger band) might be a decent low risk play.
Lets see how this plays out, for me I am undecided, but will short at resistance or buy on breakouts as usual.
Thanks for you comment on my absence Aussietrader, I was really sick yesterday :P
Every year is the same thing, the media talks about the January effect, how the first day of the year tells you about the first week, the first week about the whole month, and the whole month about the whole year !
It would be so easy to predict the market if this were true ... was the first day positive? Yes, you can buy for the entire year lol.
This reasoning can be used by big players to deceive the public, pushing the market in one way, everybody follows the move, and then reverse that move.
I feel nothing has changed on my bear case, though I have a 2.61% loss on QQQQ. But of course I'll respect the market and I won't let this loss grow much more. For now I'll just say I'll keep on holding my short position on QQQQ, I wonder if the market won't react negatively after a higher open today?
Hi David,
Today is probably the LAST chance for shorts to cover their positions without serious losses beginning! The U.S. stock markets are very likely to join in upsides with a 'seriousness of purpose' that'll amaze many!
NAZ to 2600+
Dow to 11,500+
...but, what do I know?
good fortune to all...
willey ( REDF likely to go to $25 & maybe $30 in 2006 )
Quote from: willey on January 05, 2006, 09:52:43 AM
Hi David,
Today is probably the LAST chance for shorts to cover their positions without serious losses beginning! The U.S. stock markets are very likely to join in upsides with a 'seriousness of purpose' that'll amaze many!
NAZ to 2600+
Dow to 11,500+
...but, what do I know?
good fortune to all...
willey ( REDF likely to go to $25 & maybe $30 in 2006 )
Thanks for your view willey :) You know I'll be here whatever happens. I truly believe you're wrong and I have presented my case. Now the market will tell (give it two weeks).
Hi again, David...
Oh-kee doh-kee,
You been warned! Friday the QQQQ's break up into a runaway gap to amaze a heck-of-a-lotta shorts!
...but, what do I know...
;-)))
willey
I would like to see an higher open on QQQQ, above $42, and then a close below $41.70, completely engulfing yesterday's white candle.
That would give strength to my bearish case and I could start building some more short positions. But at this time I don't feel enough courage to go against the trend (courage often doesn't pay in the stock market), just on very selective picks like the RRI short.
If QQQQ closes 2% above the prior high of $42.31, that is, if it closes, say, above $43, I'll conclude that I was wrong, at least on the short term, and I'll assume that mistake by closing my position at a small loss.
At this point my bearish case isn't damaging me much, even though the market is rising, because I am underinvested and I have some good enough long positions. The 3 Stocks on Fire Portfolio performance is at the exact same point before I started my bear campaign.
It is a good thing when you're able not to lose much when you're wrong, and win big when you're right. I'll wait some more time for the market to confirm my views so I can invest more heavily, or to bail out of these general market short positions, in the case that I'm wrong.
Let's see what today brings, my bet goes to gap up at the open and close below $41.70 on QQQQ. I'll continue holding my short position.
I shorted some QQQQ just now. Hope this gives the bears some mojo.
Well you may do fine shorting as it is near top band but not really overbought if you look at RSI and MACD. Many like to short break outs but in a bull market it is risky. The break outs this week are hot and heavy but not euphoric. If we get a pullback then another rally that can bring in the shorts - well when and if they give up and go long we van have a spurt that may be ok to short. I say - it may work out but to short when the market making all time highs uses money that could have gone into the stock taking off on the up side.
After 4 big days we will likely see a rest soon though Mondays at least usually start with a gap up.
The chart below does not move very much % so not much money per $ amount used either log or short but show this chart to folks and ask if they would go short or long.
(http://xs62.xs.to/pics/06015/qqqqshort.jpg)
Long obvious wins this week. QQQQ gained 5% in 4 days and breaks out today with record volume.
Quote from: David Randolph on January 06, 2006, 08:10:29 AM
I would like to see an higher open on QQQQ, above $42, and then a close below $41.70, completely engulfing yesterday's white candle.
Completely misjudged the market.
I did not take any short position.
For the 3StocksOnFire portfolio, all longs won (2 so far), all shorts lost (5).
If we are fully invested this week for long, I believe that the potfolio may gain 5% this week.
Actually many stocks gained 20-30% during the last 4 days.
GOOG, SNDK, RMBS, ... just name a few.
May be next week, the market will take some rest. it is usually the case if the first week ups big after new year, the second week will be flat or down.
With earning season kicking in soon, the market will focus more on company's earnings and the earnings will be good, quite good in general.
Look at what happened today. TTWO warned yesterday and the stock went up quite big.
The US equity market did not give much return to long term investors in last 4 years.
DJ lost 1% in 2005. Actually, DJ did not give any return from the begining of 2000 to today (6 years, no return).
The QQQQ gave its shorts the one-finger salute this week >:D
David, I am glad you are flexible with your market strategy. You give your trades a little time to be right, but if they're wrong you usually accept it and move on. That is a very hard thing for many traders to do!
There's a guy named Serven who ran an options trading group last summer. He was very bearish on the markets in May as the markets were coming off a bottom. He was inflexible through the summer, convinced he was smarter than the markets and that the markets would come around to his way of thinking, so he kept buying puts. By August his portfolio was down 80%. By September the site was gone. By October the domain name was available for purchase ROFLMAO!!
Quote from: Lucas Scott on January 06, 2006, 03:44:43 PM
There's a guy named Serven who ran an options trading group last summer. .... By September the site was gone. By October the domain name was available for purchase ROFLMAO!!
ROTFLMAO BRAWAWAWAWA!!! Tooo funny!
That's why options are dangerous and stops should always be used IMO.
If I am not wrong, the purpose of our service is to identify momentum stocks (up or down) and try to get returns which can beat the market by a wide margin.
But two recent selections SPY and QQQQ are SP500 & NASDAQ index-bounded stocks.
They are not momentum type of stocks at all.
It may be better if we can bet some sector index stocks such as gold sector index,
oil sector index, etc.
If we bet right, we may achieve much better return.
For example, OIL sector return last year is 40%, much better than NASDAQ and DJ.
But the best is to identify individual stocks with momentum.
Also I would like to suggest:
Can we reset our portfolio back to $100,000 begining from 01/01/2006?
This will allow us to count our 2006 return.
Let us start over again to play a new game.
Hi folks,
From Ed Downs of SignalWatch.com...( a Dow guru that I respect )
<<Today's penetration of the upper boundary of the large narrowing trading range seen in the 60 minute and daily charts is a significant bullish development. However, a true bullish resolution to the long term consolidation pattern seen in the daily and weekly charts will not be achieved until the Dow can definitive strike above 10,960. Strength above 10,960 will result in 4 1/2 year highs and likely trigger a new long term bullish advance.
However, should the 10,960 resistance level remain intact, we may experience a sharp retracement back into the long-term consolidation range. Weakness beneath 10,830 will likely trigger a profound capitulation to re-test the 10,700 fulcrum support level seen in the daily charts. Weakness beneath 10,700 will mark a bearish resolution of the long term consolidation range seen in the weekly chart and could be the catalyst for a decline toward 10,400. >>
So, very short term, beware of possible whipsaws as the market penetrates 11,000, falls back & struggles briefly with direction...for those that think the NAZ would not be affected, you might want to re-think that notion...since so many short term traders are here, this goes doubly for them.
all JMHO...( but, what do I know?...)
willey
Everybody here knows that trying to enter at the exact bottom of a falling stock frequently leads to bad things happening.
Conversely, trying to sell short at the exact top of a rising stock also frequently leads to bad things happening.
Why not wait for a trend to develop?
Being a contrarian trader, or being "ahead of the market" doesn't necessarily mean winning through anticipation and early position entry.... For instance, I remember the market at nosebleed levels during the internet bubble in, when was it... 99? Most savvy investors knew there was little chance it would hold. But the market didn't actually begin to plummet until tons of people became convinced that it COULD actually hold those high levels (and didn't want to miss out on the action). I know a lot of the savvy investors who tried to anticipate the burst of the internet bubble but were too early. They ended up losing money. I lost quite a bit myself during those years trying to anticipate by shorting stocks I knew would fall. Those companies no longer exist, but I still lost money because the share price skyrocketed and I had to cover my short position. I'm sure I'm not the only one.
I don't see the well-educated investor yet convinced that these levels might hold in this market. Many people are still betting against a rise, saying these levels cannot be sustained. It sounds very familiar to me.
When those same people start becoming convinced that these levels MIGHT BE SUSTAINABLE... that is when it is time to start entering on the short side :) While those indications are fast approaching, we are not there yet, in my opinion.
Just my 2 cents... take care, and best of luck trading!
http://www.marketwatch.com/news/story.asp?guid=%7B7F7970F1%2D3FE5%2D4A4E%2DB71D%2D88E3204E7ABB%7D&siteid=mktw&dist=
We have heard the good news on the inflation and Fed notes. Whether we can sustain the bull run depends the earnings, and the 4Q report season starts from this coming Monday & lasts till mid Feb. I happen to believe the earnings were good in the 4Q.
I agree with resetting the portfolios. They are not representative of our latest returns at all, and it would allow us to track 2006 better.
I also agree with resetting 3SOF Portfolio returns to 0 precent as of January 1. New Year, new start. I hope by the end of the year it will return several folds.
ShawFund and irod
I agree that the portfolio should be reset. However I do not believe that David should revert to $100,000 dollars. The S&P index and Nasdeq should be reset to 1/1/06 and this years performance for 3StocksonFire should also start 1/1/06. Most services and all Funds price the portfolio to the close of the year. Open positions are priced to the close and for 06 results would assume a new cost basis. David could do this or just finalize his 05 return after he has closed out all positions established in 05. It would be improper to not continue to invest his accummulated cash. David invests a certain % of his assets in each position. We are expected to do the same. Members cash invested all vary but the % per recommendation is to be the same. I think changing the corpus would not reflect David's actual gain or loss and would become an accounting nightmare. However, what I have suggested is a one time pricing event to year end. David could then show annual performance and performance from inception to date. I highly recommend this because people looking at this site will want to see performance for 06 in defined numbers. How are we doing this year is what will motivate us all to stay involved with this site. The S&P started 2006 unchanged for the year and so should we. Let's find a few stocks on fire and get 10 or 20% ahead of the S&P in Jan
Yes resetting gives a nice clean slate and since virtually all services go by calender year it will look better to reset now instead of in May. There were killer gains in 2005 so no need to ad to it.
It also shows openness. One site by very popular guy hides his results inside (as he averaged 2.9% each for closed trades) - another shows their audited on front page.
One site does it this way.
(http://xs62.xs.to/pics/06010/returnresult.jpg)
The dollar amount is meaningless I suppose, wether it be $200k or $20k the % gain is the important thing and when $ amounts are shown some people think it small and others large but all know how % related to their own personal portfoliojo size.
I personally book all open trades at the end of /start of year as I file taxes on a mark-to-market basis so have to do this. In this way you do not have any wash sales as they do not apply so you can take a gain in a stock one day and a loss the next with no problem. To file for this you can request it now with the IRS (for those that file in the USA) and it will apply for the year starting 2007.
Quote from: 1reilly on January 08, 2006, 11:24:07 AM
ShawFund and irod
I agree that the portfolio should be reset. However I do not believe that David should revert to $100,000 dollars. The S&P index and Nasdeq should be reset to 1/1/06 and this years performance for 3StocksonFire should also start 1/1/06. Most services and all Funds price the portfolio to the close of the year. Open positions are priced to the close and for 06 results would assume a new cost basis. David could do this or just finalize his 05 return after he has closed out all positions established in 05. It would be improper to not continue to invest his accummulated cash. David invests a certain % of his assets in each position. We are expected to do the same. Members cash invested all vary but the % per recommendation is to be the same. I think changing the corpus would not reflect David's actual gain or loss and would become an accounting nightmare. However, what I have suggested is a one time pricing event to year end. David could then show annual performance and performance from inception to date. I highly recommend this because people looking at this site will want to see performance for 06 in defined numbers. How are we doing this year is what will motivate us all to stay involved with this site. The S&P started 2006 unchanged for the year and so should we. Let's find a few stocks on fire and get 10 or 20% ahead of the S&P in Jan
I agree.
Just let David keep the current account balance and let it continue growing.
Normally, most portfolios keep two numbers: total return and annual return.
We can have the two numbers counted at the same time. That is, the total return since the portfolio started (April 2005) and monthly and yearly return starting 2006.
Investment is a long time race. Let us make this a long lasting success.
I also agree resetting the 3SOF portfolio....start a new a journey :)
Quote from: Terlisa on January 08, 2006, 02:01:42 PM
I also agree resetting the 3SOF portfolio....start a new a journey :)
Same here.
Let's see what 2006 produces on it's own merit
That would be a great idea, resetting the 3SOF portfolio with 100 000$ and let's hope it will perform in 2006 the way it did last year, with tree digits on fire as a return!
Happy trading all!
Like it's been said before, the cash value really doesn't matter. What matters is the % of our portfolio we invest in each stock per David's money management guidelines, be it $10,000, $100,000, or $275,495.21. But resetting the portfolio performance to track 2006 is definitely the way to go.
irod I agree with you,
in theory your are right
but since david agreed to take in account the fee per trade(10$):---->10$+10$=20$
Tot capital(100%) 2 Trades fee of 6,66%Cap % fee
1 000$ 66,66$ - 20$ -30.0%
10 000$ 666,66$ - 20$ -3.0%
100 000$ 6 666,66$ - 20$ -0.3%
Also, I guess 100 000$ is easy to manipulate too.
True... in my opinion it's irrelevant tho, everyone should account for their own portfolio sizes and trading fees, not Dave. I pay $3 per trade for unlimited shares. It's not like when you see the news on TV you see "AAPL is up 5%! But only 4.8% considering fees!". Either way works though I guess. I'm more interested in 3SOF as a stock picking service and it's performance as such, than it's portfolio and trading fee management.
No problem at all with reseting, but I think it is more accurate if we just put the 2006 performance, starting January 1st 2006, along with the performance since inception on April 2005.
I can't reduce my commitment from $286,000 to $100,000 since I'm investing for the long term, not to take out money for other activities or to spend. We'll have the two numbers.
Thanks for the suggestion, I believe after lunch Ramsburg will work on this, probably it is easy to do :)
Quote from: David Randolph on January 09, 2006, 10:25:10 AM
No problem at all with reseting, but I think it is more accurate if we just put the 2006 performance, starting January 1st 2006, along with the performance since inception on April 2005.
I can't reduce my commitment from $286,000 to $100,000 since I'm investing for the long term, not to take out money for other activities or to spend. We'll have the two numbers.
Thanks for the suggestion, I believe after lunch Ramsburg will work on this, probably it is easy to do :)
Yes, no need to reduce the account value. Keep growing.
We can have both figures displayed: total return since inception and returns since January 1 2006.
Irod,
can you tell me which broker is asking 3$ par trade?
Is the deal link with a maximun number of shares, or without limitation?
Thanks
I never saw were you closed this trade??? Did I miss something?
Jody
Quote from: phabrux on January 09, 2006, 02:03:51 PM
Irod,
can you tell me which broker is asking 3$ par trade?
Is the deal link with a maximun number of shares, or without limitation?
Thanks
Interactive Brokers http://www.interactivebrokers.com/
Charges 0.05 cent a share with a minimum of $1
so for 500 shares the price is $2.50
for others like penny stocks they have a .2% of trade value max so as an example a 1 cent stock 200,000 shares is $2,000 so commission is $4
May be today is the day to short QQQQ.
NASDAQ has gained 7 days in row and will have profit taking.
Good time to short.
This just shows the Fibonacci retrace points and see how well they line up and how they called the recent short term top exactly. It does not work every time for many times for sure.
(http://xs63.xs.to/pics/06025/qqqq1301.jpg)
hi,
look at the chart for the q's. last three candles are bearish. slow stoch and the rsi with a quadruple top, macd on a down trend. 50ma needs to come in line with the 200 day so i think some retracement is on the way this week. let's see.
maxi
p.s. ramsburg, there is a bunch of q threads here . can they be consolidated into one?
thanks
Rick - Agree with the short of QQQQ - Watch SMH as the SOX will be the lead indicator for drop. Once the Q's fall, the SPY and DIA will soon follow.
This entire market is teetering on the edge - I'm 90% cash and the rest short in various issues
just as i suspected ;)
maxi