ABLE

[David Randolph]

Dear David,
As I have been watching and trading along, I have lost more money than I did when I was working with fundamentals and thinking intermediate term. I have some observations, as I start to get my sea legs with trading.

It's been a though time, the last couple of months. I'll do my best so things get better in the future.

1. When I think about ABLE, which I bought, what I saw on our site is that there was alot of information on this stock that could give pause, as "fill" pointed out.

2. One could have plotted some entry points, which would have been useful. I appreciated the post that did.

3. The technicals broke down because, I believe, Lehmann downgraded the oil sector and almost all the stocks tanked. Combined with what is known about this stock, I think it would have been better to wait.

4. Getting into a rise after the first day has proven to be risky. Maybe my observations are wrong, but I've seen so many stocks fail to continue. Of course, I don't have the experience to really judge these things except superficially.

Anyone thinking that way (waiting for a pullback to buy) would have lost moves 1 and 2 on the chart below:



Do you think the stock went down because of the Lehman downgrade? I was not aware of that downgrade, but that's valuable information. I feel more positive about ABLE after that downgrade, since an analyst's opinion about a sector isn't a valid factor to take a stock up or down for long.

5. David, you have made some incredible choices, which paused and then increased substantially. I think of CWPC.ob as one and SIFY as another. Sify's fundamentals would encourage one. I think looking at fundamentals is important in anything but a strict daytrade perspective. Maybe I'm wrong.

I agree.

These are my observations. I am a true newbee to trading and respect the incredible knowledge that is displayed by the members and the knowledge and the humility displayed by you. It is astounding to watch you never let your ego get in the way.

With appreciation,
labelladonna

Thanks labelladonna 

You know, I study stocks since 1996 but I traded mostly futures for the past 8 years. I made 180% plus last year on a $100,000 stocks only portfolio with a quite peculiar way of trading: momentum technical trading coupled with some fundamental indsight. As time went by I tried to be more of a fundamental analyst and investor, so I could be more usefull to 3 SOF subscribers.

But I don't think I was, since most are worried about short term performance, as I am.

I'm coming back to my old trading style ... ABLE fit my criteria, but it failed and I'm losing 9% on that position. But I could be up 30 or 40%, that is, stocks with the same pattern usually rise 30 or 40% the following days.

I follow 2 simple rules:

1) A good trade is profitable right from the start
2) Never let a profit turn into a loss

ABLE wasn't good right from the start, so probably it is a bad trade. I'm ready to accept this and pay the price (but I still hold my shares, as the close yesterday was too close to call).

metro's chart on a semi-log scale is much more encouraging than mine. I hope he gets his shares at this low point and the stock rebounds nicely. But I'll have to sell it if the close is set to be, say, below $8.20, because of risk management.

Thanks for your comments labelladonna, talking about strategy is the issue I love most on trading communities ... we can and should learn with each other, I'm all eyes and ears.

[oicpecnoc]

David,

I believe a big percentage of your success was on some big hits on some pennies.  I'm not going to list them, but I think I am right.  You no longer have them in the 3sof portfolio, so matching that success is going to be more difficult without those high risk/reward plays. 

If I had made 180%, and a decent percentage was in pennies, I wouldn't be throwing out the idea of having one in the portfolio, even though you have a seperate portfolio for it.      Just a thought. 

[shawFund]

David,

I believe a big percentage of your success was on some big hits on some pennies.  I'm not going to list them, but I think I am right.  You no longer have them in the 3sof portfolio, so matching that success is going to be more difficult without those high risk/reward plays. 

Yes, I checked all the trades. Three early pennies topped the gainners' list:
NAUC.PK , AMRE.OB and BRVO.OB gained 122.77%, 1,212.50% and 165.38%.

With those gains, the whole portfolio gained over 100% within one month after the
portfotlio started.

But the portfolio gained additional 20% from early June to the end of December: $250,000->$300,000.

That was pretty good (7 months +20%).

The first two months of 2006 was not kind for the portfolio. But no one can keep the portfolio gaining every month.

My portfolio had two 4-months continuing lossing stream since it started in 2001-06 but still
made 65% annualized gains in its near 5 year history.

I think that the key is to find out hot stocks in their early stage like last year's winners:

  VPHM, AOB, IIJI,SVA, HOM, NVAX,  GIGM

I think that DAVID will do much better later.

[oicpecnoc]

Shawfund,

I wasnt' suggesting there are not downtimes, I am suggesting the source of the explosive gains of last years portfolio should not be overlooked.  To match Davids success, you would have to buy and sell exactly when he does every day.  Not an easy thing for everybody with various lifestyles.  Using stops when you cant be at your computer often results in you getting stopped out.  Since it is kind of unrealistic to copy David exactly, and since taxes on short term trades are so high, a 7 month gain of 20% minus commissions results in how much actual profit?  I would doubt people will continue to pay for this type of performance, but this is of course my very humble and often incorrect opinion.  If I had success, I would revisit where it came from if I wanted to repeat it or get myself out of a slump.

3sof is the most civil discussion of stocks I have seen on the net.  No percentage gain can or loss will ever diminish that accomplishment.  It is a credit to everyone, but mostly David and Fred, however, I am not sure people will ultimately pay for civility and eductation. 

Before I get hammered for this, everybody notice that all credit is due for the explosive picks early in the year, I am just identifying the source of many of them and noting that the source is no longer a part of the 3sof porfolio.

[shawFund]

It is very difficult to make big gains by playing penny stocks.

The reason is simple: for a $0.02 stock and a $280,000 portfolio, allocating 6.6% of resource ($18,000) to buy a penny stock implies that you need to buy nearly 1 million shares.

Even 1,000 members followed the buy and each member only spent 1/10 of the money ($1,800) to buy, that will be a total of 100 million shares.

How many OB or Pk companies have 100 million shares for us to buy? None.

[David Randolph]

Thanks for the interesting discussion oicpecnoc and shawFund 

I think you're both right !

Some trades in some penny stocks accounted for more than half of 2005's performance and that source of performance is no longer on the Stocks on Fire Portfolio.

Also, it is impossible to trade penny stocks successfully with a $280,000 portfolio and 363 subscribers possibly following the picks. There's not enough liquidity.

Hopefully people will be interested in discussing picks, analyzing strategies and learning the game. If not, they can simply try to mirror the portfolio and probably get an above average return, but not a 100% or more annual return (unfortunately).

Anyway, thinking of the website's business model, I'm not very worried about it at this moment. I'll do my best everyday without much concern for the end results.

Concerning ABLE, the stock is holding pretty well around the white candlestick's midpoint. It looks like it is setting up to push higher again, after a three days consolidation.

If we buy breakouts there's always a strong possibility of some profit taking or consolidation, but the new trend is there, and trends usually resume.

Since ABLE is just a $25M market cap, it can eclipse recent profit taking in a big two or three day's rise.

Although I'm starting to get more positive on the outcome of this trade, I'll continue protecting risk, so I'll sell if the stock is set to close below $8.20.

[shawFund]

My take on ABLE:

Since the company is not making money even the revenue has been growing, I am not comfortable to own this stock.

Also the chart history showed that the stock had few push ups with big volumes before but all failed to hold the gains (one day wonder).

May be this is a stock to buy at support.

[Terliso]

My take on ABLE:

Since the company is not making money even the revenue has been growing, I am not comfortable to own this stock.

Also the chart history showed that the stock had few push ups with big volumes before but all failed to hold the gains (one day wonder).

May be this is a stock to buy at support.

Me too, I did not buy. So volatile
But it touched the MA(50) today maybe it will bounce tomorrow.

[KCScott]

Dave,

Take a look at MEK - Very nice chart in a the energy sector

Too Bad Dave never looked at MEK -

Doubled since I found it

[Amarens]

Got stopped out at $ 9,50  Nice profit. Couldn't sell with a loss on my birthday which 3SOF did  . Set my own plan and stuck to it. Happy I was able to buy ABLE.

Thanks David, for the tip.

Amarens