HSOA.PK

[Ramsburg]

Good Morning !

Thanks for your input ScottishTrader

David will not be able to post the regular daily updates today. But he gave me instructions to Hold this position on HOM.

I'll just post an updated chart.

[David Randolph]

This market isn't easy to trade. We've had a nice breakout to the upside on HOM but the stock fell back below the previous highs. That's not a good sign, specially considering the stock is one of those that came from below $1.5 to high $5. Maybe some shorts are plunging on this one.

Anyway, I see the stock up 4% in after hours, but with just 7,000 shares traded. I'm not a new fan of HOM, I bought it at $2.97 and sold it at $4.35 when it broke TL2. TL2 was too steep for HOM.

So now I'm trading on TL3, which has a slope of $0.067 per trading day, much more reasonable than TL2 (where the slope was $0.12, only for VPHM  ). If the stock fails to hold TL3 (tomorrow at $4.90) I'll sell it with no remorse.

This is the way I protect risk and keep capital available to buy and hold stocks that are trending up. Because for a speculator to make money stocks need to rise and keep on rising. When they stop rising and start falling one should get out and look for others. This is the way this game must be played to achieve superior results. It's actually much more simple than we many times think.

[David Randolph]

I want stocks with bullish trends. I don't want stocks with bearish or lateral trends.

Regarding this general concept, I want to hold HOM if it shows a rising trend. If it doesn't, I should sell it.

So, my trading plan for HOM is to hold it for as long as it is set to close above TL3. For tomorrow TL3 will be standing at $4.96.

[Prfsr Hal]

David--

The strategy that you describe in your most recent post on HOM is different from the strategy you employ for companies like BRVO and EYII and HQSM, where you are willing to tolerate long term wallowing in a range.

You have recentlysold and then bought back into companies like HOM and NVAX where you would have enjoyed continuing profits had you stayed in longer than you had...in effect giving these companies the same benefit of the doubt that you give to EYII and BRVO.  I'm wondering what criteria you apply in adapting your different strategies to different companies.

Prfsr Hal

[aix]

Great question Prfsr Hal!

HOM looked great today!!

aix

[David Randolph]

David--

The strategy that you describe in your most recent post on HOM is different from the strategy you employ for companies like BRVO and EYII and HQSM, where you are willing to tolerate long term wallowing in a range.

You have recentlysold and then bought back into companies like HOM and NVAX where you would have enjoyed continuing profits had you stayed in longer than you had...in effect giving these companies the same benefit of the doubt that you give to EYII and BRVO.  I'm wondering what criteria you apply in adapting your different strategies to different companies.

Prfsr Hal

It is indeed a good question Prfsr Hal, let me applaud   

If you take notice you'll see that BRVO.OB, EYII.OB and HQSM.OB are all OTCBB stocks. They are also micro cap stocks. Market inefficiencies abound there, so I can't trust solely on technical analysis to establish hold/sell decisions.

HOM, NVAX and others are Nasdaq stocks, with a medium size market cap and big liquidity (comparative to OTCBB stocks). So there I expect two things:

1) All or most fundamental information is known and absorbed by the market, which gives a stock quote pretty much close to the «intrinsic value» of the stock at a given moment.
2) I can trust technical analysis for a perceived change in fundamentals, because the market's awareness is high. But, of course, technical analysis can fail too.

So, as a rule of thumb, I would say this:

The smaller the market cap and liquidity the more you need to base your decisions on fundamental analysis. The higher the market cap and liquidity the more you should base your decisions on technical analysis

It is possible for an OTCBB stock to have great fundamentals and yet that isn't perceived by the market. The stock may go down when fundamentals are improving because the market didn't noticed yet.

With NYSE and Nasdaq stocks it is much harder to find anything new on the fundamental side. Every news and piece of fundamental information is rapidly discounted on the stock price. Trading there should be based much more on expectations for the future than on facts that everybody already knows. Expectations for the future are shown on the stock chart that reflects the actions from investors. So you should put an emphasis on technical analysis when trading big caps and big liquidity stocks.

Considering HOM, the stock opened on a gap up because of Wilma. Then it came back down again. I will continue holding it for as long as the stock closes above TL3, which for today stands at $5.07.

[David Randolph]

HOM: HOLD, unless it is set to close below $5.14.

[David Randolph]

HOM is another stock where I don't have to think much. TL3 is a reasonable ascending trendline that should be respected for me to keep holding the stock, since I generally just want stocks that are experiencing bull runs.

For today TL3 is at $5.21.

[David Randolph]

Although I have a little suspicion that HOM won't rise with the general market (because it is partly a theme stock, related to hurricanes Katrina, Rita and Wilma), I feel I must respect my trading and continue holding the stock for as long as it is set to close above TL3.

For today TL3 will be standing at $5.30.

[ScottishTrader]

And look at that, HOM printed a low of 5.31, testing this trendline once again, before pushing back up.  If I had some money available, that was my buy-in point, shame I couldn't, but oh well.

Hopefully for everyone else, this trendline touch, like the last ones should signal a change in tone for HOM.  I expect upcoming earnings will be very good.

[netfishmademerich]

Picked up some shares near the close.  Hoping for a green day tomorrow.

[David Randolph]

HOM opened lower, touched TL3 and the rebounded by the close, leaving a white candle on the chart. I hope this support reaction takes the stock to new highs quickly, as netfishdemerich says, the 3rd quarter results are expected to be very good (I still don't know when they will report).

I have to stick to the plan here, and hold HOM for as long as it is set to close above its ascending trendline support. If the stock closes below TL3 it means it couldn't keep up with a $0.067 rise per trading day, it would mean the trend was no longer bullish, but lateral. I want just bullish stocks on the 3 Stocks on Fire Portfolio.

So the trading plan for HOM for today is simple: hold if the stock is set to close above $5.37, otherwise sell.

[defenderyou]

Well tomorrow is D-day as the TL3 will be higher than todays close of 5.42 (TL3 = 5.44 tomorrow right?)

So higher or out, right David?

[netfishmademerich]

IMO it opened too high today.  It turned bearish pretty quick.

[David Randolph]

We've had some news today before the open but they failed to inspire HOM:

Home Solutions Responds to Hurricane Wilma

Cramer and friends had some negative comments about HOM last Friday, that probably explains the lower open yesterday:

«Gabrielski said Home Solutions of America had rallied about 250% this year as a play on the cleanup from the hurricanes. However, the company became public by means of a reverse merger, which means it bought a shell company to gain listing on an exchange rather than by going through the public offering process. Additionally, the company has sold stock to private investors at discounted prices, he said. Cramer said that kind of stock is "not my cup of tea," adding that he also doesn't like the brokerage companies that cover the stock. And, with the stock up 250% this year, most of the move has probably been made, he said.»

This means nothing to me, they wish they had those 250% profits.

Well tomorrow is D-day as the TL3 will be higher than todays close of 5.42 (TL3 = 5.44 tomorrow right?)

So higher or out, right David?

Thanks for your question defenderyou  Yes, I got TL3 at $5.43 for tomorrow, so HOM needs to rise, at least a bit, for me to continue holding it.

I really feel the stock is cheap at this point, but I also feel the market isn't looking for theme stocks to play now (well, some relapses on a few stocks, but mostly it seems to me the smart money is leaving them).

So, HOM needs news to move forward, without them the stock will probably naturally fall, unfortunately.

Possibly my plans and sometimes mistakes are a bit annoying, but that's how my life goes as a trader ... and I've never been a better trader than I am now. What I mean by this is that taking small losses when its needed hasn't got much style, it isn't sexy, not for a newsletter writer.

But I don't see myself as a newsletter writer, I see myself as a trader who discloses his strategies and thoughts, for others to learn from his successes and mistakes.

The one who learns from his mistakes is wise, but the man who learns from others mistakes is a genius. I want to help you to be a genius in trading.

Well, where was I? HOM, ok, the trading plan is very simple, if the stock tomorrow is set to close above the ascending trendline support, TL3 at $5.43, I'll hold. If not, I'll sell.