HAUP

[David Randolph]

HAUP did a perfect job closing that gap today, time to move up now.

It did just that, closed the gap opened between $7.25 and $7.30 and then rocketed to a 6.18% gain on the day. The trend is bullish and fundamentals say it is still way undervalued, so no reason to take profits here.

Did anyone see AppleTV as a threat to HAUP?

No, Apple TV is to show content of your computer on your TV, HAUP's TV tuner is for the inverse, to get TV on the computer.

To be honest I sold 50% of my position today. Still holding 50%!!! I was way overexposed in HAUP so this is not profit taking but rather risk reduction. Even though I kind of like to lock a little profit here

I understand your selling motivation but I disagree with the method. Never liked that "sell half" strategy. Also, I don't like to be "overexposed" to any stock, unless that comes from the stock rising a lot (I don't mind that )

One should never be overexposed, but if he is, like you were on HAUP, it has to be for a very good reason. Your reasons were really sound, then why profit just 10 or 15% from them?

I have troubles with "increase exposure" when at a loss, and "decrease exposure" when at a profit. Because if you're losing, the market is saying "perhaps you're wrong, start preparing for that", and if you're winning, the market is saying "you're right, now sit tight".

A correct position size is perhaps as important, or even more important, than being right or wrong in any given trade or series of trades. I have a fixed position size for any new holding, so it is one less issue I need to worry about.

I never average down or average up. My position size at entry is always the same for every stock, 6.66% of total equity. I think this brings simplicity and objectivity, and it reduces risk and analytical effort (if it wasn't this way, I would not only have to think if the stock would be up or down, I would also need to determine how much to invest - and perhaps be wrong on that too ).

I have much respect and interest for other's ideas, and I'm here to learn like everybody else, so feel free to discuss profit taking/controlling risk strategies Michael

Concerning HAUP, I can't think of selling this stock. Buy and hold is the name of the game here.

[David Randolph]

Today was a consolidation day for HAUP, volume declined by more than 50% from the previous day. The trend is up, fundamentals are attractive, I'll keep holding.

[David Randolph]

It's interesting, HAUP's intraday high was $8 for the past three consecutive sessions. You can bet that if the stock prints $8.01 it will rally strongly. I think it is just a matter of time.

We can see from the graph below that HAUP is growing four times more than the Computer Peripherals industry and it is valued at a much below revenue multiple:



The problem is the thin gross margin of just 21% for HAUP and double that for its industry average. I hope HAUP can return to at least 26% or so gross margin going forward, because there's no use in selling more if you can't get more gross profit out of those sales.

Let's see how fiscal 2007 starts (it started in October 2006) when the company releases fiscal Q1 2007 results.

I'll continue holding HAUP.

[Michael]

To be honest I sold 50% of my position today. Still holding 50%!!! I was way overexposed in HAUP so this is not profit taking but rather risk reduction. Even though I kind of like to lock a little profit here

I understand your selling motivation but I disagree with the method. Never liked that "sell half" strategy. Also, I don't like to be "overexposed" to any stock, unless that comes from the stock rising a lot (I don't mind that )

One should never be overexposed, but if he is, like you were on HAUP, it has to be for a very good reason. Your reasons were really sound, then why profit just 10 or 15% from them?

I have troubles with "increase exposure" when at a loss, and "decrease exposure" when at a profit. Because if you're losing, the market is saying "perhaps you're wrong, start preparing for that", and if you're winning, the market is saying "you're right, now sit tight".

A correct position size is perhaps as important, or even more important, than being right or wrong in any given trade or series of trades. I have a fixed position size for any new holding, so it is one less issue I need to worry about.

I have much respect and interest for other's ideas, and I'm here to learn like everybody else, so feel free to discuss profit taking/controlling risk strategies Michael

Concerning HAUP, I can't think of selling this stock. Buy and hold is the name of the game here.

Hmmm.... I have been looking around for a long time but I have not been able to find a name for this particular trading philosophy but it is really very simple.

You find a stock that you believe in (As I said in the good old days: I love!) and establish a core position. As we all know it is very rare that a stock goes directly to heaven. Most often it takes a few detours. If it is stock that I truly believe is significantly undervalued like STX, GIGM, AOB, KOMG VPHM, ASPV, XING, NTRZ or HAUP I don't mind taking quite significant positions (at least for me) when there is a good buying opportunity.

The idea is very simple. As a long-term investor I ask myself if I would mind holding this position for a couple of month if necessary. If the answer is yes I buy. When the stock shows strength I sell (keeping my core position).

I might end up with a large position (as it happened with HAUP when I bought at 6.55 (I think we discussed HAUP that night  )

I can trade a stock like this week after week. Sometimes it fall of the cliff as it happened with KOMG and VPHM and I close my position even the core position but most time I have already traded the stock a few times before that so the loss if any is very limited.

Sometimes I become a socalled bagholder but I don't really mind as long as it is only my core position.

As said I don't think this trading style have a name but I am pretty sure that I am not alone.....

[Melf Elf]

As far as strategies, I think that there are a lot of ways to make money in the stock market, like selling 50% as was discussed (or some other percentage), or employing Michael's strategy, etc.  It's all good, as long as we're making money. 

But, from David's perspective, he's the one who has got to decide on a strategy in order to manage the 3SOF Portfolio, and then employ it.  His strategy is based more on the fundamentals than the technicals, and more on the longer-term than the shorter-term.

My approach is just about the opposite of that, so for that reason only, out of respect for David's approach, I'm not going to make any more posts on the technicals in the 3SOF Picks folders, which I think all of you can understand.

As I said last weekend in the NVLS folder, I realized that anything that I had to say about the short-term technicals isn't at all relevant to what David wants to accomplish (longer-term plays), and if I were David, I would find it a bit frustrating to have someone going on about the short-term technicals.

I'll post on the other boards, as I have.  I've got some comments on the short-term technicals in HAUP, but they are inappropriate for this board,  so I'll post them in the  HAUP folder on The Stock Picking Board.

David, you're doing an excellent job.  Applause.  Keep up the great work!

[HANDBALLJIM]

My approach is just about the opposite of that, so for that reason only, out of respect for David's approach, I'm not going to make any more posts on the technicals in the 3SOF Picks folders, which I think all of you can understand.

Maybe discuss this with David and the other moderators the best way to post...because I feel the more info short term, present, and long term information is an asset to 3SOF. Your rating is over 600 for a reason...members care for your input very much. I have been following the market for almost 20 years (TA for 5 years)...and if I had a service like 3SOF years ago with the current contributors I would most likely be typing this from my Yacht off some tropical island...and not at a busy office working for someone. 

Keep up the goodwork Melf Elf,
Jimmy

[Michael]

Hi Melf Elf and Jimmy,

I cannot speak on David's behalf but one of the thing that has always made 3SOF special for me is that different opinions about stocks are accepted and appreciated.

Lets put the opposite technical and fundamental arguments on the table and I am sure that we will all make better investment decisions by the end of the day and that is what it is all about.

Melf Elf you and I have had many heated discussions during the times and even though your TA arguments didn't always convince me they certainly always made me rethink the fundamental case and that is very healthy 

3SOF has made many great investments during the times (just look at the increase in the value of the portfolio) but sometimes we get it wrong and more than often it is members that points out flaws either from a fundamental or technical point of view. A board where everybody is either positive or negative on a stock for either technical or fundamental reasons is a waste of time and against the idea behind 3SOF.

So please continue to post critical, challenging posts about any pick. We are all here to learn and your wealth of knowledge is always appreciated

[setravis]

Applaud that post Michael
Very well said...not only this statement but the entire post!"the thing that has always made 3SOF special for me is that different opinions about stocks are accepted and appreciated".

[Melf Elf]

Jim, Michael, and Setravis,

Thanks for your comments, with which I basically agree.

I'm looking at this from David's perspective, as someone who has to run the show.  David has said in any number of ways that he isn't interested in the short-term technicals, nor is he interested in short-term trading.

It isn't helpful to David for me to post, "XYZ stock just broke a two-week Symmetrical Triangle," etc., nor is that helpful to anyone who is trying to follow the strategy of the 3SOF Portfolio.

Members then have some confusion about whether to sell it, short-term, and try to get back in, or hold it, despite the breakdown.

Then, if the downside target gets MADE, Melf looks real good in the short-term, David doesn't like so good, and members are left wishing that they had sold.

Conversely, if some members sell a short-term pattern break, and the target doesn't get MADE, or anything even close to it, members are going to be sorry that they didn't follow David's longer-term strategy, and will wish that Melf kept his big yapper shut.



That's fine, as far as I'm concerned.  I miss quite a few.  But, what does that do for David?   He's got the responsiblity of running the show, not Melf, and he's got Melf going about short-term technicals, when he has politely as possible said, "I'M NOT PLAYING THE SHORT-TERM."

He didn't "SHOUT IT," but I wouldn't ahve blamed him if he had.    

I want to support David in the best way that I can, and the best way that I can do that is to get out of his way, and let him run this portfolio based on the fundamentals, with a longer-term perspective.

David doesn't need "a monkey on his back" while he's trying to do that, if you guys see what I mean.

As I said, I'll post on The Stock Picking and Previous Picks Board on an "as can" basis, as I have, if anyone is interested in my posts on technicals.

I hope that everyone understands that I think the world of David, and that I need to let him do his thing.

Thanks, guys!

(David, sorry, I didn't mean to refer to you like you weren't even here!  )

[David Randolph]

Hehe, great posts here

I fully agree with Michael and Setravis, besides, Melf Elf, you need to think of the trouble I get to find imagination to post different and hopefully interesting things everyday on every holding of the Stocks on Fire Portfolio !

If you don't talk short term, I'll have to do it myself, and I would prefer you to do the honors, so we can build a discussion lol

Moreover, don't think you'll get away that easily on HAUP  hahaha

Short-term, HAUP is responding to the technical weakness, and broke below a Descending Triangle this morning, which has a QUADRUPLE top at 8.00.  That needs to get taken out to upside, obviously.

The pattern break puts 7.43 IN PLAY as long as HAUP trades below the pattern, or until 8.00 is taken out.

And ScottishTrader, instead of subscribing the Premium Service, is losing his position on great stocks:

Trust HAUP to get hopping just when I hopped off 

Had to clear out some positions, and HAUP looked a bit weak there, on really low volume, so I got out at 7.77, only to come back later and see it had blown through $8!!!

Oh well, it will probably continue on from here, now that key $8 resistance is broken, but to be honest, HAUP traded a little too thinly for my liking, resulting in big potential swings, but really hard to read on days like today when volume is so low.

The bottom line is: I would like you (Melf) to continue posting your short term technical analysis on the Stocks on Fire Portfolio stock threads (you can post on both threads, premium and public, just copy/paste), that helps me doing my job, because my job is to study and present different perspectives on stocks and trading strategies.

I want to convince people to be more long term oriented, and the best way to do that is through a serious debate with a short term trader like you and others. I'm not expecting to accomplish this without a fight.

People can be confused, but that is healthy, because they need to learn which information to focus on, because they will never get rid of short term information, the media will keep on bombarding them everyday with that (although, of course, your technical analysis has nothing to do with the media, both information is short term oriented).

If they're not confused by Melf's technical indicators, they will get confused by a macroeconomic indicator, a press release from the company, a downgrade from an analyst, an insider sale, a mail they received, etc. Unless they absolutely trust the long term fundamentals they can never be strong hands. 

They will trust more and more on longer term strategies by me winning this fight (and above average returns), not by you walking away. The debate is still opened, and I may be the loser (I wish I am, because I also want to believe I can make more than 30% a year for the long term - that's the short term trader's believe, but as years go by, unfortunately reality shows that it is impossible. My fear is years pass and, by trying to make more than 30% a year with short term strategies, I end up not making money at all trading - that's why I'm trying to become more long term oriented). Time will tell, but with the highest respect for your and others opinions, I kindly ask you to keep posting on an "as you can" basis. Thank you

As for HAUP, when almost nobody expected and without any news, it broke out above the $8 resistance level. I have a 14% profit on the stock and I'll keep on holding.

[Melf Elf]

Okay, David, here's a re-post:  Good luck!

They sure aren't making this one easy for you guys, are they? 

The early morning Channel breakout got to a high of 8.47 at 10:00AM.  Support on the selloff was 8.06, which was fine.  That was above the tops of the Ascending Triangle, at 8.00...8.00...8.00...8.00.

The second rally attempt was lower to 8.43, then a selloff to 8.12.  HAUP is at 8.12 again, on a Symmetrical Triangle breakdown in the intraday chart.

A close near here would be:

1. The Wave 5 fakeout/breakout possibility that we've discussed, if it closes below 8.25, similar to what GIGM did in this morning's chart example from September.

2. A Bearish Inverted Hangman in the daily chart.

3. A Bearish reversal, if it closes in the red.

Good luck, guys.  I'd like to see you at least get a close above the channel, at 8.25 or better.

[David Randolph]

It's great to have you back Melf Elf

Don't you use moving averages? I use them to smooth daily price movements.

For example, you make all those assessments about one day's trading action, I prefer to watch a moving average, for example the green one on the chart below, which is a 10 days simple moving average.

Look how it keeps rising, despite all the daily "noise" (this means no disrespect for your work, you can call me bag holder or something else too).

I spent 5 years of my life studying the "noise". I made more than 5,000 trades during those years, my record was 57 trades in one single day

I'm decided to turn off the noise and let the music play

But I still want to discuss "noise" analysis with you and others. For me technical analysis is about one and one thing only: determining the trend.

HAUP's trend is bullish. Fundamentals are attractive. I'll keep holding HAUP.

[Se7en]

David, can you share with us what your 'strategy' was when you were daytrading or trading very short term, maybe in the Members corner or so? It looks like we have a lot of good 'technicians' here on the 3SOF, like Melf, Terliso, Setravis, fous, Scottischtrader, Aussietrader and many others and they all have their own 'TA strategy'! Just curious to see what yours was ... 
I think this can be a very interesting discussion where we can learn a lot from eachother!

[Melf Elf]

It's great to have you back Melf Elf

Don't you use moving averages? I use them to smooth daily price movements.

Thanks, David.  I look at the 50/200DMAs, but I'm not a big fan of moving averages.  It all depends.

For example, you make all those assessments about one day's trading action, I prefer to watch a moving average, for example the green one on the chart below, which is a 10 days simple moving average.

I can see that, if you're day trading.  I might take a quick trade off an intraday chart once in awhile, but I primarily use intraday charts for entries and exits, looking for signs of strength or weakness on impending breakouts/breakdowns. 

See my LVLT posts on the intraday Descending Triangle breakdown for an example, if you're interested.  The Bearish Descending Triangle (intraday) was telegraphing a "possible" problem with the Bearish Doji Star Hangman in the daily chart.  It was a problem.  LVLT gapped down yesterday, and the Descending Triangle target MADE, at 6.26.

I use the intraday charts like that.

Look how it keeps rising, despite all the daily "noise" (this means no disrespect for your work, you can call me bag holder or something else too).

My feeling is, "use whatever works for you."  What I'm not fond of about using moving averages in that manner, is that they often get you out very late.  If you use an intraday violation of a 10DMA, you easily can get shaken out.  If you use a violation on a closing basis, you can get whacked.

Example: XNN (chart below). 

If you get out of the trade when the Bearish Wolfe Wave broke in the intraday chart, at about 3.67 (I posted the intraday chart in that folder...I forget the exact number), it gets you out of the trade very nicely.  If you use a Close below the 10-Day moving average (dark green line on the chart, that gets you out 24.5% lower, at 2.77.  Big difference!

If you consider the short-term breakdown below the 10DMA to be "just noise," and don't sell, the trade turns into a disaster.

UGH!! 

Notice also that there was a Bullish Cross of the 50/200DMAs on the day of the exact top, which was deadly for anyone using that event in the MAs as a Buy Signal, so you see why I say that I look at MAs, but it all depends.  XNN was much too far ahead of itself to use that Bullish Cross as a Buy Signal. 

I don't like feeling a slave to a certain moving average, or to any indicator, for that matter, to use them in that manner.   

I spent 5 years of my life studying the "noise". I made more than 5,000 trades during those years, my record was 57 trades in one single day

Mercy!    No wonder you seem a little negative about the short-term.   

I'm decided to turn off the noise and let the music play

That's great, David.  There are a lot of ways to play the market.  Find what you like.

But I still want to discuss "noise" analysis with you and others. For me technical analysis is about one and one thing only: determining the trend.

I think that you have the impression that I'm a "kamikaze day trader."   

Sorry if I've given you that impression.  I wouldn't like day trading, although there are many people for whom it's their "life blood."  Find what YOU like, is my feeling.

I'm looking at the short-term charts in HAUP for signs of a problem (possible Bearish Wolfe Wave) in the daily chart.  Again, like the LVLT example.   

HAUP's trend is bullish. Fundamentals are attractive. I'll keep holding HAUP.

David, I hope that you know that I wish you the best in this trade, and in all of your trades.  I'm feeling a tad uncomfortable about this technical vs. fundamental discussion from the standpoint that it's might become one approach competing with the other, to prove which is the "right way," to play the market, and which is the "wrong way" to play the market.

My recent posts on HAUP certainly aren't to "prove anything" about technical analysis, or to "be right" about anything.  I'm just one player, who uses technical analysis to trade.  I have losing trades, the same as everyone else. 

My posts lately in HAUP are for two reasons:

1. Although your and Michael's work on the fundamentals did much to assuage my concerns about the "Pump and Dump" history in this stock, I'm still a bit wary, especially given the illiquidity in this stock.

Because of that, I felt that if I saw anything to be concerned about, technically, I would post it, and post what I would watch for.

2. The H&S target of 7.65 MADE, then this Bearish Wolfe Wave/Bear Channel possibility showed up in the chart.  Targets aren't exact by any means.  This one has been exceeded, but I thought it worth mentioning that HAUP has continued to rally, on weakening technicals, and to watch for the possiblity of a Breakout/fakeout failure, similar to the kind that we had in GIGM on September 21, when we sold the stock (Frederick did a great job on that).

That's it, my friend.  My posts on HAUP are nothing more than that. 

Sorry that this is so long, but it seemed that I had some 'splainin' to do. 

[David Randolph]

Great post Melf, thanks

I agree with most, if not all, of what you say.

Still, I believe technical analysis is mainly trend analysis.

As for this debate, I'm a true believer that one needs fundamental analysis for  long term trading success (if not for any other reason, because it won't be possible to trade large sums of money based exclusively on short term technicals).

But I also concede that www.3stocksonfire.org has always been, and probably will always need to be, about short term trading and technical analysis.

Therefore, without leaving my current commitment to the long term and fundamental analysis, I'll also develop a short term oriented and smaller portfolio for fast and small players to follow.

Let's see how it works.

Thanks for all that you have done for www.3stocksonfire.org over the years Melf Elf

As for HAUP, it is a hard stock to hold if one is a momentum trader, but the stock is still moving up on average. I know of several people that sold when it had one of these red candles. And they sold quite below the current price. I expect the same will happen to the people that sold yesterday.

I'll keep holding HAUP.