Monday, October 03, 2005

Watch list for week of 10-3-05

The market appears to be in a contracting range and not trending right now. When the market isn't trending, most stocks won't be trending. There has been more negative action than positive action on my watch list from last week which is a big red flag to me. Here are the best low-risk buy candidates from my market homework software this weekend:

I've been going through a tougher than normal losing streak this past month. I can trace it back to the first hurricane, when the market started going higher. To summarize my strategy, I basically buy explosive nasdaq stocks from the lists produced by my market homework software, and offsetting my risk during nasdaq downtrends by being short larger blocks of QQQQ and cutting positions that are no longer technically healthy. Well when this first hurricane hit, the speculative money seems to have dried up for the time being, but the nasdaq composite hasn't gone down! I've been getting whacked on both sides this month, and as a cautionary measure I have much less market exposure than I had at the beginning of the month. The last time I can remember the market behaving this way was December of last year. The hot-money stocks were blowing up left and right but the naz kept grinding higher, until the January blowout. I went heavily short in January and didn't buy another stock until April. It wouldn't suprise me to see the next few months play out similarly. This time I am already way net-short after taking losses on quite a few longs, but I may be too early and decide to trim back some next week.

I tried to buy the breakout in LONG this week, and exited the trade with a loss the same day. It was evident that it wasn't going to follow through. I've been talking about DSTI a lot on here lately, and I'm no longer carrying a position in that stock. As it violated support at $12.50, I scaled completely out of the position. I may have sold at the bottom, it happens sometimes, but the first loss is the best loss! If you can't take small losses, you will take big ones and I'm not really into doing that =D

So what is in store for next week? I'll be monitoring the health of my current positions and the ones on the list above. Maybe we'll see the market break out from its range, but I think it is too early to expect that. I don't think this is a good time to be very busy as a trader, but when you stop paying attention to the market, your positions, and emerging opportunities, you are basically dead meat. In this business it's the steady players who bring home the bacon. If you are inconsistent in applying your strategy, you may miss the small handful of trades that makes it profitable that year. This blog has helped me maintain that discipline and I'm grateful for all the interesting people I've met because of it.


At 5:24 PM, Anonymous Anonymous said...

"I may have sold at the bottom, it happens sometimes, but the first loss is the best loss! If you can't take small losses, you will take big ones and I'm not really into doing that =D"

I like how unemotional you are in dealing with your losses. I also like that you talk about your losses as much as your gains.

Respect for you.

At 9:00 PM, Blogger bumby_lansford said...

Hang in there Jon. You've got the right idea. Keep your losses small and you'll be fine in the long run!

At 9:00 PM, Blogger bumby_lansford said...

This comment has been removed by a blog administrator.

At 12:44 AM, Anonymous Technicator.NET said...

Hey, I got the book by Weinstein you recommended. I just started reading it and it's so far so good.

You will get some big winner coming. Hang on.

At 10:53 AM, Blogger Steelrider said...

Electronic Sensor Technology (ESNR). zNose device can sniff one part per trillion of any chemical(explosives included) according to ESNR. Do your own DD but here's what my DD indicates may be the case;
Fundamentals aside (which, by the way, IMO are good ), zNose just introduced in the middle east. ESNR is in the enviable position of having already penetrated Asian markets, particularly China, which is something even fortune 200 companies would trade their CEO for. In addition, they may have the best product available, exposure with the major defense contractors, apparent validation by the US government, a huge need and worldwide market, multi million dollar orders and a very, very qualified management team in this field.
Stock is followed on Stock Insight.
I increased my position significantly yesterday.

At 11:32 AM, Blogger jontait said...

Steelrider I don't buy stocks that are making new lows.


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