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IT’S EARNINGS SEASON
Today’s spills award goes to CAT.
Today’s Thrills goes to APKT.
And my what a thrill as in after hours this issue was down 5.00 a share and now up 4.50? WOW.
I must say thus far though If I had to sum up earnings season so far I’d have to say its a bust. Aside from AAPL and IBM nothing has really stuck. Its also ironic that those two names that actually popped and didnt really drop are the two names that MAGICALLY make up the biggest percentage of the indexes. Imagine that.
You know what they say:
Why do you need to weight an index unless you wanted to manipulate it. IBM makes up 10% of the DOW and AAPL makes up like 12% of the NASDAQ. Back those two names out of the equation and what do you get? Not much.
The thought that comes to mind is "Painting The Tape"
Painting the tape is when they move a couple of key stocks to give the impression that everything is fine (to the drive by media type investors) when you look at the indexes yet all the while they kill it under the surface. The way they do that is to move the names that make up the biggest percentages of the index (most heavily weighted). Noooo they don’t do that do they? Gosh would you put it past them? I’ve seen it too many times to say it doesnt go on and is just a fluke, trust me. Case in point?
If I’m not mistaken a few days back when we were up 200 points on the DOW 100 of those points were all IBM. That’s a perfect example of what I’m talking about. Look at today, CAT was down 8.00 points with most everything else holding they’re own in the DOW yet the DOW was down 80 points at one point. How much of that was CAT related as it too makes up a decent percentage of the DOW 30.
All I’ll say at this point is this bothers me. When you have great numbers in a lot of names and even guides higher on earnings yet they kill the stocks? Thats not healthy. But ahhh when you look at the headline numbers? No problems right?
Look our job is to look under the hood of that new car on the showroom floor to see if its firing on all cyclinders. Sure they always look nice on the floor but its whats under the hood that counts. That’s why at this point we are working within the realm of it being a market of stocks.
What does it all mean for us? Selectivity is key and take things a step at a time all the while adhereing to trade size risk management. Its a difficult environment to say the least, just look at the indexes since February. Lot of wide loose slop with basically net nowhere to show for it all. But Ahhh there is action and its in swing trading in the face of fear and individual stocks and that is where and why we hang our hats in that department.
For the most part all of our recent holding additions are? Well, holding they’re own, not setting the world on fire but then again neither for the most part is anything else out there. Well except AAPL and IBM and a few other select names right?
Going forward we’ll continue to take it a step at a time pick some off here and there (keep a close eye on TIBX) all the while being mindfull of trade size risk management, the beauty of trade size risk management is that you can go thru difficult times and never get blown out of the water.
On an indicator we can’t really measure humorous side note.
Why are we up today in the leaders and our holdings (nasdaq type names) today? Because yesterday the Hate mail indicator kicked in thats why!
Yesterday we had someone yipping about how we suck because none of our stocks were up yesterday while that DOW 30 (real broad index that is huh?) was up 170 points ! Of course ask anyone who watches UNDER THE HOOD of that car called the stock market and they will tell you in the nasdaq composite (where all the leaders reside) it was a bad day across the board. Hmm what’s that phrase? Its a market of stocks? Whatever.
See you this weekend
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Short Side Coming Attractions
NONE
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LONG SIDE WATCH LIST
"Only The Best And Forget The Rest "
"We Trade What We SEE, NOT What We Think, Hear Or Fear "
Remember the name of the game is Pullback Off Highs (POH) AND FIRST THRUST UPs as they are the only patterns you’ll ever need.
SQNS
NEW NAME
TIBX
NEW NAME
7-22 I’m really starting to like this chart!
TNAV
7-21 Until this issue puts in a Pullback Off Highs (POH) pattern and moves closer to trend channel support there is nothing to talk about.
PCLN
We are going to pull this issue off the watch list. Not that there is anything wrong with it its just that its a 500+ stock and we’ve got plenty of other issues to choose from.
NFLX
7-22 Setting up really nicely.
7-20 Talk to us at the 50 day most likely after earnings. If on earnings this issue tags the 50 day? Sure then we can talk about it. In the meantime there is nothing to do with regards to employing new money to this name.
IRBT
7-21 Starting to follow thru.
IPGP
7-20 Nice tightening up. BUT still though, support is in the 60 range and MAY need to test it first. Overall we’ve got a three month base building here. Bigger the base bigger the break as they say.
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FEATURED BUT NOT TRADE TRIGGERED BY US
This is where names that we have on our watch list that have triggered but for whatever reason we did not take them (can’t do them all) in our trade trigger alerts. This section is because a lot of our subscribers opt to use our information as they see fit from a do-it-yourselfer standpoint.
LONG SIDE
When it rains it pours!! Look at all of the new names on this list — all from the watch list in this weekend’s newsletter!
KSU
7-22 We’ll probably delete this name to make room for others.
7-21 Gosh, this name reminds us of CRS and ZAGG.
7-21 Trying to follow thru.
AVGO
7-21 Follow thru! Exactly what one wants to see.
ICLK
7-21 Just more of the same here.
GG
7-21 Marking time going sideways. Remember digestions of gains? Sideways or down is the rule of thumb.
RGLD
SLV
7-20 Currently hanging around the right side of cup crossover level.
GLD
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All About Options In The World According To All About Trends
Over the weekend we posted an article in this space entitled:
OPTIONS- Your best friend and worst enemy
That article is at the bottom of this newsletter for reference anytime you need it.
NOTE: The exchanges recently started WEEKLY EXPIRATIONS of options. Going forward, make sure that you check to see which ones you are buying. Let’s stay with traditional options expirations which are the ones that expire the 3rd Saturday of every month.
Options Watch List – All AUGUST call options
Current Holdings
TSCO August calls to open (We are now long 2 Aug. 60 calls at 7.50 as of 7-21-11)
As we post they are currently trading at 8.50
ARBA August 30 calls to open (We are now long 2 Aug. 30 calls at 5.20 as of 7-19-11)
As we post they are currently trading at 4.00
MAKO August 25 calls to open (We are now long 2 Aug. 25 calls at 6.70 as of 7-19-11)
As we post they are currently trading at 7.30
NANO August 15 calls to open (We are now long 2 Aug. 15 calls at 4.10 as of 7-13-11)
As we post they are currently trading at 4.10
ENTG August 7.5 calls to open (We are now long 2 Aug. 7.5 calls at 1.50 as of 7-13-11)
As we post they are currently trading at 1.90
Wow, yesterday these were 95 cents. Looking good so far with plenty of time left.
NXPI August 20 calls to open (We are now long 2 Aug. 20 calls at 3.70 as of 7-13-11)
As we post they are currently trading at 3.00
Finally waking up this stock is.
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Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
TSCO (We are now LONG 200 shares at 65.85 as of 7-21-11)
7-22 looking good and no news driven earnings event risk to deal with either.
RAX (We are now LONG 200 shares at 43.42 as of 7-19-11)
7-22 Holds the high 41’s level the last few days now doesnt it, thats a good thing.
7-20 Triggered a POH long entry now backtesting. We’ll find out soon enough if its going to follow thru.
RUE (We are now LONG 200 shares at 33.69 as of 7-19-11)
7-20 Big daily ranges with this one, as long as its above the 50 day and green trend channel support everything is fine.
ARBA (We are now LONG 200 shares at 34.56 as of 7-19-11)
7-22 Triggered and backtesting complete with a potential abc down.
MAKO (We are now LONG 200 shares at 31.08 as of 7-19-11)
NANO (We are now LONG 300 shares at 18.71 as of 7-13-11)
7-22 Now waking up. Nice!
7-18 Right down to a prior support level and one could say right back to the top of the "Right Side Of Cup Crossover" level too.
NXPI (We are now LONG 300 shares at 22.96 as of 7-13-11)
7-10 Keep an eye in this stock, these folks are leaders in NFC chips. These chips are what allow consumers to get information about a product by simply swiping their phone in front of a tag located by the product. Taking it a step further consumers are also now able to swipe their phone in front of a special terminal and the purchase is made. No more credit cards (like America really needs them right?). Mobile Commerce.
ENTG (We are now LONG 300 shares at 8.71 as of 7-13-11)
7-22 Well this stock is obviously super strong. The fact that it trap doored on earnings and instantly caught some bids to finish flat and now following thru big time today MAY be saying something, who knows what its saying but that is huge action.
7-22 As you can see today the bulk of our holdings are popping and breaking higher out of the last few days funk. Whats the lesson? Patience. Patience vs instant gratification I might add. Heck I’m all for instant gratification but I’m not going to go out and look for it and run the risk of getting off center in the process. thats the sort of thing that happens when you chase things- you get off center and get blown up then wonder why you got blown up. That’s a loser stance folks.
You know what they say about patience right?
To him or her who has no patience, patience will be taught.
Or how about Leonardo Da Vinci’s quote:
Patience is having patience when you no longer have any patience.
We’ll see, one good day does not a trend make. Its still a difficult climate.
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To our NEW SUBSCRIBERS
What we’ve tried to do is break our watch list down into chart pattern recognition structure from a visual standpoint. Learn the patterns and the components of patterns and you’ll blow those Wall Street MBAs away. You don’t need a $3,000 software program either. All you need is a BURNING DESIRE to be the best that you can be and we’re here to help.
We have a lot of new folks here and we thank you! We want you to take it easy, get to know how the routine works around here for awhile and to feel comfortable.
We hope you all aren’t here because you are chasing performance. For us it’s more about educating and making you the best you that you can be first (that’s what we focus upon!). Like many of our long time subscribers they have all found out that they have no use for traditional Wall Street (and we don’t blame them) and it’s our hope that over time you’ll have acquired enough knowledge from us to say the same with conviction.
One of the most important things we want to stress is that of RISK MANAGEMENT via POSITION SIZING. You don’t need to stack your account with just a few big positions as we’ve seen it time and time again that those who get into trouble are the ones who take large positions and do not employ any risk management system IE shoot for the fences. Those are the people who live on the fringes of extremes and yes ultimately get burned.
As a guideline a good initial system is that of the following example.
Let’s say you have a $100,000 virtual portfolio and let’s say that as a guide you never place more than 10% ($10,000) into any one position. Now let’s say that one day a news driven event hits (over which you have no control over anyway) and one of the positions tanks 20%. On its own that position is sporting a $2,000 loss, while that may seem devastating on its own its really no big deal overall.
Why? Simple its all about risk management being properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the virtual portfolio in this example.
Answer: A whopping 2% LOSS. Now you know why we say no big deal.
We can also tell you new people here that you will get stopped out of names and you will take hits. There is nobody on the planet living that has ever hit 18 holes in one and there never will be. We’d rather get you grounded in reality right away vs talking about pie in the sky all the time like a lot of other sites. In so doing your head is screwed on straight from the start and when those days happen (and they will) mentally it won’t mean a thing to you. To us that’s what’s most important is YOUR state of mind as it’s your most important asset. We hope you appreciate our honesty.
We have a very good retention rate here at All About Trends and a lot of great outstanding people here. We like to think that a part of that is being upfront about what can happen (in both directions). Verses those up 500%, I turned $50,000 into $3 million or some other absurd number to get you to bite. That’s not who we are.
WELCOME ABOARD!
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Lastly with regards to taking any trade:
Remember the moment you take a trade you are at the mercy of the market and have no control except when to sell. If you are not willing to take the risk and are not willing to pay that price do not take the trade. We are willing to take that risk knowing full well the end result could be a loss. That said make sure that virtual portfolio management trade size is used accordingly. With any position you may take make sure that should something go awry the amount of total impact to your account does not devastate your acct. Try to stick to a 5% position That’s the key to virtual portfolio management, not biting off more than you can chew.
Remember the mechanics of reality with regards to the stock market states a stock can only do one of three things: Up, Down, Nowhere. The moment you hit the enter button you are at the mercy of the market therefore the only control you have is when to sell/cover. You can’t manage your gains as you have none to manage initially. Knowing this in advance it allows you to stay in outcome, that being you will either:
1. Make a gain
2. Wash
3. Get stopped out at a loss
Remember the market IS the boss. IT is going to do what IT wants to do.
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OPTIONS- Your best friend and worst enemy
Let’s talk about options for a moment. First off this is a big universe with a lot of advanced strategies and terms like theta, delta , straddles, butterflies and the whole gambit. For the purposes of this conversation we’ll keep it real simple and not try to get to deep.
We’ll approach it from simple buy puts (short side) buy calls (long side). The first thing I want to mention is that options attract the fast money crowd in hopes of turning 500 into 10,000 overnight. This is also the get rich quick crowd. And more often than not these type of people get broke faster than they get rich. Please don’t be one of them as greed kills.
Time and time again we hear from people who like to trade options, and time and time again we hear the horror stories too. When we hear the horror stories nine times out of ten we can guess as to why their option went to zero. Nine times out of ten it was because they bought out of the money options or at the money options. This is the reason why 80% of those who do options lose money by the way.
Sure there are folks who use out of the monies and at the monies but those are experienced traders that know the ins outs ups and downs.
You see the trick is to NOT pay for time. You want as close to a point for point move as possible with the stock because there is nothing worse than seeing your stock move yet your option does nothing or very little, know the feeling?
So for All About Trends we only want to look at IN THE MONEY CALLS OR PUTS and we DO NOT WANT TO PAY FOR TIME, sure they cost more BUT we want to be as close as possible to being able to see a point for point move with the stock.
We hate paying for time. We want true value without the time. We’re not saying our way is any better than others, we’re just saying it’s what works for us.
Now let’s touch upon how we would build a virtual portfolio dedicated to options and how to make it a piece of your overall virtual portfolio via allocation. Keep in mind this is more geared towards beginners so you advanced people might be bored with it but then again it never hurts to revisit the basics every now and then.
At All About Trends Trends we talk a lot about never biting off more than you can chew and trade size position management. We do that for a reason, we do it so as to when Murphy’s law shows up it never devastates us or blows us up. Typically we try to stay within a 5-7% position size when we do a trade. The same thing goes for options. If we were to start a virtual portfolio of options or shall we say allocate a portion of our overall virtual portfolio to options the way we would look at it is the following:
For example, let’s say the total value of your virtual portfolio is $100,000. The most we’d consider allocating towards an options strategy is 10% of the whole virtual portfolio. In this case $10,000. So now you’d have a $10,000 option virtual portfolio to work with. Now let’s say that you are the worst trader on the planet (we doubt that!) and you lose the whole option virtual portfolio, what’s the risk to the total value of the overall virtual portfolio? 10% in which case you live to play another day. Now let’s touch upon that $10,000 you allocated toward options. Let’s reduce the risk even further (and we haven’t even talked about what stocks to trade yet). Let’s take that $10,000 and split it up into no more than 10% ($1,000) can be allocated to anyone position as a guide. (Sometimes 1000 can get you 3-4 contracts you know). Now let’s say that one of those positions goes bust (and they will! and sometimes more than one at the same time we assure you.) What is the total impact to the overall options virtual portfolio? 10% right?
Now let’s take that a step further. What’s the total impact to the overall investment virtual portfolio of 100,000? 1% – that’s right 1 measly percent. When it comes to options you need to employ some sort of virtual portfolio risk management structure parameters as this way you can get in trouble and you don’t lose sleep – you just have a bad day that’s all.
As for getting rich overnight? Forget about it. That’s just a marketing ploy. As for taking 50,000 and turning it into millions? Ain’t happening overnight but it sure sounds good doesn’t it? And that is why people bite on those marketing ploys.
As for time? We never go out months. As a swing trader we’re in positions for only a couple of weeks best case so why pay for the time to go out further in time when you don’t have to. When the stock moves whether it’s right away or not they sure seem to suck that time out of you just as fast anyway right?
Typically we’ll look at the front month (current month) or the next month but not months. When we say front month if options expiration is a week or sometimes even two weeks away we’ll look out to the next month and not the current. While time is our enemy in most cases, in this case it’s your friend. It’s just that you don’t want to pay for it
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SUBSCRIBER ONLY WEB SITE
Don’t forget you can view updates in the middle and the end of each trading day complete with current charts, along with our current performance at our subscriber only web site.
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