The Daily Vento

Bill Maher references Johnny Vento on HBO

2009-03-27T23:52:00.000-07:00

See for yourself here

(click on Overtime)

This is the Overtime segment for Friday March 27 2009. This segment started by my question sparked an entire conversation/argument that was not concluded by the end of the 5 minute clock.... in fact mine was the only question asked.

Granted, it is not stock related, but this bird brain thinks it's pretty cool to be on HBO's Bill Maher- it's the John Stewart for the over 40 political set.

The Daily Vento Resurrected?

2009-03-25T22:08:00.000-07:00

It depends on InvestorsLive and whether he wants content for his site. I had some encouraging talks with him that indicate that he is looking for content. It's all up to you.

Watches Thursday Jan. 22

2009-01-21T21:43:00.000-08:00

APTK DK CQP QGP AVII FTBK

My "7 Monitor" set up

2008-12-29T19:14:00.000-08:00

After getting frustrated with my current set up and contemplating buying several monitors for real, I decided to give this a try first to see whether I could get the same basic functionality out of a virtual multi-monitor set up. I'm taking advantage of the "Spaces" technology from Apple to set up 6 distinct virtual desktops:

Anyway here is my set up:

I have 4 screens for watchlists, so I can separate the combo lists from the short list and also have some room to chart what comes off the hod list. The 5th screen is for the chat and the 6th is for IB. The 7th you ask? That is where I run Windows XP in the background where I have Scottrade Elite running Trade Ideas (detailed here) with my backfiltered list of deadly combo stocks (detailed here).

The great thing about this set up, actually the only thing that really makes it functional, is the fact that I can set each window to a quick key for instant and direct access. I find this direct pivot actually to be about the same as moving one's eyes and refocusing on a new screen. Anyway if I find that it just isn't working out then I will invest in a multi-monitor set up. But for now this has the advantage that I can bring it with me wherever I go, like now.

** UPDATE

To clarify about Spaces- it is true, for obvious reasons if you think it through, that an application can only exist in one space only. To get around this problem I use a different web browser in each space. Therefore, the number of spaces ("watchlist monitors") is really only limited by this, since the number of virtual windows you can create is limitless. There seems to be no shortage of browsers available so this is not a problem. I use: Safari, Firefox, Camino, Seamonkey, Stainless, and Opera. Of course IE is also available (puke) and a few others probably. I can also use Chrome on the Windows side, although there is no need since that does not exist on the Spaces interface so I can have multiple browsers open there as well (I run the hod list from Firefox; running it on the Windows side allows for the freeze frame technique).

What I've been doing over the holidays

2008-12-24T19:00:00.000-08:00

1- Going over all the chat logs to make lists of all the stocks in play

2- Going over all the chat logs to chart the premarket leaders looking to see how they played long and short

3- vomiting violently due to some mysterious virus

4- trading occasionally (here is SIL from today (unrealized))

5- reading Brian Shannon's great book

6- reading another great book from Brett Steenbarger (I will post about later)

7- taking care of my wife who is vomiting violently from the virus that I gave her

8- tweaking my "7 monitor set up" (hehe)

9- complaining about the lack of borrows from IB (really!)

The situation has really been quite comical. After I got ill at my parents' house (after spending 3 days at my wife's parents'), unable to even get out of bed, then my wife got sick, causing us to delay our flight back, only to have the plumbing blow up forcing us to retreat to a hotel at the airport (where I'm writing this). We will try to fly out tomorrow. It's amazing I was even able to trade today.

Speaking of IB, it's awesome of course. But I can't believe given my extremely limited trading, that already on 2 shorts I tried to get, EPIX and HPSO, I was denied... I know nothing is perfect, but geez... maybe this means I'm just too slow...

How has everyone else's vacation been?

** UPDATE

I had to update the picture 4 times because my SIL profit kept going up in afterhours, hehe

Funds available Dec 22

2008-12-19T09:13:00.001-08:00

Apparently there is a 4 day hold on new deposits at IB? Plus I waited 4 days for all the funds to settle before I could pull out of the other brokers. This is why I waited until now to do this. I hate missing all the action, but I'm reading about it in the chat logs. I will be able to trade again on Monday. However I am going to be traveling and I don't know how much control I will have over my schedule.

I will try to keep my blog updated in the mean time- this weekend I will show you my "7 monitor" set up that I have been working on in my down time. I will also post an excerpt from the book I am reading and show you how that Muddy displays the behavioral characteristics of a genius trader... and how you can try to get yourself into that framework.

Down for a bit

2008-12-10T12:40:00.000-08:00

I'm going to be off until I finish moving over to IB. Plus my head is throbbing from this unfinished root canal.

A great combination

2008-12-07T10:17:00.000-08:00

I have to say I'm loving Yngvai's Correlation filter... I've added day range to it so here is a watchlist of stocks that are all over 80% red on $DJI red... AND all over 20% ADR5! A delicious combination.

RAS ARA UEPS FCH ICOG FTK GRA URE GNW

Watches Monday Dec. 8

2008-12-06T19:11:00.000-08:00

HIG OGXI BBX RDN TLB LCC HRP PGI OREX ATPG

Lots of run ups but a few others...

LCC and all airlines on 4+ day run up, keep on short watch... these are good options plays also, will detail in future posts

OREX huge down, could be bad news so keep on watch ala CPE

ATPG 88% down on $DJI red

PGI 1 day up, 1 day down... guess which day we are on

HRP look at what happens to the chart when it ends on high of day... where did it end Friday

Watches Thursday Dec. 4

2008-12-03T19:46:00.000-08:00

LSI ATPG BBX HRP PPO IFLO OWW ASTI IMP PGI

I'm really digging the late day run ups... nothing like RAS today but HRP nice.. and BBX back to 3 is why it's back on the list...

also on watch: Vanessa Ng (just kidding)

also... did my blog get mentioned on ft-talk.com? I got a lot of traffic from there today... I hope you are saying nice things haha

thanks everyone for the birthday wishes

The Daily Babe-o

2008-12-03T09:10:00.001-08:00

Vanessa Ng

Global Vento part II

2008-12-03T08:55:00.000-08:00

Really getting a nice cross section of hits. This is only the most recent 500. Thanks everyone!

Anatomy of a day trade: BBX

2008-12-03T07:42:00.000-08:00

That is one beautiful chart.

After reviewing the chart I changed to a limit order

This was the key to the entire trade since I got filled at 3.30.

Penny by penny we wait

I consider this a successful trade at this point.

A very nice dip below 3 however the spread is like .15 here so no opportunity to cover.

Who buys into a falling chart like that with a spread of .15-.20???

Trading sideways now. Will take here. Even though I really wanted this one below 3, the market is surging now and I don't want to fight the headwind.

I will take profits and move on to the next one.

Position entry: A+

Position exit: B

Overall trade: A-

This trade alone meets tortexal's requirements of making $200 per day.

Happy birthday to me.

** UPDATE

So I looks like I'm missing out on a big part of the trade. There are two reasons for this. The first is that I am forced to make decisions about when to close a trade that are less than ideal because they aren't about the trade itself. Because I have to go to work I will be away from the computer for 45 minutes and I don't always have time to watch trades during the day. The second reason is that I have a hair trigger for taking profits which I consider to be both a good and bad thing. On this trade my instinct was good in that the reversal was real. However that stock dropped sharply the following morning so in the end patience would have paid off. Am I glad I took that trade when I did? Yes in part because the market could have rallied the next day and I would have potentially had a losing position. I can't get too upset about it because I made profit... that is the most important thing. I changed my exit to B.

Watches My Birthday Dec. 3

2008-12-02T20:56:00.000-08:00

RAS ISSC BBX HRP BC CRMT STSI PLD SAH OVEN RMBS EGY PGI ATPG YRCW

RAS

2008-12-02T19:26:00.001-08:00

I'm going to do something I don't usually do, I will try to short RAS in premarket tomorrow since open is usually too late

Watches Tues Dec. 2

2008-12-01T20:54:00.000-08:00

FRPT YRCW XING OVEN RMBS EGY PGI ATPG (still)

My favorites from other lists... sorry I didn't have time to do any scans today

My favorites on this list are EGY PGI ATPG

I will have an upcoming post about how a stock's chart feel makes me want to trade it or stay away

The Daily Babe-o

2008-11-30T11:03:00.000-08:00

Pania Rose

A "new" Muddy filter

2008-11-29T15:39:00.000-08:00

Muddy mentioned back in comments about how white candle around the lower Bollinger Band with a tail as long as the body or bigger can kickstart a rally. I know he talks about white candles under LBB on his blog but I don't think this tail data has ever been coded. Anyway I just did. And the backtest is pretty ridiculous.

show stocks where close is above open

and price is between 1 and 20

and average day range is above 3

and average volume(90) is above 700000

and set{bottail,open-low}

and set{body,close-open}

and bottail > body

and price touched lower bollinger band(20)

Here are some of the backtest results

** UPDATE

I suppose this is a bullish hammer... however I think the combination of the LBB position makes it more powerful

Watches Monday Dec. 1

2008-11-29T15:14:00.000-08:00

WYN ATPG CI DNR MEE DYN FNF URBN AEO

These are all run ups that had a red candle on Friday. They aren't picked up on the Red Floater scan because they are under the upper Bollinger Band but it is the same idea. They are ranked in order of highest probability short on $DJI red. My favorites from everyone elses lists are

YRCW XTEX OCNF TRW SOLR PPC AXL STSI HTZ

A possible logo

2008-11-28T11:12:00.000-08:00

for birdbrain Vento

Surprisingly accurate.

Shameless

2008-11-28T10:24:00.001-08:00

I've decided to post hot chicks in a shameless attempt to get more readers on my blog...

Jarah Mariano

Just kidding

(Or am I?)

Anatomy of a day trade

2008-11-28T08:52:00.000-08:00

To make the blog more interesting I've decided to post same play-by-plays of actual trades that I make from time to time. The hope is to get more into chart details and analysis of what goes right and wrong during the trade. To start things off I will post my trade of ATPG from today.

Eyeing it up at open

After giving it 5 minutes I decide it's worth a trade

I get in with a market order a few seconds later

Early success!

What to do? Ride through the bump or get out?

This is why I like Ramtajogi's calculator so much. When the Dow surges, the odds of the short go from fantastic to a coin flip.

These aren't just abstract stats. The uptrend in ATPG directly coincides with the Dow moving steadily up at 11:00.

I got out at 6.18.

It turns out that was a decent exit since this was a true reversal.

Final profit

So this isn't really a bragging post. The trade was less than ideal since I had multiple chances to take profit below $6 but didn't. I left about $200 on the table. I give my entry an A and my exit a B- so overall trade: B+

This is where trading strategy gets interesting. Is it better to hold multiday or get out early? The answer has more to do with your personality- I like getting in and out of a trade with decent profit to show for my effort and hate to see reversals take it all back. On the other hand the multiday holds that Muddy does usually result in more profit.

Post any ideas for future things you'd like to see on the blog. It will be impossible to post every trade but I'll try to post some interesting ones.

Watches Friday Nov. 28

2008-11-27T10:31:00.000-08:00

RAS PCK HWD HDNG LEN BBX

RAS ended with a spike... the last 2 times it did that it dropped significantly

PCK bad news panic sell, may continue

HWD 90% correlation on $DJI red in November... nobody wants diamonds haha

HDNG same

LEN 3 days up, historically good chance for failure, 80% correlation for Nov

BBX reliable downtrend, can barely string together 2 white candles in a row

may add some more later

** UPDATE

sorry I haven't added any more- by the way all of Yngvai's picks are great- I didn't put them on my list because I'm trying to find different ones from others- however I do evaluate everyone's watchlists, as per my comment that I shorted HRP off of Yng's list

many more great picks on Muddy's list and stackyourcream... my favorites now are ATPG and IPCS... excellent looking charts and good odds for shorting if the market is down today

Day traders making a comeback in volatile markets

2008-11-26T19:07:00.000-08:00

An interesting short read on Slate.com

link

Proof that Timothy Sykes is using SPAMMERS to sell his products

2008-11-25T22:00:00.000-08:00

Many who follow the Timothy Sykes drama know that there is an annoying acolyte, one Jeremy K, who is relentlessly spamming people trying to get people to buy Tim's products. Worse still, he uses a 'faux' spam site to lure unsuspecting 'prey' into a site that purports to be about deconstructing Sykes, yet instead leads one through a maze that in the end pressures the 'prey' into in fact signing up for Sykes' 'service'. As annoying as I found all that mess, I never thought much about it. However, after receiving a series of emails, which I describe below, I now come to believe that the 'Jeremy K' SPAM operation is in fact run by Sykes himself. The proof follows.

Here is a screenshot of the original SPAM: keep in mind, I put Jeremy K on my spam filter, so nothing from him should have gotten through:

All of that is one thing. Yet when I responded to this email, minutes later, Pallian responded acting like he didn't know what is going on:

In his defense, Pallian claims to not know what is going on. He implies that the actions of Jeremy K are 'rogue' in behavior. However, if you review the original SPAM, it clearly shows Pallian's email listed as 'Jeremy K'.

Let's keep an eye out for how truthful that is. We already have reason to believe that the Sykes operation has compromised its integrity; it once blasted Beacon Research (saying it 'sold its soul') but later accepted Beacon as a sponsor. Stay tuned.

Yes Pallian. I now have direct proof that you are linked to a SPAM site. If I can determine this is illegal, I will also look into Better Business Bureau practices about using SPAM and lying about it. Do you want to bank on whether or not this will be a problem for you? Then clear it up soon.

** UPDATE

Apparently Timothy Sykes doesn't care that someone is spoofing his email- Pallian at least acted concerned- he pretty much states his position in comments that he doesn't care. More proof that the two are actually connected in a working operation rather that as just an 'affiliate'. This certainly is sketchy behavior- just as sketchy as taking sponsorship money from a company that you once blasted as a SPAMMER- I guess it takes one to know one.

FROM THIS:

TO THIS IN A FEW SHORT MONTHS

Watches Monday Nov. 24

2008-11-23T19:01:00.000-08:00

DAC HALO PLD TRMA YRCW HUGH RLF RPF AMCC CPE IPG AMCC STXS

DAC 87/77

HALO 87/40

PLD 85/36

TRMA 85/57

YRCW 85/57

HUGH 85/50

RLF 82/33

RPF 82/40

AMCC 82/43

CPE 80/43

IPG 82/26

AMCC 82/43

STXS 75/33

And my pick of the day is: DAC

Muddy filter 3 day fail - JV modification

2008-11-23T12:19:00.000-08:00

I spent this morning analyzing the fail filter. Yes, this is how I spend my Sunday mornings. I believe Muddy said that the original intent of this filter was to look for weak stocks that were ready to pop. In that regard the filter selects for longer bottom tails than top ones as a sign of reversal. For shorts, we want the opposite- shorter bottom tails and less reversal. So I flipped the code to reflect that point. I only changed 3 words- you can copy the code below. I put this in a separate post so you can use both filters as you see fit. Very nice coding by Murknd.

set{x,count(volume 3 days ago above volume 4 days ago,1)*2} and set{y,count(volume 3 days ago above average volume(90),3)} and set{z,x+y} and z is above 1.1 and close 3 days ago had been decreasing over the last 3 days and average volume(90) 3 days ago is above 100000 and close 3 days ago is between 1 and 10 and low 3 days ago is below lower bollinger band(20) 3 days ago and count(close 3 days ago above open 3 days ago,3) is below 2.1 and day change has been below 0 for the last 3 days and set{a,count(volume above volume 1 day ago,1)} and set{toptail,high-open} and set{bottail,close-low} and set{taildelta,bottail-toptail} and set{b,count(taildelta is below 0,1)} and set{c,a+b} and c is above 0 and set{d,count(volume 1 day ago above volume 2 days ago,1)} and set{toptaila,high 1 day ago-open 1 day ago} and set{bottaila,close 1 day ago-low 1 day ago} and set{taildeltaa,bottaila-toptaila} and set{e,count(taildeltaa is below 0,1)} and set{f,d+e} and f is above 0 and set{g,count(volume 2 days ago above volume 3 days ago,1)} and set{toptailb,high 2 days ago-open 2 days ago} and set{bottailb,close 2 days ago-low 2 days ago} and set{taildeltab,bottailb-toptailb} and set{h,count(taildeltab is below 0,1)} and set{i,g+h} and i is above 0 offset is 0

** UPDATE

2 day and 1 day fail filters with JV modification

2 day fail

set{x,count(volume 2 days ago above volume 3 days ago,1)*2} and set{y,count(volume 2 days ago above average volume(90),3)} and set{z,x+y} and z is above 1.1 and close 2 days ago had been decreasing over the last 3 days and average volume(90) 2 days ago is above 100000 and close 2 days ago is between 1 and 10 and low 2 days ago is below lower bollinger band(20) 2 days ago and count(close 2 days ago above open 2 days ago,3) is below 2.1 and day change has been below 0 for the last 2 days and set{a,count(volume above volume 1 day ago,1)} and set{toptail,high-open} and set{bottail,close-low} and set{taildelta,bottail-toptail} and set{b,count(taildelta is below 0,1)} and set{c,a+b} and c is above 0 and set{d,count(volume 1 day ago above volume 2 days ago,1)} and set{toptaila,high 1 day ago-open 1 day ago} and set{bottaila,close 1 day ago-low 1 day ago} and set{taildeltaa,bottaila-toptaila} and set{e,count(taildeltaa is below 0,1)} and set{f,d+e} and f is above 0

1 day fail

set{x,count(volume 1 day ago above volume 2 days ago,1)*2} and set{y,count(volume 1 day ago above average volume(90),3)} and set{z,x+y} and z is above 1.1 and close 1 day ago had been decreasing over the last 3 days and average volume(90) 1 day ago is above 100000 and close 1 day ago is between 1 and 10 and low 1 day ago is below lower bollinger band(20) 1 day ago and count(close 1 day ago above open 1 day ago,3) is below 2.1 and day change is below 0 and set{a,count(volume above volume 1 day ago,1)} and set{toptail,high-open} and set{bottail,close-low} and set{taildelta,bottail-toptail} and set{b,count(taildelta is below 0,1)} and set{c,a+b} and c is above 0

enjoy.

Muddy filter 3 day fail

2008-11-22T20:48:00.000-08:00

Muddy posted this filter in comments, it's worth a blog entry for sure. This and other Muddy filters were routinely discussed on StockFetcher back in 2003-2005... I wish I had been around during that time. I'm still playing catch up. Luckily, Muddy is still around and still giving away his knowledge for free... and I will continue to take it and try to learn from it. My whole blog is dedicated to Muddy and 13th for their worldview of giving away knowledge for free, and of patient teaching and coaching. If you want something to be thankful for this week, let it be that.

Muddy 3 day fail filter

set{x,count(volume 3 days ago above volume 4 days ago,1)*2} and set{y,count(volume 3 days ago above average volume(90),3)} and set{z,x+y} and z is above 1.1 and close 3 days ago had been decreasing over the last 3 days and average volume(90) 3 days ago is above 100000 and close 3 days ago is between 1 and 10 and low 3 days ago is below lower bollinger band(20) 3 days ago and count(close 3 days ago above open 3 days ago,3) is below 2.1 and day change has been below 0 for the last 3 days and set{a,count(volume above volume 1 day ago,1)} and set{toptail,high-open} and set{bottail,close-low} and set{taildelta,bottail-toptail} and set{b,count(taildelta is above 0,1)} and set{c,a+b} and c is above 0 and set{d,count(volume 1 day ago above volume 2 days ago,1)} and set{toptaila,high 1 day ago-open 1 day ago} and set{bottaila,close 1 day ago-low 1 day ago} and set{taildeltaa,bottaila-toptaila} and set{e,count(taildeltaa is above 0,1)} and set{f,d+e} and f is above 0 and set{g,count(volume 2 days ago above volume 3 days ago,1)} and set{toptailb,high 2 days ago-open 2 days ago} and set{bottailb,close 2 days ago-low 2 days ago} and set{taildeltab,bottailb-toptailb} and set{h,count(taildeltab is above 0,1)} and set{i,g+h} and i is above 0 offset is 0

I'm really interested in talking to Muddy about how he analyzes upper and lower tails on candles.... perhaps there is something that can be put into calculator form... I'll update if I ever come upon such information.

The state of the blogosphere / Watches for Friday Nov 21

2008-11-20T20:25:00.000-08:00

The sign of a mature blogosphere is that different blogs each find their own niche so that they all work together to make the collective more informative and interesting.

In that regard, my niche may involve picking highly likely stocks to short that aren't based on recent strength, like Muddy and Timothy Sykes like to do. That is a great strategy that I like to follow as well, but if we all post the same watchlists then we aren't really working in symbiosis. In these market conditions, I find it somewhat astounding that traders would routinely ignore stocks that are steadily in decline, since that is where the majority of the market is. However, groupthink is easily created and difficult to break, especially when the groupthink involves a legitimately good idea.

Perhaps my ultimate role in the stock blogosphere may be to help devise simple calculators to help traders make more informed decisions about the trades they are making. The goal is to use the available information to the trader's advantage without getting too bogged down in statistical theory and the misguided notions of automated trading, which is part of the reason Avery Horton Jr. is so unpopular in certain trading circles, besides his personality flaws. I believe strongly that there is valuable information buried in the charts that is helpful to traders but is too sophisticated for the brain to analyze quantitatively, whereas once the trader has access to that information explicitly he/she may decide upon another course of action or at least verify the intuitive feelings they have about the trade. Technical indicators are an attempt to provide this information, but they all fall short somehow, leaving the serious trader wanting for a more reliable source for their upcoming decision making. Maybe stats can help in that regard; hopefully the idea of using stats in trading decisions hasn't been tainted by the unpleasant internet presence of "The Rumpled One".

That being said, simply listing the stats for my watchlist is useful but occasionally I should add some analysis as well.

AA EMC XLF LUV AMD C UYD BAC SSO

AA 81/31

EMC 81/26

XLF 81/37

LUV 81/26

AMD 84/53

C 74/47

UYG 71/37

BAC 74/32

SSO 77/16

So far I have discovered that the 80% mark is a meaningful threshold for solid performance as expected on a $DJI red day. Even stats as high as the 70's are not reliable as can be gleaned from an analysis of my previous watch lists. As you can see from the second part of the stat, most of these picks should be abandoned on a strong market rally day. That is the reason these stats were created in the first place. Change your strategy or stick with stocks that have a 'reliable' record of failure in the face of a strong headwind. In this regard, these kinds of stocks should be watched carefully when the overall market reverses intraday. An intraday reversal should be viewed in some ways as a market 'up' day. I will have much more to say about this situation in future posts. Also in the future I will post long watches on market rally days as well. Without running extensive scans I will say that LCC AMR UAUA are poised for a rally on the next strong day.

** UPDATE

I don't know how to say this any plainer folks. When the market flips, use the opposite indicator as your guide for shorts- or even better, use the lower number as your guide for longs, since the opposite action is inferred in the second statistic. Let's go through this again.

AA 81/31

EMC 81/26

XLF 81/37

LUV 81/26

AMD 84/53

C 74/47

UYG 71/37

BAC 74/32

SSO 77/16

AMD and C were the best probability shorts going into a market rally. The numbers reflect that. Let's look at other play options.

The bold number is the probability of shorting success on a $DJI green day- the inferred statistic is the opposite number, namely the probability of success long on a $DJI green day.

Those numbers are:

AA 69

EMC 74

XLF 63

LUV 74

AMD 47

C 53

UYG 63

BAC 68

SSO 84

Based on these numbers alone, I would have gone long on SSO. AA was a surprise gain and you can never really predict those, but the SSO return was solid based on the stats.

Watches Thursday Nov. 20

2008-11-19T20:19:00.000-08:00

F GM PLD URE AMD HIG HST AMAT XLF AA

I don't even know if it is possible to get shares of F and GM but if ever there was a time it is now. Look at the stats:

F 84/68

GM 87/78

PLD 87/37

URE 87/42

HST 81/21

Most stocks change dramatically whether or not the market is up or down. Look at GM: 87% chance of red on $DJI red, and 78% chance of red on $DJI green. Amazing.

Use this list as a supplement to Muddy's list for short watches based on recent (unsustainable) gains.

** UPDATE

Pretty good so far... AMAT had the lowest stat with "only" a 77% chance of going red... all others were 80%+ ... PLD was the highest with 87% (and my pick of the day for that reason)

Update

2008-11-19T10:56:00.000-08:00

Had a good conversation with Ramtajogi last night, the calculators are in the works. I don't think we will set the world on fire but when we finally get to the holy grail, the Scenario Calculator, I think it will be pretty cool. Hope you agree.

ADR support and resistance StockFetcher filter

2008-11-18T21:44:00.000-08:00

For anyone who believes in the idea that average day range can be an indicator of intraday support and resistance (an idea I pioneered here), the following is a StockFetcher filter written to calculate these numbers. Not flashy but it saves me from having to use a calculator which I often find myself grabbing. Put in any stock symbols that you want to check; as many as you need separated by commas. This code was written by DaveH in chat; next time you see him tell him you appreciate his work (I do!).

SYMLIST(ABK,RDN,TMA) /* enter whatever tickers you want to calculate here*/
set{range1ago, high 1 day ago - low 1 day ago}
set{range2ago, high 2 day ago - low 2 day ago}
set{range3ago, high 3 day ago - low 3 day ago}
set{range4ago, high 4 day ago - low 4 day ago}
set{range5ago, high 5 day ago - low 5 day ago}
set{tot12, range1ago + range2ago}
set{tot34, range3ago + range4ago}
set{tot1234, tot12 + tot34}
set{tot_15, tot1234 + range5ago}
set{range_avg15, tot_15 / 5}
add column range_avg15 {5day_avg_range}
set{hi_range, open + range_avg15}

add column open

add column hi_range
set{low_range, open - range_avg15}
add column low_range

Watches Wednesday Nov. 19

2008-11-18T21:31:00.000-08:00

GTE BTIM IDMI HZO STXS FRPT MNI SMCI GBX

The highest probabilities on $DJI red are MNI STXS

Some short on weakness candidates are SKS IPG ABD

SKS 80/38

IPG 85/25

ABD 82/42

Watches Monday Nov. 17

2008-11-16T18:07:00.000-08:00

FUQI ONNN LIZ VECO PERY FONR BEE TLB OVEN CRBC

FUQI 61/32

ONNN 80/35

LIZ 66/30

VECO 90/40

PERY 74/38

FONR 50/45

BEE 72/26

TLB 75/45

OVEN 80/32

CRBC 66/35

The reason I sometimes post continual droppers is they have extremely high probabilities of going down on market red days based on the co-relation calculator (explained here). 90% probability for VECO on $DJI red is about the highest probability you are ever going to find (100 day period used here).

Don't read too much into the fact that several of these involve women's fashion/make up.

** UPDATE

Looks like the stats held up pretty well. The weakest ones, FUQI and FONR went green while the strongest ones, ONNN, VECO, and OVEN performed as expected.

Late day spikes

2008-11-13T21:00:00.000-08:00

This post is really an addendum to the one on what I look for in shorting candidates. Who knows why these late day spikes are so coordinated; just keep taking advantage of them while they happen. As per my short short watch list, here are NCT UMC RAS

This is what happened the last time NCT and RAS spiked:

History repeats itself tomorrow.

Watches Friday Nov. 14

2008-11-13T20:59:00.000-08:00

NCT RAS UMC CHIC PHH ANV TIV GSOL

NCT 74/27

RAS 85/36

UMC 76/30

ANV 66/42

TIV 77/40

CHIC 60/40

PHH 75/30

GSOL 85/27

All bets are off it the market surges again tomorrow.

** UPDATE

I hope people are making money from these calls- am I making them all in vain?

What I look for in shorting candidates

2008-11-12T19:23:00.001-08:00

Yngvai asked in the comments what patterns I'm looking for in my watchlists. I thought I would post it here.

1. long red candles - this sounds obvious, but it's not the same as high day range exactly. Some stocks have longer red candles than white, which skews their ADR down. I don't know if it's useful to calculate ADR separately for red and white candles, but it is something that I am investigating. (Perhaps another calculator? I already have calculator back log.) If you want to see an example of a chart where the red candles are consistently longer than the white, look at PHH:

2. short top shadows on the red candles - this is something that I am actually working on in calculator form. In short, the lower the top shadow on a red candle, the better probability the short will be on red (since you wouldn't short when the stock is green... I don't consider premarket leader drops in these situations- that is actually another category but one that this calculator will be able to analyze)

3. high probability on the co-relation calculator - this one is self explanatory. If the percentage is very low when the Dow is green, then I won't go into it on those days. Only stocks with good numbers (> 50% are considered when the market is soaring).

4. place on the chart - if you only screen for stocks that are up 8% on the day/15% in 2 days you can miss many good plays that have dropped but still have more down. FRPT is a good example of that today from my watchlist.

5. the propensity of a stock for multiday run ups/downs - this is something that you can get from just reading the charts but I want to make a calculator for it to make my life easier and give me more hard numbers to make an evaluation. If a chart is one day up you have to make a call whether it has the ability to keep going. If you wait only for multiday run ups (like I once concluded) you will miss good opportunities like NCT (that was as beaut). Again, it depends on the stock.

**UPDATE

more here.

Watches Wednesday Nov. 12

2008-11-11T20:20:00.000-08:00

HQS FRPT STEM HOTT BXG CPHL RDN NNBR CTCM XTEX

I'm still working on getting new calculators developed... I'm at the mercy of my generous programmers donating their time... it will be worth it for everyone in the end, so I know they'll come through.

stats for shorting on market red/green days (expressed as percentage over past 2 month period)

XTEX 85/85

HQS 70/40

NNBR 80/60

STEM 55/55

HOTT 70/30

CTCM 80/35

BXG 80/45

FRPT 73/50

RDN 63/45

this concept of market conditions affecting shorts (or longs) is explained here.

**UPDATE

Watches Friday Nov. 7

2008-11-06T20:58:00.000-08:00

DIN NAK VIP don't forget out those that are down but still way overextended

SNTS PNCL red floaters

BLT 7 days up

AEL NGA easy borrows, in play

SNMX 1 day up but reliable loser

and bounce watch:

ABK (how low can you go... 52 low is $1... right now at $1.52)

GLUU (the only liquid stock I could find with 9 red candles)

Watches Thursday Nov. 6

2008-11-05T21:03:00.000-08:00

ALU LNG ESLR RZ CVI RRR GPBC EGO PNK RCNI

All of these are excellent on $DJI red days, and decent on $DJI green days.

Also watching ABK long. It's getting down to where I find it extremely interesting. If it breaks $2 on the downside tomorrow I will watch carefully and may load up for a bounce/swing play (rare for me) up to $3.

** UPDATE

As successfully predicted by the gap stat calculator, ABK gaps down on huge losses. Now it sits in the 1.6's. This is why I didn't buy ABK yesterday.

The time has come

2008-11-04T18:29:00.000-08:00

From the title you might think this is a political post. Well I will save that for another time. What I need now is to move more of my analysis to automated form and also to make it more publically available. My overarching goal is to bring actual data to concepts that good traders know and evaluate instinctively and qualitatively, but not quantitatively. The reason some traders like to trade one stock is that they get to know its characteristics, including its gap tendencies, its intraday movement, and and its movement with the overall market. The good news is that these characteristics can be quantified and therefore evaluated and assimilated in less time. I call it the triumph of science.

This is not to say that trading can ever become automated. Despite what I said above, I believe just the opposite. There is no substitute for years of watching the markets and trading. But what I strongly believe (and what I hope I have already proven to you by the creation of the gap stat calculator and the co-relation calculator) is that quantitative analysis can bring powerful insights- the same insights that expert traders have always made, quietly and intuitively, without ever making calculations. There is more than one way to get to the end of the road, and I am trying to use what I know to get us all there sooner.

THE POINT OF THIS POST is that I need a programmer to help me, for which I am willing to pay. Ramtajogi, Slowpoke, Brian, this post is to all of you. Or anyone else that can help. Please email me so I can discuss my ideas in detail and work out some kind of arrangement.

Watches Monday Nov. 3

2008-11-02T14:38:00.000-08:00

PLA ASFI ANV MTG LNG TEN HTZ FDML ODP OMX

Most if not all of these are on Muddy's list also. Here are the stats for shorting on a $DJI red versus green day (explained here):

PLA 88/50

ASFI 72/61

ANV 70/40

MTG 70/55

LNG 77/44

TEN 85/50

HTZ 75/25

FDML 80/44

ODP 70/44

OMX 62/44

As you can see some of these remain decent shorts on $DJI green day (PLA ASFI MTG TEN) and some do not (HTZ).

New kind of calculator idea

2008-11-02T14:29:00.000-08:00

I want to combine my 4 day up filter with the co-relation calculator idea to have a calculator that can indicate how many times a stock has gone up consecutive days in a given time period. Ideally, the number of days up could be changed, as could the time frame. When a stock is on a multiday run, it is useful to know how many times the stock has a similar pattern in its history. If a stock is on a 3 or 4 day run up, and hasn't had 3 white candles in a row before, that is a different situation than if that same stock has had many 6 or 7 day runs. Both scenarios are valuable for longing and shorting considerations. The opposite, X days down consecutively, could be used to compile a likely bounce watchlist.

The ideal calculator would then have this format:

[X consecutive days {up/down} for stock ABC over timeframe Y days] = ANSWER

The best plays are unplanned

2008-10-28T08:49:00.000-07:00

This is why I could never run a TIM alert type service. You can't plan in advance for a stock like ACF that gaps down and heads lower on 25X normal trading volume. Of every stock play, this is my favorite, and I play them every time they come up like BQI and VSE. I wasn't logged in to the chat so I have no idea if this play was called. I will read the chat logs later tonight. This was also a perfect reversal play but I didn't play the long side. That is something I need to improve upon. The key to these types of plays is the trading volume. 15X or above and I know something bad must have happened. Muddy says the Scott hod list has made him lots of money from spontaneous stock plays. I have to say that Trade Ideas is my equivalent. I wouldn't want to trade without it.

Watches Tuesday Oct. 28

2008-10-27T18:14:00.000-07:00

HSNI DIN LNG HBAN DDS HZO NQN

HSNI can you say "triple threat"? my top pick

DIN $3 more to give on the downside

LNG may fall to earth like CQP did

HBAN not a junker per se, just a fin with wild day range

DDS bounce predicted by Muddy (how does he do that), gives more short opps

HZO everyday, quietly without fanfare, loses 5-20%

NQN 7 days up, manip looking chart... a little illiquid for me but if you like those kind go for it

Seriously

2008-10-26T19:03:00.000-07:00

If anyone out there knows how to get rid of nasty adware, please let me know. I've tried Prevx 2.0 (which I usually consider very good), Ad-Ware 2008, Norton, and AVG-antivirus, and nothing works. I'm a mac guy, I'm not used to this shit. This is why you should use macs. Unfortunately for me, I use Scottrade Elite (their 25k version) so I can use Trade Ideas, which I find very helpful. I run a Windows simulator in order to use Trade Ideas, which, unfortunately for me, acquires very real viruses.

Please email me at johnnyvento@gmail.com

**UPDATE

Thanks to the amazing kshelia, I used Malwarebytes. I think I really dodged a bullet on this one. The whole day went by and no attacks (I was getting 1 or more every 5 min. yesterday). I was prepared to reinstall Windows which would have set me back several trading days. You rock kshelia! But we knew that already!

Watches Monday Oct. 27

2008-10-26T17:26:00.000-07:00

LCC (and all other airlines) SPAR NKTR MTG FDRY

Just a few for now. Something terrible must have happened to FDRY on Friday (I don't really bother looking up news anymore since it doesn't affect the stock trade but I'm always curious). If bad news was a factor it could continue to plummet or rebound like FOUR. Either way it is in play. NKTR has to drop pretty soon. It's the Law of Balance after all.

Also, you guys just shorting off of spikes are missing stocks like MTG. It has a decent day range but at any rate many stocks are making consistent moves down day after day and shouldn't be ignored. There is a whole separate category of these stocks that includes CAR BC DDS WGO DAN FR GPI HZO... several of those have been mentioned in the chat logs if you read them everyday... just don't forget about them!

I mean, is anybody buying a Winnebago??? HAHA

Also, my Windows is infected with some nasty adware which may impede my ability to trade tomorrow. As if I need anything else to slow me down these days.

**UPDATE

CAR +10%

BC -6.38%

MTG -23%

DAN -14%

FR -13.58%

WGO +1.76%

GPI -4.56%

HZO -15.27%

DDS +35%

not bad... wowzers DDS

The Law of Balance

2008-10-26T17:17:00.001-07:00

The Law of Balance: Any sudden and large move in one direction must be balanced by a move in the opposite direction.

Stock trading seems to be a lot like physics. We all follow this rule implicitly when we trade but are there any guidelines that can be followed?

Not really, but I've developed one anyway since that is what I like to do, in my never-ending quest to find the most ideal stock trades. I'm sure Muddy laughs at me over this, as do probably several others.

My basic guideline is a stock becomes much more interesting when it has surpassed 5X ADR. That is, 5 times its average day range.

For instance, WRSP was such a great short twice this year because it normally trades in the range of ADR=8-12%. 5X ADR = 40-60%. From 7/16 - 7/23 it ranged > 100% and from 9/18 - 9/25 it ranged > 250%.

As you can infer, consistently high dayrangers have to become much more extended in order to become good candidates for likely moves in the opposite direction. LCC ranges around 20-35% so 5X ADR = 100-175%. From 10/10 - 10/22 LCC moved 300%. It was a good shorting candidate at any point beyond 10/17 (and I posted it as a potential short on the blog first for 10/17). Notice how Muddy only put it on his short list after it was 300%. He has such an intuition for these things.

LCC: the trade that followed every rule

2008-10-26T16:59:00.000-07:00

LCC was awesome Friday. I had shares ready to short but the best play ended up being long. Why was long the best play at the open and not short?

A huge market dump in the morning had many stocks sharply down at the open. First of all the five minute rule would have kept you out of the short until the stock decides which direction it wants to go. But the LCC open can also be looked at as an accelerated version of a reversal play. I've written several posts about this and this kind of play should be viewed as the exact opposite of the premarket leader drop. We all view the sharp rise of a stock at the open as a potential short off the highs- a sharp gap down should be viewed as a potential long also.

Also, having an idea of the dayrange as support should be kept in mind here. LCC lost 16% of its dayrange right at the open. Although it could easily have gone further down, once it made a significant move (>5% off lod ~ 6.35; or do like I do and wait 8-10% for entry ~ 6.50's) it was a reasonable entry long at that point. In addition, UAUA DAL NWA were all heading in the same direction. No need to wait for green here although a green entry also yielded good results. The red to green gave the stock even more lift.

Shorting candidates: the "Triple Threat"

2008-10-21T19:52:00.001-07:00

In an ode to Yngvaimalmsteve for his post on figuring out the parameters under which he will day trade financials: my "Triple Threat" for shorting:

1- at least 3 days up

2- over 50% on the Ramta/JV co-relation calculator (I need to take some credit for it since it was my idea)

3- trades in the millions (as opposed to the thousands)

Only one stock makes the cut: HOKU

If the market is red, these are highly desirable (but don't meet all triple threat conditions):

MPEL GRRF SCON QELP RRI TRGL NKTR TXCO DM

Airline puts

2008-10-20T21:22:00.000-07:00

UAUA 12.67 12.5-strike puts $2.40

DAL 9.41 10.0-strike puts $1.55

NWA 11.43 12.5-strike puts $2.40

Tomorrow may be the time to strike.

Watches Tues Oct. 21

2008-10-20T20:42:00.000-07:00

These are some of the Muddy watches. The fractions represent the percentage of time the stock went red on $DJI red (i.e. the probability of success on a market down day)- the second number is the percentage of time the stock goes red on $DJI green. As I have discussed, the probability decreases, sometimes dramatically. The best shorts in a Dow up day are: NOW MPEL XJT followed by TMA XING QELP MDTL

NKTR 76/28

TOMO 81/43

NGAS 76/36

NOW 81/71

CYTK 71/29

TMA 62/50

EXTR 81/57

MPEL 71/71

ROCM 57/43

XING 81/50

QELP 76/50

XJT 66/65

BQI 71/43

GROW 71/29

MDTL 76/50

Watches Monday Oct. 20

2008-10-19T16:07:00.000-07:00

LGDI FCEL UTSI DAL AAI LCC UAUA NWA XJT

I still think airlines are due to come down, but I will be more enthusiastic to short them on a market down day. This may be the time to try an options play. DAL 10-strike puts are currently 1.90 and NWA 10-strike puts are 1.35. Most of the airlines are a 2:1 risk/reward short when the $DJI is red, the exception being XJT, a good chance on red (the stock) no matter what the market conditions and a decent day ranger. UTSI went red on red $DJI 81% in last 100 days.

**UPDATE

LGDI, which has the highest probability of going red on a market up day (read this post; download co-relation calculator here), was indeed the best drop. That's why it was listed first folks. Airlines are stubborn little ones so I keep stalking them... but I shouldn't try to predict ahead of time on these kind I suppose.

How market conditions change the risk/reward of shorts

2008-10-19T14:41:00.000-07:00

This is an observation that I have been working on for weeks and wondering about for months. Most traders have heard the adage that most stocks follow the market, yet this platitude is unhelpful and too overgeneralized to be useful. And what about the kind of stocks that we like to short, anyway? The junkers, pigs, etc.? Don't they trade independently of the market? The answer, like always, depends on the stock- and the numbers provides a useful insight into how and when to make trades and some surprises about whether or not the risk/reward is still on your side. Many times it isn't when you think it is.

To illustrate, let's take a look at my watchlist for potential shorts for Monday Oct 13. Of course Monday turned out to be a huge market rally (the biggest point gain in history) so what better to use as the most stringent conditions for our analysis?

Here is the results from that watchlist:

Not a great result for a list that was supposed to be for shorting. But one thing was missing from the analysis: I was focused on RSI(2), and while I believe that to be an important indicator, it is not a controlling variable. The more important controlling variable seems to be how the particular stock performs under general market conditions. Now, thanks to the incredible RamtaJogi, we have the co-relation calculator.

The co-relation calculator is simple: plug in a stock and an index to see how the stock performs. Let's look at some stocks on the list and some old favorites to see what the numbers reveal.

By far, the most meaningful insight is that the risk/reward on most shorts changes dramatically whether the market is red or green. Here is ICO:

Shorting ICO when the $DJI is green as opposed to red changes your probability of success from 76% to 23%. That's a pretty dramatic shift and one that most people are unaware of. Similarly, here is PNX:

The risk/reward changed on Monday from 76% to 30% odds of success. I tried to short PNX that day and took a loss. I never would have made the trade if I had access to this information. As you can see from the update, both ICO and PNX finished up on the day. What about YRCW, you ask? It performed well as a short against the market. And the numbers reveal it:

YRCW shows a propensity for going red both on Dow up days and down days. The risk of shorting YRCW on DJI green was much less here.

Let's look about on one of our old favorites, SIL:

Again, a great independence shows that shorting on $DJI green is no more risky than on red. The astute reader might ask if the numbers are self-referential; are the numbers good because we are taking into account the incredible down move by SIL that we all took advantage of? The answer is no. Looking at earlier data that preceded the big upward move and subsequent down move, from July 1 to Sept 1, showed that the tendency was always there.

The independence of SIL was always there, making SIL one of the best risk/reward shorts on its huge run up in recent memory. This independence also makes trades like SIL good multiday holds where PNX is not.

As you can see, market conditions are much more of a controlling variable than RSI(2). Although this is just one consideration to make in the selection of stocks to trade (where the stock is in relation to its own chart is still paramount; and RSI(2) is still a good indicator of weakness to be used in making the best selection), I believe this is important enough to be considered very carefully.

Watches Friday Oct. 17

2008-10-16T21:55:00.000-07:00

RDN DAL AAI LCC TMA PNX

As regular readers know I predicted an airline bounce back in this post. I am now predicting a retracement/sell off of these conditioned on a red market, I will explain that in more detail this weekend in a series of posts. PNX down nicely, I expect more down, nothing earth shattering there but just too keep in mind that stocks down sharply can still be great shorts for 1-3 more days. TMA is still falling and could go under $1 in the near future.

Prioritizing shorts based on RSI(2)

2008-10-12T14:35:00.000-07:00

Here is a short watchlist and the corresponding RSI(2) values:

The 1.75 value for ZYXI seems like a mistake but that is what prophet.net is displaying. Monday we will see if this relative strength index correlates at all with subsequent price performance. I don't expect the matches to be perfect but let's see what happens. Perhaps stocks with RSI(2) in the 50's/60's/70's will perform better (i.e. drop more) than stocks that have run up with RSI(2) in the 90's like LEVP and FORD (which aren't on the watchlist). RSI(2) is an indicator that Muddy finds important but I haven't made a point to prioritize the watches based on weak RSI(2). Muddy has said before that stocks piercing UBB with RSI(2) > 90 is an indicator of strength. This will be a quick test tomorrow with a follow up.

"Where should I invest my money?"

2008-10-12T10:26:00.000-07:00

I've heard this question a lot lately. Unfortunately the answer is nowhere. Buying and holding is an extremely risky strategy right now and although eventually there will be historically low prices on certain stocks that will end up in retrospect looking like incredible values, I don't think the market has bottomed yet. People buying in right now trying to pick the bottom are getting their asses handed to them.

If you don't believe me, look at this chart for sector performance across weekly, monthly, and yearly time frames:

A sea of red in every industry in every sector. Not too many safe bets for buying and holding. (This chart can be reviewed in detail at Stockfetcher.com > click on the Sectors and Industries tab > view all Industries)

Read this article by Timothy Sykes about why he believes the bottom hasn't arrived yet in the market. I agree completely.

Unless you are day trading, the only way to make money right now is to short stocks. I would move any money in a 401k to a cash position.

The Daily Vento goes global

2008-10-11T15:57:00.000-07:00

This list is only the most recent 500 visitors. I do have a few people in India and Australia that are return visitors. And it crosses the entire political spectrum from Halliburton to NPR in Washington D.C. to someone at Apple Computer! They must have visited by mistake. Hey can I get the new laptop when it comes out?

I do wish I would get more hits from Iceland. Aren't you guys able to trade up there in Reykjavík?

** UPDATE

Oops. I guess not.

Watches Monday Oct. 13

2008-10-11T15:40:00.000-07:00

ZYXI YRCW UCBH NCT PNX ARQL ICO OWW MKTX

Some really nice plays came out of the manic market on Friday.

Although ZYXI somehow manages to finish with small gains lately, it is seriously testing $4. YRCW I will take my revenge on Monday when it cracks for the second time. NCT and PNX both went up $2 in the last hour of trading. Needless to say I don't think they will hold.

Be prepared for opening sell offs followed by bounce rebounds. Some of the patterns are mutating in these markets but the basic strategy of shorting these run ups remains solid.

**UPDATED

more added

Are the days of relaxed shorts over?

2008-10-10T18:56:00.000-07:00

Probably not. But just because some of these stocks are pigs doesn't mean they can't gyrate unexpectedly. Here's ISSC from my watchlist:

Even my 5 minute rule didn't help today, because shorting off the spike just lead to more spikes. I covered for a loss even though perhaps I should have held, I don't believe in risking even more loss when a stock looks like it is going green on the day.

Also YRCW:

I loved the huge red to green action in the morning and if I were in the chat I would have mentioned it. I got a great entry off the spike and was all set for a great short. However what was supposed to be a relaxed short turned into a scramble to cover just to break even at the end of the day. I made a good entry but got caught in the unexpected end of day rally. My goodness.

Nice plays on RDN and LCC long. I've been expecting an airline rebound after they've been so beaten down and they didn't disappoint. Watch LCC UAUA AMR for long rallies again on Monday.

Watches Fri Oct. 10

2008-10-09T20:27:00.000-07:00

MGI ISSC GFI LBAS

First two are Muddy watches

GFI another precious metal stock (anyone remember SIL?) bought into on the hype of the devalued dollar

LBAS crazy manip chart earlier in the year, looks ready to drop again

**UPDATE

nice picks, if only johnnyvento listened to johnnyvento more often (to be fair, I couldn't get MGI shares and the YRCW play looked too good to pass up... and it was a good play... I just held too long)

Watches Wed Oct. 8

2008-10-07T19:35:00.000-07:00

UAUA AMR LCC AAI XJT

A different approach tomorrow. Airlines are a good proxy for banks in terms of investors losing faith in a downturning economy. I still haven't found an indicator to give me a way to link a stock to a particular index. I really believe this would be an extremely useful indicator for many stocks especially airlines, oil, and banks. I need more time or more access to smart computer programmers to figure it out. Anyway, these stocks tend to move together and with the overall market so if tomorrow is bloody and I don't see any other compelling shorting opportunities then I may jump into some of these. Remember to leave some capital for plays like DNDN, AGIX, GGC, and whatever else comes up off the hod list. See you tomorrow! (Hopefully).

I want to mention XJT specifically, it is already cracking, the reverse stock split is not holding. I always regretted not shorting XJT down from over $1, now I have my chance. As of tomorrow consider me a long term holder of XJT short, the same way Muddy is holding SIL.

Off day

2008-10-07T16:07:00.000-07:00

I couldn't trade today, what I mean is I was too tired/sick to really concentrate on it so I passed. I rarely miss trading days in fact the last day I outright took off was July 28, I remember because I missed the epic KEM short (looking at the chart it seems to have big red candles after huge gap ups, I keep missing them because most are low volume). Anyway I suppose getting up at 4am to prepare for trading and then working until 7pm is starting to get to me, but I won't mention it anymore because you are not coming here to hear me complain. Without even reading the chat log I predicted that the room would be playing GGC and AGIX, I saw them move myself and should have jumped on them both but I just couldn't put the right concentration into it. And I couldn't get DNDN shares either (I'm sure they were all gone yesterday). This is what keeps me from trading full time, oh yeah and the fact that I'm not in the same universe as Muddy/13th ha.

Hope you all did well today.

Watches Monday Oct. 6

2008-10-05T17:44:00.000-07:00

FEED COIN GBRC NXTM EPIC

Monday is a day I believe that will send already red stocks further into the red. Although run ups provide some of the best shorts, don't forget about the junkers that have already started to fall. Will post follow up.

GBRC nice bounce back up, sure to fall again, already red floater of sorts

still in NXTM but think it could have another big down day, maybe not too late to get in it

FEED and COIN are huge down, but still are good shorts on red in my opinion, don't forget these classic junkers even though they haven't run up lately

**UPDATE

got out of my FEED short with decent profit, but my trade was interrupted yet again by the trampling of the Sykes followers... I thought it was strange that it was running up, now I know it was at least partially artificially induced. The bounce off 5 was probably real, but after that, well, you can decide.

other stocks, i.e. COIN which was not a TIM alert, fell as expected. As did GBRC and EPIC. Nice. Took NXTM at 4.20 for great 2 day gain.

The 10/60 cross (how indicators work)

2008-10-04T23:11:00.000-07:00

All indicators are themselves lagging indicators, meaning they are derivatives of price and volume. The 10/60 cross is useful in many respects because it smoothes out the data coming from the chart and thus can provide some perspective about what is happening to the stock. Remember the indicator will be much slower than the actual movement of the stock price, so you can be aided by it or hindered by it depending on the circumstance. Let's look at the ABK chart recently:

The 10/60 cross into the entry was decent because the gap up and retracement provided a confusing signal but the following run up confirmed the move nicely. The 10/60 cross kept you out of several potential sells on the retrace. However a sell on the retrace below 4.00 was not bad move in this situation since the exit signal of the 10/60 cross was far less than the ideal sell price and the sell should have been triggered on something more like a 4.00 fail than the 10/60 cross below at 3.85 (that would have likely been filled at 3.65).

This underscores the point that the 10/60 cross is only a guideline and cannot be relied upon for precipitous moves in the opposite direction but can be generally relied upon to filter out noise moving in the direction of the trendline.

Here are two examples of my SIL entry short:

I have already mentioned my entry into SIL short and you can see its relation to the 10/60 cross. Waiting for the cross here would cost you a big move in your direction.

My 2nd entry into SIL short was in the 2.4's from this chart:

Again, ahead of the indicators but they are useful for smoothing out the data, just be aware that you are literally 'behind the curve' when using these.

The best shorts

2008-10-04T22:57:00.001-07:00

The best shorts are from the multiday up charts. Am I just now coming to the conclusions that Sykes has already found? Possibly. The difference between me and Sykes is that I think there are good trades to be made every day, and also day trading the high day rangers. However my recent stats from the Muddy picks as well as my own stats on 4 and 5 day run ups seems to lead to the same conclusion: wait for the best opportunities.

Greed kills

2008-10-04T22:22:00.001-07:00

When should you exit a profitable trade? This is a good problem to have but I see many people including good traders that I know have genuine angst when they lose profit on a winning position. Apparently it is just as painful to lose profit as to incur a loss, it feels the same so we will leave it to the professional psychologists to analyze why that is, I will concentrate on the charts and what you and I should do to not find ourselves in this position.

For shorts of 'junker' stocks like the ones we like to play, I find that the safest position is to take it 2-3 days down, and 4 days is a bonus. Do not try to take it down more than 2-4 days unless you are prepared to hold it for a longer term, which may turn out to be a successful long term strategy but goes against my personal strategy of making the most out of the trade and moving on. Unless you have excess capital to apportion to the position, don't try to ride these positions for a week or more unless you are prepared for the long term.

Let's look at a few winning charts from the past few months.

Clearly, the play on these shorts is hold for several days but at some point holding too long is a detriment- some of these clearly rebound on the 3rd, 4th, or 5th day- so how do you tell the difference between a junker that spikes up in the morning and crashes later versus one that will genuinely spike up and run?

Answer: you don't, unless you are very familiar with the stock, and that is still no guarantee. Hold for 2-4 days maximum and don't get caught in the reversal. For WRSP, although lately holding the short is a good position, earlier in the year closing after 3 days down was the perfect play. Closing after 3 days down would still give you most of the gains here without the risk of a run up.

The reason I bring this up is because of SIL, holding for 5 days was an incredible play, but at that point should have been recognized as being beyond the bounds of any reasonable trade, look at the chart and see that anyone in their right mind should have closed out at 1.65 after 5 days down, here is a case of epic greed taking hold, anyone still holding is waiting to get back to where they were after 5 days down, just don't be greedy and you would have already moved on to the next play, ha.

Upcoming posts this weekend

2008-10-03T21:50:00.001-07:00

Greed kills...

Best short opportunities

My thoughts on the 10/60 cross

Watches Fri. Oct 3

2008-10-02T20:17:00.000-07:00

SPAR NXTM RZ

Still watching SIL.... may jump back in ("I don't know how to quit you")

Also, main reason for post is that I'm testing some options strategies to be played simultaneously along with shorting the stocks... right now NXTM 5 puts at .90... will update with results

**UPDATE

nice drop on NXTM....

as expected, the 5 strike puts went from .90 to 1.45 on the drop (a 60% gain!) but the spread is ridiculous, prohibitively so. I knew this was too easy.

Watches Thurs Oct. 2

2008-10-01T21:13:00.000-07:00

CYPB RZ CALC BRCO EPIC UCBH

The first ones are continuation watches from darkside, remember to keep watching

EPIC hasn't held 9 since its big gap down in March... right now at 8.92

UCBH can't make 3 white candles in a row of late... guess how many white candles it has now

SIL update

2008-10-01T10:33:00.000-07:00

Closed SIL today as I mentioned yesterday, got out in 1.80's, looks like a good exit on my part. If SIL runs again tomorrow (I predict gap up and another run towards $3) then will look to reshort. I'm also considering an options play here. Unlike most of the junkers we short, SIL has options available since it trades on AMEX. Will fill in the details if it looks interesting.

The perfect reversal set up

2008-09-30T16:35:00.000-07:00

I tried 2 scalps today, one off WB and one off AMR. The WB one was messed up from the start- I had to use a 1 minute candle because the Scottrade chart was messed up and I only clipped it for .11. I bailed when it failed to cross 3 only to see it take off later. Instead of chasing it I moved on. People are getting burned by banks left and right. However AMR looked like the perfect reversal set up- I posted about that here and here. However I've been a little shy about playing these ever since I was so horrible at predicting the ABK bounce on the day it got crushed 80%. However AMR looked very good for several reasons. First, It was crossing back over 9 which gives it some new lift. But most importantly its cross over 9 represented its ADR support which I posted about here. With a high of 10.30 and low of 8.81 it had used up about 15% of its day range [10.30-8.81=1.49/10.16=15%] which is where this stock has been ranging (ADR5 ~ 12%; however it has had recent days of 15/16%). So the 9 cross looked really good. I also mention in one of those previous posts that this reversal pattern seems to hold up better in stocks over $7. Soon after it looked like I was wrong yet again- but no reason to sell unless it make new low below 8.81. Luckily the ADR support held and it took off. All I wanted was 9.30 but took it to 9.50's. Went to almost 10. Good play.

(Sep 30-11:07) johnnyvento: trying AMR off 9 bounce

Still in SIL, will probably close tomorrow, up over 3k

Thanks Daily Vento readers

2008-09-29T17:22:00.000-07:00

Yesterday was my highest number of visitors since the inception of the blog. Hope you continue to find it interesting and maybe useful sometimes. If you have any questions or suggestions for blog posts please email me at johnnyvento@gmail.com.

Will try to post something interesting next time to read...

Volatile banks

2008-09-28T13:34:00.000-07:00

Bailout news could move some of these tomorrow. The whole list is a watch. Everybody saw what these can do on Friday with CCOW.

Sorted by highest ADR5.

watches Monday Sept. 29

2008-09-28T13:13:00.000-07:00

IDEV WRSP GBRC LSCG THM

Just a few. As I mentioned in my previous post, don't ignore ones that have already gone red some- I still think there is a big down move left in WRSP and GBRC. Also, IDEV could still be a good long tomorrow on volume although I will probably wait for the short especially if it cracks early in the morning. Also I 'm still in SIL and think it has one more day in it but will close if starts heading up. If you study the charts of WRSP POGS ZYXI you will see that 2-3 days is all you can expect on a major move but will stay in as long as it's red. I'm right on Muddy's and Sykes' tail with $1900 up on it so far. Right now they are both beating me ha. Would love to see under $2 on this one.

Dark Side trading: the stats

2008-09-27T15:41:00.000-07:00

A quick analysis of 120 stocks on the darkside short blog shows what we've known all along: the picks are fantastic. An astounding 83% of the picks have dropped significantly within 2 days of the target date. Only 7 stocks of my 120 sample (6%) failed to drop significantly after 5 days, and some of those even became tremendous shorts later on (see TUTR). Here is a sample of the analysis (target is the day of watch, +1 is next trading day etc).

But the purpose of this post isn't to simply proclaim how great Muddy is, it is to analyze the data to uncover some patterns and improve my trading. What I have discovered from this quick study is that some of the best shorts are coming off stocks that are +2, in other words two days after they are considered prime candidates. Look at charts from IMMR and NOVS from recent days:

This makes sense of course because many keep running up but I have to admit that I can lose track of some from previous days, not the ones that are running still but the ones just lingering, I tend to ignore them. This exercise has reminded me that I am missing some great opportunities.

Also, don't ignore the ones that have already started to drop. I still view GBRC and CPSS to be great short candidates on Monday off red with much potential downside still in them. Those can be missed on the 8% gain and 15% 2 day gain filters, but will still be caught using 50% gain in 10 days or 100% gain in 20 days filters.

One thing I want to do is clarify some of the nomenclature that comes up with these kinds of plays. The 'red' and 'green' terminology that Muddy uses to describe prices that are above and below the previous close price don't apply when the stocks gap up huge, so I will use 'red on day' to describe stocks that have gapped but are breaking down, similar to shorts off of premarket leaders, no need to wait until it drops below the previous day close although that may still be a safer entry. I will use 'green on day' for stocks like RDN that gapped down but had a huge run up, no need to wait for 'green' on those. For an example of 'red on day' see IMMR chart above, red on day almost the entire day but still 'green' from previous day's close. For an example of 'green on day' see RDN from Friday. I alerted at 9:50 am on the huge bounce from the volume spike (see previous post).

Trading to your ability and risk tolerance

2008-09-26T16:44:00.000-07:00

SIL has continued to be the gift that keeps on giving. I closed yesterday almost at its low figuring I could reshort it today. Luckily I was out on the way up this morning, I have difficulty holding when that happens even when I know it's going to come back down. Today I wasn't sure what would happen actually- I was all over the place thinking it could run again and thinking it would be a nice short off the spike up.

(Sep 26-08:47) johnnyvento: SIL way up... may be green day

(Sep 26-09:04) johnnyvento: SIL might be a good reshort off the spike up

(Sep 26-09:04) johnnyvento: will have to see

Why am I telling you all this? Because once SIL settled down it was clear which was it was heading, and I jumped right in.

Here is the chart:

Classic Muddy style is to go in on break of $3. This was a good play but it broke so fast then retraced that I wasn't sure it wouldn't start to run. After seeing how FRE got dusted on DC rumors I flinched that any kind of bailout news (bad) could send stocks like these soaring. Letting it settle out made me more confident that SIL would still be a good short for at least another day. With more confidence I jump in with 1 1/2 positions to make up for the lower range I am getting so it works out. Plus I don't have to survive the heart attack of being on the wrong side of the trade. The point I am making is, if you are not sure of the trade, don't get in. Works for me. Could it work for you as well?

Also caught RDN early off the huge spike.

(Sep 26-09:50) johnnyvento: RDN huge bounce

I'm not bragging, everyone in the chat watches RDN. I'm just saying to Avery Horton Jr. that it is useful to call them in the chat before they run up instead of after.

**UPDATE

By coincidence, Timothy Sykes has an almost identical post up tonight, although he doesn't really address the question of the entry, which is the most difficult aspect and what the letter writer asked for help on. Although this trade on SIL is on a different day, the thinking is the same as my first entry at 3.89.

update on Thursday watches

2008-09-25T21:33:00.000-07:00

GBRC yup

UQM yup

WRSP ha, wanted more run up, got it

SIL said more down, understatement of the year

FRG yup

JSDA short yup

MNKD short candle, told you

GBN boring now

VRML ha missed it, congrats to those in

DPDM will drop soon

HYDG told you to watch long, was up huge before drop

RFR scan streamlined

2008-09-24T21:41:00.000-07:00

If you use the RFR scan (Run, Forrest, Run) from StockFetcher by Avery Horton Jr. then you know that most of us have a love hate relationship with it. We love the scan, and appreciate TRO's efforts (if you don't know what TRO stands for don't ask) but we wish it could be simplified sometimes. Here is a simpler version that 1- compresses down to 2 columns 4-9% and 10%+ gains; and 2- filters out the volcnt below 100% and therefore obviates the need for the volzero column. Here is the truncated code:

set{volcnt, count(volume above 50000, 100) }
set{volzero, count(volume equal 0, 100) }

set{x1, high - open}
set{Long_Profit, x1/open }

set{C1A, count(Long_Profit > .04 , 100)}
set{C2A, count(Long_Profit > .09, 100)}
set{C0010, C1A - C2A}

set{D1A, count(Long_Profit > .09 , 100)}
set{D1020, D1A}

and add column daychg2
and add column C0010 {4_9}
and add column D1020 {10+}

close is between 1 and 15
average volume(90) above 50000
average volume(10) above 250000

volcnt equal 100
offset is 0

sort column 6 descending

Use it in good health, or at your own risk, whichever is more appropriate. (Code modified by Brian, another amazing member of the chat.)

Watches Thurs Sept. 25

2008-09-24T17:30:00.000-07:00

GBRC UQM SIL (more) WRSP FRG JSDA GBN (still watching)

Most have been mentioned in chat so no big surprises. Plenty of downside left in SIL in case you missed (but I don't think anyone did).

GBRC FRG love the price going up on lower volume.

MNKD also a watch, red floater now but didn't put on primary list because the red candles been short lately... love to see you prove me wrong MNKD.

Hoping WRSP runs up more.... be a shame if didn't.

Several others still on watch... VRML DPDM but not liking those illiquid ones lately... not moving nice i.e. stall or jump up and down like MKTY... SIL kind much better for me personally. But everybody has their own strategy to this game.

Also watch HYDG for possible long... could run tomorrow otherwise short on red if you like those sub-buckers.

Thanks Muddy...

2008-09-22T22:21:00.000-07:00

... for the incredible blog post, more than I deserve really. The more I learn your methods, the more I love them... and I love to contribute when I can. The pressure is on now!

And because of your nice 'alert' to my blog, today received a record number of hits. Muddy readers, welcome! The chat is rocking now!

More posts and updates coming soon, was hoping to get one up tonight but couldn't quite make it... I need some more data from today and yesterday. I want to discuss timing of trades... especially the psychology of small trading volume...

The Five Minute Rule wins the day

2008-09-21T10:17:00.001-07:00

I posted way back when about trading in the morning and how tricky it can be. Friday turned out to be a good lesson for that- or a hard one if money was involved. One thing that I think needs discussion is the psychology of the 5 minute chart. Looking at the open of WM, PMI, and RDN and seeing those huge white bars could make one think that they would keep going up...

However the 1 minute chart reveals the real story...

Although the 5 minute chart is useful most of the time, trading at the open and premarket leader drops requires the most precise timing. Switching to a 1 minute chart may help clarify what is happening in the stock and help you make better trading decisions.

Uh oh

2008-09-21T09:18:00.000-07:00

As of right now I can't log into the chat. Can you guys try and leave me a comment? I guess I won't be trading with you tomorrow unless I can get it corrected. I hope I didn't get banned...

**UPDATE

looks ok for now

Watches Monday Sept. 22

2008-09-20T18:56:00.000-07:00

WRSP MNKD NOVS SPF VNBC GBN HTM

WRSP gotta love it, ran huge in past, Friday almost straight up, possibly more to come. Could run huge again Monday, wouldn't be surprised. Going to be an epic short either way.

NOVS haven't run the hard numbers but looking at the charts the last 4 days looks like one of the biggest percent gain in this stock's history... need I say more

MNKD you don't even need to look before 9/16... but if you do you'll see 8/7

SPF a TRO favorite... shows up in chat to talk about it even when it hasn't moved at all... this time it's relevant

VNBC big runup past few days.. no great insight, just think will fall

TRE/GBN/HTM huge bearish doji/hammer candles... big drops coming soon I believe... played TRE but will get back in Monday

HSWI still in, more down looks like

Black Candle Friday

2008-09-20T18:10:00.000-07:00

The black candle is comparatively rare in candlestick charting. Used in multi-color charting, a black candle represents stocks that have closed lower than they opened (i.e. red) but still closed higher than yesterday's close, i.e. the price has still advanced. Friday had an extraordinary amount of black candles- here are a few just for starters:

RDN DSL TSFG FED FHN CRBC CORS STSA PMI VSE WM SFI SBKC

And those are just the high day rangers. A strange mix of irrational exuberance and pessimism produced Black Candle Friday. I can only assume the pessimism will continue on Monday. I'm expecting a big red day.

WRSP epic day... and don't follow me on financials

2008-09-19T19:58:00.000-07:00

Well I think today which everyone was excited about turned into a bloodbath for many people, including a few in the chat. Turned out some of the best plays were from the good old Muddy/13th style. Several nice ones from the watchlist including ANPI, AKNS, and HSWI (which I am still in) and I caught WRSP on its first spike up before 11am.

(Sep 19-10:55) johnnyvento: WRSP huge spike up

(Sep 19-11:07) Reaper: WRSP was spike on news of deferring debt ... sort of like CHCI: http://biz.yahoo.com/bw/080919/20080919005111.html?.v=1

(Sep 19-12:30) johnnyvento: WRSP more up 36%

(Sep 19-13:54) Reaper: WRSP nhods 1.38

(Sep 19-13:54) Muddy: WRSP great job

(Sep 19-13:58) Muddy: WRSP geez

(Sep 19-14:03) Muddy: 1.50 WRSP

(Sep 19-14:03) Kris: WRSP 1.53

(Sep 19-14:04) Muddy: on fire!

(Sep 19-14:08) Reaper: WRSP 1.75

(Sep 19-14:09) Muddy: holy cow

(Sep 19-14:09) johnnyvento: WRSP weeeeeeeeee

(Sep 19-14:09) Muddy: unreal call

That "huge spike" (arrow) looks like a blip compared to the rest of the chart. WRSP even though it faltered ended up finishing near the hod and up 101% on the day. Not bad.

Here is WRSP chart for your amusement:

My predictions on the financials were less than stellar. I was decent at calling RDN as a scalp but kept saying it would make new highs and it never did. And I was horrible at predicting a bounce on ABK, it crashed through any support it had using any method, it had its highest day range (80%) in over 2 years, if not ever, this is one for the record books.

New statistic needed

2008-09-18T17:41:00.000-07:00

A commenter noted that the shorting on weakness trial didn't work in the face of a +400 Dow up day. That leads me to an idea that what I need is a statistic that correlates how a given stock moves with the market. Perhaps the advance/decline daily correlated with green or red would be enough. That will give me an indication of how independent a stock is. I've had the opinion that a lot of the ones I trade don't get influenced by overall market conditions but I need to turn this feeling into an actual number that I can reference. This will be a project to write the filter over the weekend. If anyone has an idea what would be a good indicator or how to write the code, please leave in comments.

Short on weakness trial #2 for Thursday

2008-09-17T20:00:00.002-07:00

NT NCC SOV DYN CNO SIL AVF KOG KFN TRID

A watchlist for tomorrow. Although I like best the high dayrangers that are red on huge volume- this could be considered an inversion of the Muddy methods- these are 15% down in 2 days and down on huge volume increase, again just reversing the volume blast filter that Muddy uses. The nice thing about his methods is the ability to spin off different concepts- we'll see if any of this works.

*UPDATE

Ha I couldn't have been more wrong... should change the title to Long on weakness strategy... yeah that's it!

CNO amazing! Missed it right under my nose

Update on Monday watches

2008-09-17T20:00:00.001-07:00

Yup.

VSE splat

2008-09-17T15:17:00.001-07:00

Another great high volume panic short found today- does this chart look familiar?

(Sep 17-09:36) johnnyvento: VSE splat

Very similar to the high volume selloff of BQI that I caught last Wednesday. Hump day must be Panic Selloff day... anyway these are the kinds of plays I've been good at catching lately, this one was epic, down 73% on the day but if you subtract out the gap down it still dropped $2.2- an amazing 61%. I promised to find these kinds of plays that no one else seems to notice, CABeachBum also noticed it 8 min later either off my call or on his own, he's got good eyes that one, got the shout out from Muddy on the blog- better than me, I have yet to receive a shout out from Muddy. Maybe in time it will come. Until then I will keep trying to find good plays.

Looks like lots of people making good trades lately, congrats.

Penny stock worth watching

2008-09-14T18:38:00.000-07:00

I don't play these that often but WYCT is definitely in play now- if it opens tomorrow on even higher volume than the previous two days then it could be a runner. Sometimes the third day up can dwarf the previous two as more people find the stock and get interested. (For example of epic third day charts and the original scan see this post.)

WYCT is clearly being hyped, and therefore is very dangerous and should be approached with adequate caution. If the volume isn't there and a strong open then forget it. It will turn into an fantastic short at that point. And this should go without saying, but since I don't know who is reading this blog then I will state it clearly- Do not play this stock without a day trade, or the ability to watch it continuously.

Watch Monday but play at your own risk.

Watches for Monday

2008-09-13T11:44:00.000-07:00

COIN/COINW/COINZ QCOR BBND CRXX

Of the COIN family, I like COINZ the best. It has the cleanest breakout and looks ripe for a fall. Also notice that the red candles have no top wicks- meaning when it goes red it tends to go downward on the day. Also the doji candle Friday may be forshadowing a down move.

QCOR has been on an amazing run and now has made new 52 highs. This is the same situation MITI was in and made for several good shorting opportunities.

I called QCOR Thursday pretty early on the breakout:

(Sep 11-09:59) johnnyvento: QCOR up nice on vol spike 5.75

(Sep 11-10:00) johnnyvento: could run maybe

I haven't made a lot of calls in the chat recently. I feel no need to call stocks like RDN/ABK/PMI/FRE/WM that everyone is watching already. My role is to try and uncover great plays that no one else catches. I did this with BQI and QCOR in the past couple of days. Less quantity and more quality is my goal here.

BBND another one to watch close. It had an amazing run of 10 days up in April. However the recent 3 day run is actually a larger percentage move. Due for a down move soon.

CRXX has been amazingly consistent in the $3-4 range. Shorting red on $4 seems to have been a winning strategy the past 6 months.

BQI spectacular

2008-09-10T14:03:00.000-07:00

I'll write a separate post detailing the shorting into weakness experiment- but the results alone from BQI make me believe that this is a concept worth following, at least in the current market conditions. BQI from my short watch list posted last night:

(Sep 10-09:39) johnnyvento: BQI under 3, dropping

(Sep 10-09:40) GS: BQI-super nice fall

(Sep 10-09:49) johnnyvento: BQI vol 2.7's

(Sep 10-10:02) FortunateSon: BQI under 2

(Sep 10-10:03) johnnyvento: BQI spectacular

(Sep 10-10:03) Androo: BQi crazy, good one JV

(Sep 10-10:03) Laura: BQI nuts

(Sep 10-10:04) Laura: yes, BQI good catch JV

BQI hit a lod of 1.68 before bouncing all the way back to 3 again.

Strategy, sign of the times, or contrarian indicator?

2008-09-09T21:23:00.000-07:00

If there ever was a time to test the shorting into weakness strategy, it's now. Earlier, I indicated that BFRM might be a good short- that was based on the fact that the end of day selling looked panicked. BFRM went down some, but ended up rebounding so the eod sell there wasn't indicative of anything. In science we call that an n=1. For Wed. we will take a larger sample size:

ICO BQI IAR CPST RDN MTG ESLR LMC PBY

Of course this slightly larger sample size may still be only indicative of focalized market conditions. But let's look at the stats and set up a repeat experiment in the future.

Tests like these make me realize how difficult it is to come up with consistently winning strategies. I could spend 43 years trading before I come up with my own that work. Best use his.

Shorting from lower Bollinger Band

2008-09-07T19:33:00.000-07:00

Awesome post from Muddy tonight, hopefully he will post some code that he uses, otherwise I will experiment with variations of SF scans that involve percent gains or days up from LBB, very nice insight from Muddy, hope there is much more to come!

watching PCYC close tomorrow, rode this one long a few months back for an awesome gain, hard to believe it's in the 2.50's, don't think that will last.

Prediction: PCYC will be a TIM alert...

Patience pays

2008-09-05T21:58:00.001-07:00

In case you were thinking I was an expert trader who never makes mistakes, let me disabuse you of that notion.

Two days ago I was set to short URRE when my autotrigger got activated at 3.30, man I was stressed to see it go up to 3.68, I almost had a heart attack, but it dropped and eventually fell below 3.30.

Today I was set to short TGIC and had the short order forced in at 3.80. Since the open price was 2.80 I felt that this was no way close to being triggered. Well if you watched it you know that my price got triggered within 5 minutes- holy crap. But as fast as it rose it fell back again to below 3.80*, I felt stupid telling Muddy that my short price was 3.80, that is like failure. Someone shorted it from the hod. I think that is reckless, but nonetheless this trader nailed it and grabbed the most gain.

*Updated to fix prices

Simple stat but effective

2008-09-04T18:20:00.000-07:00

4 day breakouts from 1 day ago: 121

5 day breakouts today: 18

That means 103 stocks (85%) went down after 4 days up.

Here is the code for 4 day breakout:

show stocks where price is above close from 1 day ago

and close 1 day ago is above close from 2 days ago

and close 2 days ago is above close from 3 days ago

and close 3 days ago is above close from 4 days ago

and price is between .3 and 10

There may be a more elegant way to program it, but that is what I figured out.

add a column for average day range and sort for the highest rangers. Then watch for red.

Updates

2008-09-02T23:10:00.000-07:00

Short BPOP 9.20, we'll see how this goes. Has a tendency to gap down when it makes gains and it didn't hold $9 very well before. BFRM disappointing today, not much movement. Will keep on watch. MITI trading like a normal stock now, will watch still, long biased here as opposed to most of the crowd.

Tomorrow the list on darksidetrading looks outstanding, my favorites are COIN, WMAR, STSI. STSI is making new 52's and this is not a normal ideal shorting condition, will watch close but I think will still pull back some since it has run up so fast.

Shorting into weakness/watch for Tues

2008-09-01T11:22:00.001-07:00

Although some of the best shorts come from breakdowns of artificially extended longs of the ZYXI/STXX/POGS/WRSP variety, in some circumstances some great shorts may be had from stocks that have already dropped sharp and will therefore be missed on scans that only look at percent gains. Of course these stocks could rebound but this is the same as waiting for the short from stocks that keep extending, in both cases the short is only good on red. My first test case (on the blog) is BFRM - already down big from $5, if you look at the intraday chart the stock dropped .60 in the last 15 min. on huge volume in what looks like a panic selloff and only appears to have been stopped by the closing bell. I'll watch close Tues for red and will probably jump on this at the open short, this one could break its 52 week low of 3.43 as early as tomorrow, if so there could be even more downside.

Using StockFetcher scans intraday

2008-08-31T08:41:00.000-07:00

One thing I am experimenting with is using StockFetcher scans intraday to find trading opportunities that would realize themselves too late if they were discovered after market close. I can immediately think of 3 reasons to use SF scans this way:

1- to look for strong stocks at the open that have pulled back and could become shorting candidates

2- to look for liquid penny stocks that have made huge (>75%) gains in the morning and could become intraday shorting candidates

3- to look for stocks going into the closing hour on the high of day to look for potential buys into the close

I have experimented with each of these before but now I will more systematically test each one and post follow ups on the results. One of the challenges with SF intraday screens is that the results are 20 minutes delayed so this may decrease the usefulness somewhat. If I find any of these screens particularly interesting or useful I will post the code that I use. I also welcome you to post in the comments any idea you may have for an intraday screen.