Watches Friday Nov. 14

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

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

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

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

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

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

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).