I managed to squeeze out a .14% gain today. I'll take it.
The weekly chart of the S&P 500 looks pretty ugly.
However, if I would have followed the trends (trend changes indicated by arrows) and sold when the trend flipped to the downside and bought when things were trending up, I would have ended 2007 with a 53% gain (instead of 40%). This year I'd be up nearly 20% instead of down 12%. Interesting stuff.
When I saw the premarket numbers, I must admit I was chomping at the bit.
From Reminiscences of a Stock Operator:
"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!"
I haven't got the skill of sitting tight quite down yet. If I had I'd probably be up 20% for the year. But we all need to be able to adapt to a changing market and be able to accept the fact that it has changed for now. It will pass, but right now doesn't seem to be the time to be aggressive.
It seems like there may be some opportunity out there this week with as oversold as the market is now. But I thought that last week as well, and that didn't turn out too pretty.
There aren't really any stocks that jump out at me in the Zweig screen this week, so I'll probably use this week as an opportunity to learn how to short a stock. I've never done it, and I know that puts me at an extreme disadvantage (especially in this market).
We're officially in a down-trending market which hasn't happened since 2003. That can't be good. Corey at Afraid to Trade pointed out to me that the S&P monthly chart looks eerily similar to the run up and subsequent sell off in the late 1990s and early 2000s. Time will tell.
I began trading in March of 2003, so I haven't had to deal with a down-trending market yet. I'm trying to quickly learn, but trading short doesn't come naturally to me for some reason. 
If your portfolio is suffering, you're not the only one. Both StockSuperstars which is run by AAII and the Prudent Speculator have suffered this first half of the year. I admire both of these services for their candid sharing of portfolio performance. Both services are extremely profession and trustworthy which is why I follow them now and have subscribed to them in the past.
But it's pretty obvious that even the professionals are having a hard time navigating this market
.
7-11 didn't bring me any luck today. I capped off an entire week of losses with a final -.23% For the week I lost 2.27% even though I held very few positions. If I had been fully invested in the Zweig RS 5 screen I would have made 2.54% even with a nearly 15% sell-off of AEHR. NSYS was the best performer in the screen with a 14.38% gain, but it was very thinly traded (less than 2,000 shares today), so I wouldn't have bought it anyway (I've got to find something).
You guys posted some great comments on the Zweig Screams post! I love discussion about different approaches. I wish I would have followed the advice of one of the anonymous posters and just played the screen this week!
I've decided to quit paying for Zack's Rank numbers for the time being. I haven't bought stocks lately based on Zack's Rank, and I think there are other methods to screen for stocks with earning surprises for less than $200.00 per year. StockBee has an interesting article in that regard.
So now that I am no longer a Research Wizard I won't be able to specifically screen for Zacks #1 ranks and will stop keeping track of the Zweig and Zacks screen from here on out.
Get it? "Screams" not "screens". Get it?! Whatever . . .
Anyway, I was cleaning up my portfolio tracking information (I used Smartmoney's excellent site) and found the Zweig screen from February which I hadn't deleted yet. Here's the thing. If I would have bought the Zweig screen (12 stocks) as it appeared at the beginning of February and held it until now, I would have gained 23.35%. Interesting.
Looks like a positive open today, but these last two days have been really goofy. We'll see where things go. I still think there is a lot of short term opportunity out there, but I'm still too nervous to be very aggressive. What do you guys think?
The bulls came rushing in, just as many had thought they would. Now well see if they have any traction. A small pull-back is natural in the next few days so don't flip out over a couple of down days. We have a set up for a bear-market rally, so I put some money to work this morning. We'll see how things play out.
Chris Perruna has a great article (if you're bored with this market) called the 10 Steps to Profitable Trading.
I use this chart as one of my market "health checks" to help determine where the market might be headed in the near future. Right now it says that there are so few stocks trading above their 50 day moving average that a bounce is likely soon.
I saw this chart on PitbullInvestor.com on Henry Ford's daily commentary. It always interesting (to me) to compare and contrast different things on charts. It sure would be nice to see the price of oil come down to "normal" levels again. Time will tell, but this doesn't seem the best place to buy oil stocks if you ask me.
This should be a sort of "recovery week" for the indexes. I expect that those stocks who were hit hard last week will show the strongest recovery this week (ie agriculture, metals and energy). I plan to lay low this week unless things go nutty. I've got one position which will probably tank. Good luck out there!
I'm a few days late, but I wanted to discuss the month of June.
Thanks to Seeking Alpha for this chart showing that this was the worst June performance since the Great Depression with nearly a 10% drop.
I began to get more defensive and stopped aggressively going long the 3rd week of June. I made a few mistakes along the way, but overall I'm pleased with my ability to limit my losses. For the month I was basically even. I was down about 2 times my risk for the month, but my tiny position sizes toward the end of the month saved me from big dollar losses.
The screens had awful months as well with the Zweig RS 5 screen losing 10.48% and the Zweig MACD screen losing a whopping 21.54%. Zacks and Zweig gained a bit, but only had one stock qualifying for one week during the entire month.
It looks like I didn't miss anything while I was gone. What a mess.
I have one open position now as I have stopped out of everything else. Everything on my watch list yesterday was down hard--like 3% or more. That doesn't make me want to jump back in any time soon.
I'm going to enjoy the holiday and regroup. Have a great 4th of July everybody. Enjoy the freedoms we have as a country!
I'm glad that one is over. My portfolio lost another 1.29% today as I continued to stop out of my last few positions. For the week I lost 2.18% which wasn't too awful considering what the indexes lost. According to Charles Kirk, the Dow dropped -4.19%, the S&P 500 declined -3.00%, Nasdaq -3.76%, and the Russell 2000 -3.80%.
The Zweig RS 5 screen lost 5.26% this week led by AEHR's 21% decline.
I'll be out of town until Wednesday, so I'm not sure if I'll be able to post (or monitor the market).
I'm trying to resist trading this morning. After an awful day like yesterday there are usually some stocks on my watch list that are ripe for the picking. I think it's better for me to wait a bit longer before I jump in full throttle.
We didn't see a bear capitulation yesterday so I wonder if we're truly done with the downside. Many good traders are seeing this awful month as a great opportunity to make some money in July. I agree with them, but I'm going to wait until next week before I get my feet wet.
The news this morning said that this is the worst one month drop (in June--thanks StumpJump) since the great depression. I guess there's nothing like learning how to trade in the worst month in 80 years!! Be careful out there!
What a day! Not much went right today for pretty much anyone (unless you were shorting). I came out OK despite being long (someday I'll learn to short). I lost 1.11% as the major indexes tumbled more than 3%. I'll take it.
So far this month the DOW has lost 9.3%. The good news for me is that I've lost less than 1% this month. In all my years of trading I have always lost more than two times what the indexes lose. I was 19% in the hole back in March.
That's been OK because I've usually made 8 to 10 times what the indexes gained (in the past few years). If I can limit my losses like this and keep the gains I make, I'll be a much better trader in the long run (and I'll make a lot more money). So for me, this month has a silver lining. I've done a better job at preserving my capital, and I'll live to fight another day when the market is giving me excellent odds.
I have no idea where we go from here. There isn't much good news anywhere so there is hardly anything to move this market upward right now. The media is wallowing in bad news, and the public is eating it up.
I'm not smart enough to know if things really are that dire. But I do know the market has been through worse things and it has always recovered very nicely for people who were willing to take some risks and who were patient enough to wait out the nastiness.
I had an OK day. I made about .35%. Around lunch time I was down about a percent and a half.
Tomorrow could be a bit of a disaster. I decided to hold RIMM through earnings and they didn't have very good results (missed earnings but made revenue). Oh well. I'll live to fight another day.
The Zweig screen had a pretty good day except for AEHR.
I've enjoyed reading Harry Domash's site over the last couple of years. He has a nice question and answer post this week.
I've changed StockPunk's Market Meter to "frowny face". Things suck.
Nearly all the stocks on my watchlist were down 3% or more today despite the overall market's modest decline. I don't know if that is a bad sign or a good one (do I ever?). My portfolio lost almost 1 percent today. I'm not digging this.
The Zweig RS 5 portfolio was down another 1.71% today.
We'll see if tomorrow brings some of the end-of-the-quarter window dressing that everyone's talking about.
The Zweig portfolio took a beating today. Even though the market traded sideways, the Zweig RS 5 portfolio lost 1.66%. Ouch.
My day went OK. I made .88%.
I withdrew some money from my portfolio for the first time in a year. Owning a house is expensive. I'd forgotten how much I dislike paying for heat, water, electricity, and property taxes. It's been over 10 years since I've paid for any of those things, so this will probably take some getting used to.
I'd like to get back to as few financial obligations as I can before I begin trading for a living. I'd like to have the house paid for, and I think that would alleviate much of the stress that comes from not having a steady income.
After a bruising end to the week I'm not so keen at jumping back in full throttle. The Zweig screen has 7 candidates this week which is half of its average. That may mean there is opportunity or it may mean that the market sucks.
Charles Kirk is hinting that conditions are ripe for a moderate rally this week. We'll see, but caution is probably the best way of traversing this market right now.
According to the Kirk Report--Since last Friday, the Dow declined -3.78%, the S&P 500 declined -3.78%, Nasdaq -1.97%, and the Russell 2000 -1.07%.
Considering how the indexes did this week, I'd have to call this week a success. I made 2.48%. Today I lost 1.76%, despite my lightweight portfolio, so I'm glad I wasn't loaded up. I'm in a much better position now than I was when the indexes were flirting with this level back in mid-March. On March 10th I was down nearly 20%!
I was able to beat my screens this week which rarely happens. The Zacks and Zweig screen continues to outperform the others and it gained again this week. That screen has been a great indicator of when to be in and out of this market and overall it's performance has screamed compared to the broader market. You have to take it's performance with a grain of salt, however, because many weeks had only one or two stocks meeting criteria which is way to risky for a portfolio.
There's chatter about end of the month window dressing moving this market back up in the next couple of weeks. I know this was a particularly volatile week because of options expiration and stuff, so who knows what the future holds. I'm not too happy about testing the March lows, and there's hardly any good news to turn this thing around. 
The chart I use for short-term decision-making is about to turn bearish. We had a good run from April 3rd, but it looks like momentum is drying up and it's time to get defensive again.
This whole thing is wearing me out, but this is the time when I learn the most. We'll have turnaround again, and I'll be even more prepared to make some decent money.
I lost .83% today.
I had a hard time deciding what I wanted to do today. Some of my best performers took a dive today which is what I was anticipating (it always seems to happen that way). I got out at OK prices, and I didn't get whipsawed, but I continue to question my methods. The next couple of weeks will verify if I made the right decision or not.
My main goal was to maintain some of the gains that I made over the last few days. I've been unable to find the "sweet spot" between letting my profits run and avoiding big losses (including giving up big gains). I've developed a better trading journal with automatic updates in Excel, and that has really helped me with my decision making. I just wish it made EVERY decision for me. I guess that wouldn't be any fun, would it?
I'm uncomfortable with this downtrending market right now. I know there will be opportunities this summer and later on this year, so it is starting to make sense to avoid fighting this tape and get a little more strategic in my trades.
I'm growing tired of watching the indexes self destruct as the news continues to emphasize what's wrong with everything. Now when people find out I trade, they 0ffer their sympathies.
Despite the drop today, my portfolio held together pretty well. I lost less than the indexes (.89%) which isn't much to brag about, but I'm certainly much better off today being down half of what the indexes are than I was in mid-March where I was down more than double what they were.
I trying to learn how to read the broader market while attempting to understand patterns in individual stocks. I continue to learn from Corey at Afraid to Trade through his tutoring service and I have been very pleased with what I've learned and what Corey offers.
I apologize for my lack of posts lately. I thought school was a good excuse and then the market started sucking and that became my excuse. I will try to do a better job of keeping you informed about what's going on (as if you care). I know I enjoy looking at The Kirk Report, Ugly Chart, Stockbee, and others several times a day, and I'm disappointed when something new doesn't pop up. Charles Kirk is probably the best at having multiple posts every day so I rely heavily on his take on things each day.
I've actually had the best three-day stretch I've had in a long time. I've gained over 8 % since last Thursday which usually means that I am about to get my buttocks kicked. I'm going to hang in tight and we'll see what happens.
I've changed my strategy a bit lately after selling a couple of stocks too soon. I sold SQNM at 9.11 after gaining 20% on it. I had a trailing stop that grabbed most of that gain, but then the stupid thing went on to new highs that would have looked good in my portfolio.
The mantra we hear all the time in trading is "sell your losers and let your winners run". I sold this winner, and many others too soon. So, this month I'm using a scaling in technique on all my stocks that have gained one or more times what I risked. The last few days have worked out well as I've let my winners run. Here are a couple, AGU and CF:
Scott-
Can you go through what subscriptions you use other than AAII and Research Wizard?
Also, have you been more successful trading in and out of the Zweig screen as opposed to simply buying Monday at the open and holding.
Thanks,
Mark
I'm sorry I haven't been posting lately. The market has put me in a sour mood and nothing I'm doing seems to be working. This is the most frustrating six months that I've experienced in the last five years and I've been through a lot of frustrating times I assure you.
The only other subscriptions I have currently are to StockFetcher, Pitbull Investor, and Trade4Cash. I use StockFetcher to find stocks that meet my criteria--it is extremely easy to use and I get instant results. It's also extremely cheap for what it offers.
I use Pitbull Investor and Trade4Cash to gather ideas different from my own. I'm trying to go beyond screening into some technical analysis, and I gain a great deal of insight from both services (they are also both extremely reasonable for what they offer).
I have NOT been successful with making my own decisions using the Zweig screen. Aside from paring the whole screen down to 5 to 10 candidates based on relative strength and the Zacks ranking, every other attempt at improving the screen or setting productive stops have ended in disaster (I exaggerate--but you get the idea) for me.
I have ALWAYS been beat by the screens despite my brilliant attempts at making them better. This year has been particularly bad for me because I've been trying other ideas and ignoring the screens and I am getting my clock cleaned while the screens once again out-perform the market.
I haven't had much to write about lately. I keep losing money and am now down over 10% for the year. I'm compounding my mistakes and I'm getting a bit frustrated.
Things were looking pretty sweet for me until today. I made .70% for the week after losing 3.46% today. I had a good pick in SQNM from my own research. I had a trailing stop on it and got out after a 20% gain. It went on to gain over 30% more yesterday and today. I think I need to change my strategy a bit.
The Zweig RS screen beat me again, of course. It made 3.75% for the week after falling 2.6% today. Once again my overthinking cost me. I hesitated on a clear signal for AEHR which made nearly 19% this week. GHM also had a good week gaining 8.69%. I didn't own it either.
Zweig MACD suffered a 3.37% loss for the week with ESL pulling it down 9.87%.
The major indexes are sucking wind again this year. After breaking even at the beginning of May they are back down to mid-April levels.
The good news for me is that I'm holding up pretty good despite the market's insanity. I'm even with the indexes which I don't mind when the market has been so erratic. I don't like to be even with the indexes when the bulls are running, but when the bears are in control, I'm satisfied to lose what the indexes lose.
Maybe someday I'll be able to make money no matter what the markets do. I think it's extremely difficult to do, but I know there are individual traders who do it. There's certainly no way I could trade for a living if I went nearly 6 months with no gains (besides drawing down my equity). We'll see how the rest of the year pans out, but this has been the most difficult year I've had trading.
I was way up this morning and feeling pretty good, and then I was way down this afternoon and feeling pretty bad, and then I ended up making a few bucks as the broader market stumbled.
The Zweig Top 5 Relative Strength stocks are up over 4% today after the market has had two straight days of losses. You unemotional investors are making a killing. Guys like me who can't stick to a system to save their lives have been getting their teeth kicked in. When will we learn?
A reader commented this morning:
"I'm doing a bad job of following this system too. I should have bought AEHR this week...I didn't because Scottrade wouldn't let me without a live broker...so I said..forget it. Dumb...it's up over 7% at the moment today.
So, had I bought GHM and AEHR I'd be having a great week so far...instead I'm down for the week...the system works...the system works....follow the system......"
That sounds sooooooo much like me--even today! I've followed the system for three years and I still think I can outsmart it. AEHR had a perfect entry point yesterday (it broke out of its consolidation pattern) and I skipped it because it was too much work to call my broker (I use Scottrade as well). Stupid.
I hand in my comprehensive exams tomorrow (I'm still working on them), so I should be able to post more often after that--not that anyone really missed me.
AAII's Zweig screen only has 9 candidates this week. The screen had a fantastic week last week and is doing much better than my portfolio is.
The screen had no Zack's #1 candidates this week. This has been a rough year for Zack's rank. Last year the Zweig screen was averaging 5 a week. This year it has barely been one a week. Interesting.
I show 3 stocks with bullish MACDs this week.
There are a couple of Zweig stocks with interesting chart patterns. AEHR has set up a long pendant pattern. It will be interesting to see where it breaks out.
I've asked AAII permission to list the results of the Zweig screen each week. So far I haven't heard back from them.
I've tracked my To the Moon screen for a few years now and it's time to let it go. My intent in creating the screen was to show that even a simpleton like myself could put together a winning screen if it was followed without emotion. Since September of 2005 the screen has made over 300% compounded.
The screen was made up of the highest Relative Strength stocks in four different screens I ran. One screen was AAII's Zweig screen and the other three were Screens from Zacks Research Wizard. I just took the highest Relative Strength stock of these three screens:
bt sow best buys
bt sow big money
bt sow filtered zacks
This was a "buy on Monday sell on Friday" stock screen that did very well in a pretty lame market. I wanted to show that there are opportunities in the market for individual traders who don't have a lot of time and who don't want to have to monitor the market on a consistent basis.
My subscription to Research Wizard runs out this summer and I don't intend to renew. I think Research Wizard is a great product, but for me it is too pricey and I don't like that it doesn't have an established community of users who share ideas and information.
I will continue to use AAII's Stock Investor Pro as I work on new ideas while following the simple screens that I've been watching for the last several years.
I was happy about coming out this week with a little over 1% until I ran the numbers for my screens (which I all but abandoned for my own ideas).
FUQI helped the Zweig Relative Strength 5 (8.19%) and the Zweig MACD (12.51%) screens this week.
Sometimes I really question my sanity when I try something new. I was up 15% for the month of May two weeks ago and thought I was a genius. As I watched most of it slip away the last two weeks, I wondered why I hadn't just stuck to my stock screens.
We'll see how the last 6 months of the year pans out. Maybe I'll be taught a hard lesson about trying to think my way to success in the stock market.
Man, the stock market is such a distraction when I'm trying to get these tests done. I didn't look much today, and that was a good thing because I lost half a percent. It was good to see some strength return to the market. We'll see how all this shakes out, but now I'll be happy to get out of May in the green.
Corey at Afraid to Trade has an interesting article about selling in May and going away (as the saying goes). Several StockPunk readers have been discussing the idea as well.
Corey has been teaching me some technical analysis stuff along with some market indicator stuff. I think it is important to continue to learn, and when guys like Corey offer their services for dirt cheap, I can't help but try to learn from the masters. I've noticed another master trader, Van K. Tharp, charges upwards of $100,000 for one-on-one tutoring. Yikes!
The price of gasoline is on everybody's mind, it seems. I've never had so many complete strangers talk to me while filling up my tank.
But the price of gas hasn't really bothered me. I lived in Romania over 10 years ago and the price of gas there was about $1.00 per liter or $4.00 a gallon. In a country where the average wage was $100 per month, that WAS expensive.
In London in 2000 I paid nearly 5 bucks a gallon and my friend in Ireland says that gas is now over $9.00 per gallon.
We're a whiny bunch, and we really should focus on how good we really have it. Sure gas is more than it used to be, but life is still good, we're all more rich than 99% of the world, and we're still paying less for gas than most of the world.
For more on the price of gas, MSN has a good article tonight.
Things didn't go any better for me today. One week ago, I was flying high. This week I got kicked in the shins. For the week, my portfolio lost 9%. The market has a way of teaching guys like me painful lessons. The key is to live to fight another day. I know that what I do works over the long run. One week is just a blip. This week was a nasty blip, but a blip nonetheless.
None of my screens suffered like I did. Zweig Relative Strength 5 (down 5.92%) was brought down by GHMs 15% drop--ouch. There is a lot of good discussion on StockPunk this week about using stops and about some of the struggles Zweig screen traders had this week. There are always going to be weeks where the screens blow up on you. Most people who trade don't make money because they quit after a week like this. If you just realize that you've got to experience the bumps and bruises and just stick with the program. Don't over-think things. Just trade your plan and hang in there.
The other screens did relatively well considering the trading environment this week. Zweig MACD lost 1.79%, To the Moon was up 1.45%, and Zweig and Zacks was down 2.01%.
It will be nice to have a break on Monday (its been a long time since I've looked forward to a holiday from the market). Take the long weekend to relax, rethink, and enjoy the freedom we all enjoy to trade our money in the freest market in the world.
Genius on Monday morning, idiot today. I was up 13% for the month of May on Monday morning. At today's close I am barely holding on to 4%. What a mess.
This always seems to happen to me when I hit a new high. I know the market does its thing without any care about my piddly contributions, but sometimes it sure seems like it does.
I'll use this as another learning opportunity. I thought I was pretty bullet proof this month as I only had one losing day until this week. I was making way more than I needed to trade for a living, and I got a bit cocky. I was even contemplating upping my risk substantially to take advantage of my new found genius. This is all good for me, because it will help me make better decisions in the future (hopefully).
I was up 2% at lunch time thinking I was a trading genius. At the close, my portfolio was down .80%. Just a day in the life of a stock trader.
I was hoping things would bust out a little heavier today, and it looked like they would. But something got the market a little spooked. Things seem a bit overbought anyway, so it will good to let things settle down a bit before the next leg up (if that happens).
The Zweig screen is still pretty sparse with only 10 selections this week. With the major indexes hovering below their 200 day moving averages, everyone seems poised for either a huge breakout or a pullback. Of course no one really knows what's going to happen, so my suggestion (as always) is to just let the screens do their work.
The S&P 500 monthly chart has just peeked above its 20 period moving average. If it can hold out above there for the next couple of months, things look good for more of a long-term rally. If not, hopefully we'll avoid a repeat of 2000.
I was surprised when I looked back over the week. Based on the daily ups and downs I assumed that the broad indexes would be relatively flat for the week. They all did quite well, with the Dow up +1.82%, the S&P 500 +2.59%, Nasdaq +3.35%, and the Russell 2000 +2.92% according to the Kirk Report.
I had a good week, but it would have been better had the indexes struggled more. My portfolio made 7.94%. I am .04% away from being even for the year! Yay! What an awful 3 months that was.
I had to make 26.5% the past two months to make up for the 19% that I lost since the beginning of the year. That was a major pain in the buttocks.
Now that I'm (almost) back to even, I can set my sights on grinding out 40% for the year. With only 7 months left, it won't be easy. But I still think it's possible.
Even though I handily beat all the stock screens, it was still a bitter/sweet week since they did a pretty awesome job as well with To The Moon leading the pack. Zweig Relative Strength 5 has busted out of the gate and has a nice return for the year already at nearly 8%.
I've veered off the trading path over the last couple of months and I have been dabbling in options and trading chart patterns. I've been feeling pretty cocky about my returns until I realized that the Zweig Relative Strength 5 screen has pretty much matched what I've done in the last two months.
This was kind of a sucky week for the broader market, but the screens did OK by comparison. To The Moon did the poorest with a loss of 3.59% for the week. A 16.76% loss in HA drug the screen down.
All the other screens beat the DOW--Zweig Relative Strength 5 lost .30% while Zweig MACD lost 1.28%. Zacks and Zweig had no picks again for this week.
I was traveling for half the week so I wasn't able to monitor things. Once again that proved to be a good thing as my portfolio was up 4.03%.
I went with my wife to Parris Island, South Carolina, to see one of the girls we took care of graduate from the Marine Corps. Here is a photo of me with her right after the ceremony. I'm the goofy looking guy on the left.
The screens didn't change much this week. Zacks and Zweig still has no candidates. The Zweig screen picked only nine stocks this week and they are mostly the same from last week.
I continue to work on my Master's Comprehensive Exams. I don't like them.
Have a good week. I'll chime in when I can.
I got handily beaten by the stock screens this week. I was down 1.58%. Zweig Relative Strength 5 made 3.53% with a nice pop by AMED and GHM. I didn't own anything in any of my screens and I'm looking really brilliant right now.
All of the screens except "To The Moon" have climbed out of the hole and are in positive territory for the year. I am once again wondering why I even try to do better than my screens.
I just looked over my comprehensive exams for my masters degree and I'm a bit overwhelmed. I've got a couple of weeks to complete them, which means I really won't have much time for anything else.
I guess this is a great time to test my "automatic" system and see if I can really live in a world where I don't monitor the market all day.
My posts will be sporadic and short, so please feel free to e-mail me any of your brilliant ideas and if they ad to the blog I'll post them. There have been several contributors lately who are much smarter and more disciplined than I am and I think everyone has benefited from their unique perspective. Keep the information flowing as I slog through these tests!
Behave everybody!!
A few of you have asked what I mean when I say that I made "4 times my risk" in my previous post. I'll try and explain:
For each trade I risk a dollar amount. It's different for every trade. So, for example, I buy KEX today (not a recommendation) at 54.84. I see that on average it hasn't lost (or gained) more than $2.24 in a day over the last 2 weeks. I decide that I will sell the stock if it varies more than 2 times that amount in a day (2.24 X 2 = 4.48). I am willing to lose $4.48 per share on KEX.
My portfolio is $100,000 (as an example--I really have billions). I decide to risk 1% of my portfolio on each trade--or $1,000. For KEX that means I can buy 223 shares ($1,000/$4.48).
If KEX goes $4.48 against me, I sell and I lose what I risked or $999.04 or 1 times my risk. If KEX gains $8.96 I make 2 times my risk. I keep track of each trade and record how much I risked.
At the end of the month, I add the winners and losers and come up with a risk number for the entire month.
Here's are my stats for April: I had 14 winners that totaled 9.55 times my risk and 11 losers that totaled 4.96 times my risk.
Calculating risk this way can help you get a feel for your system while allowing you to "plan" your earnings. So, I know that if I can average 4 times my risk each month and I risk $1,000 on each trade, I can earn $4,000 per month with my system (theoretically of course).
I'm learning that every time I have a terrific day (or week) and I get a bit too cocky, the market ALWAYS kicks my buttocks and makes me re-think everything. Once again, the pattern continues. I was euphoric about my best day ever on April 16th, and then I managed to allow the market to siphon off 6% by the end of the month.
I still managed to meet my goal of making 4 times my risk this month. That is my new measure of progress since percentage gains really doesn't reflect the accomplishment of my trading system. I was up around 10 times my risk a few weeks ago, so once again, the market humbles me. Maybe one of these days I'll be able to keep my gains. Probably not.
For the month of April, the screens looked like this:
To the Moon: 5.39%
Zweig MACD: 10.79%
Zweig and Zacks #1: 10.63%
Zweig Relative Strength 5: 12.9%
My returns for the month were 9.68%.
I got another 1.34% taken away today. Thank you Mr. Market.
I don't have anything witty or amazing to say. Maybe I'll recover a bit tomorrow.
I gave back my wimpy gains from last week today. Things look a bit uncertain out there, but I'm going to hang on. I like the smaller movements the market is showing lately.
It's been busy. I did some research on Portfolio 123 and StockFetcher over the weekend. Both look like promising applications, but I need to spend a lot more time in each one to figure out if they can help my trading.
I don't think that I'm going to be able to get the portfolio to break-even by the end of April. Unless we have an amazing week, I think I'm still stuck underwater for the year. If I would have stuck to the Zweig & Zacks screen or the Zweig MACD screen I'd be sitting pretty right now. So much for all my thinking and analysis.
Zacks and Zweig has no qualifiers again this week. The Zweig screen has only 10 picks. I'm not sure if that means anything, but it's worth thinking about. Happy trading!!
This week was disappointing for me. It started off really good and I have to admit I got a bit cocky about my stock picking and whenever that happens I get kicked in the pants. I had very few stocks from the Zweig screen this week and naturally the screens kicked my buttocks. I made a whole $16.86 this week.
The Zweig MACD screen screamed thanks to an excellent performance by GDI at 18.29%. MACD had many other good performers including AMED, ARO, GHM and AME. The screen is also out of the hole for the year now (I wish I was).
Zweig Relative Strength 5 had a pretty good week as well with a 3.47% return. WFR drug the screen down while the top 3 in the MACD screen also appeared in this one.
Zweig & Zacks had no qualifiers this week so it gained (or lost) nothing.
To the Moon didn't do much.
There's nothing worse than seeing green across the board as my portfolio takes a dive. Nearly every one of my stocks lost money today and I was handily beat by the indexes. In fact, I was down 1.72%! I guess all of my positions were top heavy because they sure came tumbling down.
To me, it's kind of a good sign that some of the former leaders took a hit while stocks that were languishing did very well. MS was on my watch list and made a major move today. Of course I didn't own it.
Things are starting to get interesting and we may be on the precipice of a nice extended rally. Don't count your chickens yet, however.
Another consolidation day today. Nothing much to worry about. My portfolio lost .19%. No big deal. This kind of stuff will probably go on for the next couple of days. I'm just going to ride it out.
I made nearly 2% on a consolidation day. I'll take it.
MSN has a bunch of doom and gloom article about the stock market in their Money section. I'm becoming more and more convinced that it is detrimental to my trading when I watch or read stock market news. I stopped my subscription to the Wall Street Journal (I felt guilty when I didn't have time to read it) and I no longer watch any stock news on TV. I'm limiting my total TV time to 3 to 5 hours each week (mostly for Lost and The Office). Yesterday, I avoided any contact with the market until after the close.
I'm trying to get back to reading a book a week. Right now I'm reading The Progress Paradox by Gregg Easterbrook. It's about how much better things are now than they were 50 to 100 years ago and still people think things are worse. Interesting stuff.
Most of you know that I cut my teeth on AAII's Stock Screens. I have been following them for several years and I love their simplicity. Moneysuckle (of the complicated poker post) has put together some information on why he has chosen just a few screens among the several that AAII shares each month. The results he discusses are assuming monthly re-balancing and holding all stocks that qualify in the screen.
I'm fascinated by the number of traders who also dabble in game playing. Ugly loves chess and games of chance. Chris Perruna thinks that poker has some parallels to trading. Warren Buffet loves to play bridge. And Dr. Van K Tharp enjoys poker playing as well.
I played a few poker games with my brother and a few friends of his at a recent birthday party. It was the first time I had played since playing on my Mattel Intellivision back in the mid-80's. I'm guessing that most StockPunk readers don't even know what an Intellivision is. Whippersnappers. I digress.
I think there are many lessons that poker teaches that can be integrated into a trading system. Issues like drawdowns, bet size, risk, ruin, and probabilities are common to both trading and poker.
One StockPunk reader sent me an interesting and math-intensive article he wrote that utilizes a computation called the Kelly Criterion for poker. The Kelly Criterion is also found in many books about trading systems. The writer asked me to use his cryptic poker playing name which is Moneysuckle.
I guess I can't be too cocky about having a good week since everybody and his grandma had (or should have had) one. I don't care. It's still a good feeling when things go your way.
All of the screens posted positive gains this week with To the Moon coming in first. It had a pretty good distribution with STLD being the winner at 7.49%.
Zweig Relative Strength 5 was next on the list with the best showing coming from ARO at 9.37%. AEHR pulled the screen down with a loss of 6.19%.
The Zweig & Zacks combo still leads the pack with a +20% gain for the year. That's looking really good right now. ESL pulled that one down with a 1.81% loss.
The last time my portfolio was down less than 8% was back in mid January. That's a long time to be languishing in the hole.
If you're interested, I'm selling a series of DVD's and cassette tapes from Dr. Van K. Tharp's Institute for trading mastery on E-bay.
The DVD's explain position sizing in very clear terms. I watched them several times and it really helped me formulate a trading strategy. He uses an example of trading from newsletter recommendations that is very revealing about the power of position sizing. You can see the auction here.
The other series is on cassette tape (that makes them retro and therefore really cool). The cassettes took me a long time to get through, but they were very interesting. He basically has a roomful of traders that he teaches the techniques of position sizing, money management, and developing a trading system with a positive expectancy. It's interesting to listen to the experts and compare your own trading to theirs. You can see the auction for the tapes here.
I continually am impressed with the quality of folks who peruse this dumb blog. What are you people thinking? Don't you know I don't really have a clue about what I'm doing?
When people go back and read my previous posts they often become confused about my strategy. There's a good reason for that--I change my strategy often. I don't change it because I'm so smart. I change it because I still am trying to figure this whole thing out (and I have a LONG way to go).
Shaun had the misfortune of wanting to figure out my philosophy and strategy, so he went back and read all of my posts over the past year. He became even more confused (who wouldn't) so he wrote me. He gave me permission to post some of the questions and answers that we went through and I thought it would help the other two people who read this blog (Shaun's questions are in blue):
I'd be happy to answer your question. I think the reason that you are confused about what I do is because I am confusing about what I do. This has been a learning process for me, and I am by no means any sort of expert. I've kind of stumbled into the type of trading I do after taking bits and pieces from experience, books, and blogs.
I've been all over the place in my trading as I've learned new things. Some things have worked very well so I continue using them. Some things were ridiculous, so I quit (probably not soon enough).
I've totally changed the way I trade recently after really starting to understand the concepts of risk and money management. Until recently, I thought trading was all about picking the right stock. This is a gut wrenching game because I had to pick the right stock (usually from a basket of stocks like the Zweig screen). Then I had to buy it at a good price. I struggled getting in at good prices on Monday morning which was always frustrating. Then I needed to figure out how long to hold the stock. Sometimes I'd have a stop, other times I didn't. Sometimes I'd sell the stock unemotionally when it dropped of the Zweig screen. Sometimes I wouldn't sell hoping to squeeze a few more percent out of the stock.
The mechanical approach I had served me well for a couple of years. I think it's a great approach to learn the mechanics of trading. It takes very little time and effort and it can help to manage the emotions of trading (I still struggled with the emotional thing).
But I now think that money and risk management is the key to staying in this game long term and I think that I can really boost my returns and avoid unnecessary risk by utilizing those management tools in my trading.
Currently I am trading stocks in a few different systems. I still use the Zweig screen, but I am also using some technical indicators to make additional trades. I am pretty new to technical analysis, but I am starting to see its value in my trading "package".
>>>In one comment a guy asked what you did with cash since you said you only risked 2% on a trade and wanted to hold 5-10 stocks. You said the rest was in cash. Is that right? If you had a $100,000 account and there were 5 stocks you liked, would you be investing 2% of 100,000 into the 5 stocks, so $10,000 invested and $90,000 in cash? Did I read it right?
The whole risk and position size thing seems simple, but it has taken me over a year to get it figured out. I've probably written some confusing things over the past year as I tried to get things figured out. Here's how it works.
The least complicated way of using a position size with the Zweig screen would look like this. I've got 5 stocks that qualify. I've got $100,000. I determine that I want risk only 1% of that $100,000 on any one trade (a good rule of thumb). That means I RISK $1,000. I determine that a 10% stop works best for my system. So I can buy $10,000 worth of stock with a 10% stop on each one. 5 X $10,000 means $50,000 in positions and $5,000 risked.
>>>>I have been thinking of risking 2% of the account per trade, but saw it as setting a stop that would be 2%*100,000=$2,000 loss max on each of 5 positions. So I'd buy $20,000 in each of the 5 stocks picked, at set price stops for $2,000, which is 10% of the position. What do you think of this method? (I am going to work through the Chris Perunna links that you posted and I plan to read the Van Tharp book that you recommended.)
You’ve got the idea! I recommend you read the Van Tharp book—it’s excellent and thought provoking. I learned a lot more about stop setting and now I’m using a volatility stop rather than a set amount like 10%. It’s less gut wrenching because it seems to have mathematical value.
>>>>>Have you refined your 'volatility system' for taking profits mentioned on October 6th, 2007?
The volatility system was a spreadsheet developed by Henry Ford at Pitbull Investor (I subscribe). It’s a great tool. I also use Average True Range (you can find that out on a StockChart). I use 14 periods and times the result by 2.5 to give me a number that I use for stops.
>>>>What is the "To The Moon" screen? Did I miss its description or is it secret sauce? You mentioned that it relies on Zacks metrics that you will not be able to screen for if you do not renew Research Wizard. Could you use AAII and Zacks Premium to replicate it?
To the Moon incorporates Zacks screens of my creation and elements from the Zweig screen. I really haven’t bought any stocks on that screen for some time because I know that I won’t be renewing my subscription. I’m going to let it die this summer.
>>>Has your view of Zack's Research Wizard changed at all? Last I heard you were not impressed with it, particularly the client service. Maybe the way to go is do a trial once a year?
I’m moving a different direction. I still like the screener, but I want to focus more on technical analysis. I’ll still subscribe to Zacks to get the Zacks number (I think it is a powerful qualifier), but I don’t plan to renew RW.
>>>>I enjoy reading the blog of someone who has trail blazed the path I have set ahead for myself. My results lately on discretionary trading are terrible, so mechanical investing is my future. Now I have to steel myself to dump some losing positions that I hoped would come back, but have learned that hope is a lousy hedge.
I’m glad my dumb blog has kept your interest. Thanks for your contributions! It makes things much more interesting. My goal was to provide a place to put down my thoughts and a place where I could get some feedback on what I was doing. I’ve learned a ton in the last year, but I still have a long way to go.
I think I just got lucky. If I had lost money from the get-go I would have quit doing this a long time ago. Hang in there! Trading is extremely rewarding and fun. You’ll find your grove and things will take off. Just keep learning as much as you can. Turn of the news.
The best thing that I came away with from Van Tharp’s book is that trading stocks is a probability game. Probability and emotions don’t mix, so you need to have a system that takes your emotions completely out of your trading. Otherwise you bias your trading and create all sorts of problems.
We have an official StockPunk best day ever today. The portfolio was up 5.55%! Nice. That's not the best percent-wise. Way back on May 2nd, 2006 I made 6.03% in one day. I have a lot more money now so this is my best day for dollars gained. Back in 2006 I was betting the whole portfolio on one or two stocks. I had some good days, but my portfolio sure took a licking during the bad times. I've learned a lot since then, thankfully.
The 2nd best day ever dollar-wise isn't that long ago--December 10th 2007. I made 4.65%.
Let's hope this continues, but as I've learned--past performance is not a guarantee of future returns.
Looks like today could be an interesting day. INTC was inline and most tech stocks should follow. I could use a +1% day and even more would be better. I actually have a bit of time to trade this morning but I'm fully invested right now. I'm thinking about using a bit of margin for one more purchase. I usually don't like using margin (and I don't use it to calculate my position sizes) but I think this is a pretty safe bet. I'll let you know if I was whacked later on today.
My hayfever has kicked into high gear as the market meanders all day. I was up a piddly .10% today. Thanks everyone for the good discussions you've got going. They are much more interesting than my boring posts as of late.
I'm currently doing some tutelage under the watchful eye of Corey Rosenbloom at Afraid to Trade. I've followed his blog for a while now and I have really appreciated his take on the market. He's a lot smarter than I am, and I feel he can teach me a lot. His fees are extremely reasonable, and now is a good time for me to learn some new stuff.
I'll let everyone know how it goes. I truly believe that is important to always hone your trading skills and the stuff that I've paid to learn has (usually) paid for itself several times over. That's more than I can say for most of the education that I've been through in my life.
Things don't look too promising right now. GE is still affecting the world and we could see further downside if more companies chime in missing their estimates.
I'm not taking any new trades today. I plan on holding on to what I have and let the market and my stops give me some direction this week.
Be careful out there!
I'm turning in my taxes today. Trading sure creates its share of headaches when it comes to taxes. I've only been trading for 5 years, but I've already got a threatening letter about owing lots of money to the IRS. That was a mistake that I made on my tax forms and I got it cleared up, but it was a hassle.
This year I owe a large sum of money because of my gains last year. It's a little hard writing that check when I've already lost half of those gains. I know that eventually I'll get it back, but paying taxes on money that no longer exists makes me a bit miffed.
I used Gainskeeper which is offered for free when you trade with Scottrade. I like the package and it saves me a ton of time. My federal return was 14 pages and would have taken a ridiculous amount of time if I hadn't been able to download the information into my tax software.
My family just moved into our new home last week. For the past 10 years we've lived with 8 teenage girls in a group home. While this has provided great cash flow for trading (our housing and food is paid for), we've had very little privacy for a decade.
We still live at the group home, so the new house is like our "vacation home" when we have some time away. I'd forgotten how quiet a home can be when it's just your family there. Nice. It's also much more fun to entertain when you aren't managing the emotional highs and lows of teenage girls while making your guests feel comfy.
Charles Kirk paid off his mortgage this week. It took him less than 5 years. I decided to put nothing down on mine and use the money I would have used on the house for trading. My friends and family think I'm a nutjob, but I think it's worth the risk to eventually be financially free. Once I can live off of trading and pay cash for the house, I'll do it. I do see an advantage to having no payments (the house is our only debt).
I had a good feeling on Monday about the direction the market was heading, and once again the market has taught me the value of my "feelings". For the week I was down 2.44%.
The Zweig Relative Strength 5 screen was the best "performer" this week with a loss of 1.37%. GHM was the best stock in that screen with a gain of 5.12% while WATG was the worst with a 7.42% loss.
To the Moon was the worst performer for the week with a 2.69% loss.
The Earnings report from GE sure put a damper of what was looking like a decent rally. Hopefully next week will produce some companies who have handily beat earnings. Otherwise we could be in for a nasty month.
My portfolio lost 1.14% today. The market is churning on low volume which makes me a bit unhappy. Initial earnings have been tepid, but next week is the real show. I plan to continue staying fully invested until I feel that it isn't wise anymore.
Not much going on out there. I ended up the day down .27%. Next week begins the bulk of earnings announcements so we'll see what the real trend will be then.
I wonder if I'll look back on these last few months and remember how chaotic the news made the markets seem. It seems like everyone has a different opinion on what is happening and where things are headed. Will I learn that it will be like this next time and make better decisions? Or is every time different and you can never really predict the future from the past? I haven't been doing this long enough to know.
The folks at Earnings Whispers have an interesting article about the recession and how unemployment numbers may be a positive sign. You have to register at their site, but they have lots of great information. Here's an excerpt:
In January, we projected a 20% decline in the S&P 500 and a 28% decline in the Nasdaq Composite with a bottom between May and October, but we also said we expected the S&P 500 to end the year above 1,300. Now that we have more data about the current recession, we are projecting the S&P 500 to be above 1,500 around August 2008 - up an additional 9.5% from its current level - as long as the employment data continues to weaken and the Fed continues to lower interest rates.
But stock prices dont go up in a straight line so the question is how are we going to get from point A to point B? not to mention the fact that we need to look for confirmation of our thesis along the way as well. This week has the potential to confirm or quickly make us doubt our position as the S&P 500 nears resistance and the CBOE Volatility Index (VIX) hits its support line. All of this suggests that the market is a little top heavy right now and is likely to pullback, but if the uptrend is intact, the S&P 500 could break above resistance and it could be swift. We should also point out that the chart on page one of this report shows declining peaks in our advance/decline oscillator for the Nasdaq Composite while the index has seen rising peaks. This is a sign of near-term weakness.
Things started out very nicely, but I ended up giving back .65%. There seems to be a lot of uneasiness out there and there are a lot of smart people who think we're headed for another downturn. I'm not smart and I think we're headed higher so we'll see who wins in the end.
Nick at Ambitions as a Trader, thinks GHM is a good shorting candidate. You can read his comments here.
GHM has appeared on the Zweig screen as the number 1 in relative strength. Dang it. I had it on my radar for the past two weeks waiting for a breakout and missed the last 30%+ gain. From my experience with the Zweig screen, it still has upward potential.
Zacks #1 picked 3 stocks out of this week's Zweig screen. KEX is back in the running.
This was my best week since the first of December. A lot of people told me I was crazy to go full throttle this week. They were probably right, but it turned out OK for me anyway. I had already lost 2/3 of my gains from last year and I was starting to get a little frustrated.
This may just be a pause in the market before it sinks lower. I feeling pretty good that we've established a bottom, but I'm quite ignorant on these matters.
For the week, the Zacks and Zweig screen shined with a 10.45% gain on 3 stocks. NGS gained 19.37% which helped greatly in a this screen and a few of the others. I'm glad I held on through the week. I've been trailing my stops up and plan to get out of NGS as soon as it shows some weakness.
Zweig Relative Strength 5 also did well with a gain of 6.29% on 5 stocks. Again NGS was the winner and KAI was the loser with a 3.71% drop.
The Zweig MACD screen didn't select NGS this week, but it did grab some good gainers, AEHR with a 14.45% gain and AMED with a 12.31% gain.
I've been watching GHM (a former Zweig screen selection) since the end of 2007. I rode it up for a really nice gain and then got out at near the top. It has been consolidating for the last 3 months and I was waiting for a confirmation (either down or up).
Today it had a breakout with a 25% gain, but I missed it. Oh well, there will be others.
Usually these are really good plays because you watch for a breakout and place a tight stop right below the breakout. You can often make a lot more than you risked with trades like these.
There's nothing like making a couple of good decisions to boost my confidence. I made two good calls today. I held on to WFR after dropping the stop to 2% below what it was gyrating at during the first half hour. It ended up losing only 3.44% after being down over 10%. Whew!
I put a 4% stop on NGS and it gained another 3% today. I was tempted to sell it while it was declining after the open, but I'm glad I waited. I shut the quotes off at 9:00 am and left them off until the close.
This has been the best two-week performance for me since early December. Yikes! That's a long time. No wonder I was getting a bit edgy.
It's good to see that the averages held above support today. It gives me some more confidence that I'm moving in the right direction.
It's days like these that make me glad that I'm managing my trades better. WFR is about to open with a big gap down. It will blow through my stop and I'll lose a good chunk of money. But I didn't bet the farm on that one stock and I will live to trade another day, dagnabbit.
I never know what to do in gap-down situations. Do I try and sell during the craziness of the market open? Do I wait and hope the gap fills later in the day, week, or month? I just don't know.
For WFR, I removed my stop and I'm going to watch it today to see if I can get a read on what to do. I'll probably end up losing much more than if I sold it in the morning rush, but I'm here to make the mistakes so you don't have to. You're welcome.
I can't complain about a day where the averages are down but I'm up a percent. I played everything as planned today and it worked well for me.
One of the reasons that I am fully invested now is this chart. If you ask me (I know you didn't, but it's my blog dang it) things have bottomed out. I think there is opportunity for some gains right now, so I'm taking it.
I'm struggling with what to do with NGS tomorrow. My volatility stop system says it's time to sell. It's made 20% since I bought it and it looks like it's still trending up (it gained 4% today). The MACD just went positive and the chart looks good. I think I might follow it with a tighter stop because I don't think I can pull the trigger on it yet.
I'm starting to record my gains and losses as "R" (risk) multiples and that has really helped take the emotion out of my trading. So far I haven't had any huge R gainers (like Ugly), but I'm starting to get the hang of this whole risk management thing, I think.
My portfolio got dragged along kicking and screaming to a gain that got beat by all the indexes--up 2.88%. A disastrous trade of CALM (don't ask me why) hurt me badly yesterday and today (I lost over 17% on that one).
This market is so wishy washy lately. It makes it very hard to gain any confidence in any move. But, at least I'm moving in the right direction. I'd like to be even for the year by summer. What a wimpy goal.
I've been moving into our new home this week, so it has been very busy. I'm getting behind in my classes and that has stressed me out a bit.
I've switched the StockPunk Market Meeter to "Go For It!" which means I think conditions have improved enough that going long is no longer scary. I'm an idiot, so please don't take my musings as anything actionable.
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