Weekly Review and Watch List

Trading was a bit more tricky last week as I got stopped out of a few positions.  I expect this to remain the norm until the market decides on a meaningful pullback to correct the overbought conditions.  I'd like to see a pull back to the 1326 area on the SPX and the 1306 area for me to get a lot more bullish.  The risk/reward in the market isn't compelling to me at this juncture.  Therefore, I am becoming more defensive by using smaller position sizes and taking quick profits.

Here's what I'm watching...
DNN - Bought this about a week ago at $1.90.  After pulling back to the $1.70 area, it popped above $2 last week.  I want to see it hold above the $1.90 level for continued move up.  The 50 day ma is crossing the 200 day ma.  I have a stop at around $1.70 with a target at $2.50.

RIC - Still watching for dip to $11 area or breakout above $12.91.  Which ever trigger hits first, I'll establish a game plan.

I'm interested to see if the steel sector might get a bump. If so, I'll watch these...

CLF - Oversold stock that had a good bounce on Friday with volume.  I might consider an entry over the 50 day ma at around $68.75. Target is 200 day ma around $74. Stop around Friday's close of $67.75

X - I'm watching over $29 with a target of $31.50 (200 day ma).  Stop $28.05, or 50 day ma.

GLW - Watching this over $14. Stop $13.46 (20 and 50 day ma). First target $15 (200 day ma). Second target $15.75.

Everyone have a good week.
Daytona 500 rain delayed till tomorrow. :-( 

~JP

Semi-Annual 401k Adjustments -- Update

About a month ago, I wrote about changes that I was looking to make to my 401k allocations.  One of the allocations that I was going to increase dramatically was the bond fund.  I've had second thoughts on that and now think that it would be better to stay in a money market option.  The risk to bonds due to inflation is more dramatic than I'd like and, therefore will be changing my allocation from around 40% to roughly 5% bonds and having the remaining dollars allocated back to the money market fund. 

Honestly, I don't know much about bonds and always thought that they were a "safe" alternative to equities.  I have been hearing people like Buffet talk about how risky they are in this economic environment relative to long-term equities.  He's probably right, but I don't want to bet on equities over the short-term either due to many potential issues around the world, including Euro debt, US debt, Unemployment, Iran, and oil prices.  Cash may be king over the next 6 months or so....who knows.  I didn't think we'd see 1370 on the S&P this soon in the year either.

If we get a meaningful pullback to somewhere around the 1300 on the S&P, I might scale into large and mid-cap growth funds.  But, I think we have a month or if we see it.

~JP

Weekly Review and Watch List

Last week, the market was pretty choppy, making it tough to hold positions without getting stopped out. The week started out on a down note as I got caught in a negative earnings play for MAS for a 8% loss.  I also got stopped out of a MKTG with a 2.7% loss.  MKTG is a very thin stock with high volatility.  And while looking for the breakout at $12, the stock dipped the next morning and I ended up selling at the low of the day. The rest of my plays had small gains from zero to 6%.

I'm still in the DNN position, which is looking much better.  It dipped just below the $1.70 and bounced to close strong at $1.85 on Friday.  I still have a mid-term target of $2.50.

Other stocks I'll be watching...

VZ -Still watching that $27 area on VZ.  I may take a starter position since it popped above the 50 day ma.  I'd add to it if it dropped to the $27 area. A break of the lower uptrend line would cause me to stop out.  My long term perspective sees this in the $40s.

NLST - I'm watching this one again for a rebound off the $3.60 area.  It seems to be bouncing off the 20 day ma pretty consistently.  Not sure how long it can keep it up, but might be worth another try.  I'll be watching for an indication of support around $3.60.  Target would be around $4. Stop would be tight with break of 20 day ma.

RIC - This is a gold stock I'm keeping my eyes on.  I like the way this chart looks.  I'd be interested to see if this tests the lower upward trend line for an entry, maybe around $10.75.  If Gold stays strong, this stock can show some strength.  Its got a nice wedge pattern that's formed since Sept last year.   I'd like to buy on a dip and see this move to the top end of the range for a potential break out.  Stop would be around $10.50

Budweiser Shootout winner Kyle Busch.  Great win for Kyle after nearly crashing twice.

Bad Luck Happens

Sometimes trading your plan prevents you from realizing some big gains.  Today, ROYL and GNOM saw a huge pop for 18+% and 47%, respectively.  It just so happens that I got stopped out of both stocks by one or two pennies each on Friday.  Its very frustrating because I could have had some huge gains.

Likewise, I got into MAS on the breakout of $13.15. The stock closed higher at around $13.25 and is looking good.  I failed to realize that earnings were released after the market closed.  Based on the selling after hours, it doesn't look too good.  We'll have to see what the damage is like tomorrow morning.  I'll take my chances to try to get out when the market opens. 

Even though I missed out on some big gains, I traded my plan and respected my stop points. Sometimes this scenario happens.  If it happens a lot, I might need to adjust my strategy. Since it doesn't, I'll chalk it up to bad luck.  Who knows, if I would have held, the stocks could have been down 10+%.

Not understanding when earnings are released is something I need to be more diligent with. I do not want to be holding stocks through earnings.  There is just too much risk.

Trade your plan. Stay in the game. Learn to survive, then learn to profit.
~JP

Short Idea - PTEN

I usually don't short stocks, but I thought I'd throw out an idea.  PTEN is looking really weak below Friday's low around $17.85.  The bottom of the down channel has the target around $16.50 or a little over $1 in profit.  I would put a stop around $18.  With market weakness over the next couple days, this might work out.

~JP

Weekly Review and Watch List

The market is due for a pullback and Friday may have been the start of a short-term reversal.  As the trend may be changing, I'll probably do a lot more watching to see where things go.  Its tough to have patience when you're expecting a pullback in the markets. So, I've been a little quick to sell in this environment.  However. I've realize that I need to exercise a bit more patience when stocks are working in my favor.

Here's a summary of last week's calls:

EGHT - I took position in this on Wednesday as it started to break out of its flag at around $4.52.  I got stopped out at about break even. 

ROYL - I bought some of ROYL at $4.55 on Wednesday with the anticipation that it would break upward out of its wedge pattern.  My stop was at $4.36, which triggered on Friday.  This was frustrating because the stock rallied a bit into the close and closed positive.  It still has potential to move up from here.

DEXO - I bought DEXO on Tuesday at $1.81 to see it close at $1.90.  Because I was worried about the overall market being overbought, I closed my position that day.  Unfortunately for me, the stock moved up the next day and ran to $2.23 at the high.  So instead of a 20% gain in 2 days, I settled for a 4% gain on the same day. 

NLST - This had a big run past $4 as I mentioned in prior blogs.  I didn't take a position here as I missed my ideal entry and didn't want to chase the stock price.


Here's what I'm looking forward to:

DNN - I like the way this stock is looking.  I took a small position on Friday at $1.90 as it was breaking out of its wedge pattern.  I need this to hold its lateral support line at $1.70 to stay in the position.  That's a pretty loose stop, but an upward move could take this to $2.50, then $3.

Entry = $1.90 (Currently at $1.86)
Stop = $1.70
Target = $2.50

VZ - As noted a couple weeks ago, VZ is in a short-term down trend within a larger uptrend. I'm watching for a pull back to the $37 zone, where we see double support from the long-term uptrend and long-term lateral support. It also would represent a short-term double bottom.  A bounce at that level could take this stock to the $40 range within a month or two.

Entry = $37
Stop = $36 (You could go a little tighter at $36.25-.50)
Target = $40

~JP

Weekly Review and Watch List

Trade Review: VZ, HPQ, NLST, X
For various reasons, I didn't play any of last week's setups (from last weeks blog post).  Each stock had good opportunities, but I don't have a lot of confidence that this market can continue to move up day after day.  I expect a short term pullback to around the 1267 area on the SPX.  A pull back and consolidation in the indexes would allow for a strong move up to possible test the all time market highs.  There's a lot that can happen before we get there, so I'm cautiously optimistic.

VZ - we were looking for a $36.50 entry point, but it only got down to just above $37 before it ran up above $38 in the next couple days.  The short term channel, since the beginning of the year, indicates that this could still hit $36.50 or its 200 day ma ($36ish) over the next week or two before the next bounce.  we'll keep an eye on it.

HPQ - This was another good call with a dip by around $27.25.  The low was $27.23 on a gap down before it ran up to close positive and continue on for the remaining of the week.  Its now sitting at $29.07 and looks to be heading to its 200 day ma at $30.  A break above that could see this run to the mid $30s.  I won't be playing it, but will watch to see what happens.

NLST - This had a nice move on Friday after hitting the $3.15 target early in the week.  This may try for another run at $4 shortly.

X - Earnings created a pretty volatile day, but created a good opportunity to buy in on the dip around $29. On earnings day, the stock gaped up, then pulled back which would be a good opportunity to buy.  Since then, the stock has moved up and is closing in on my target of $33.  Too bad i missed this on too.

The charts tell me that there are still a lot of opportunities out there.  I'm not sure when we'll get the pullback, but you gotta play what's in front of you until the market tells you things have changed.  I've been taking smaller positions and limit the positions that I hold overnight.  This will keep the risk controllable in the event the market sells off.

Some new positions I'm watching are:
DEXO - This is a bit of a tricky stock, but Friday had a strong move early that faded throughout the day. The price is sitting on the 50 day ma, which will be crossing the 200 day ma shortly.  It's also sitting on its long term uptrend line. For this one, I might enter early with a cross above the 200 day ma at $1.76 and set a stop below the recent lows around $1.65 or its 50 day ma, $1.69. Target would be around $2.25-$2.50.

ROYL - I'm looking for this stock to break above $4.92 for entry. Target $5.12, then $5.50.  Stop $4.84.

EGHT - A flag if forming here after an earnings breakout, which is a good catalyst for us to see a continuation.  The buy point is $4.50. My Stop looks to be below the 20 day ma at around $4.38.  Target will be $5, but could go as high as $5.50+.

~JP