Market Watch for week of July 13, 2009

[Dr. Dave]

i can't sleep, i'm going to go over that post dave thanks
all i can think about is stocks.

I'm up too - been working at night a lot - I have disregulated circadian rhythm, and my boss is in and out of the country so much, and has a lot of stamina, so we are always up late - makes trading a bear - well, if your strategies involve quick entries and exits, which is why I have to keep the pennies on the light side. One thing I truly learned, is when you have a target and a decent plan, you have to play it out as planned. Due to missing the entire trade day, I've missed my sell point on RTGV at 0.55, and missed my entry into BEHL, and missed my stop on MGLG. My broker (we'll the broker I've been using for these) won't let me set stops. I think about stocks all the time too. I get too caught up in looking for trades, that sometimes I don't manage the ones I'm in. But that's the thing - and why a journal is so important - a journal is more than just an entry of the pattern, or the fundamentals, and the entry/exit, gain/loss... you have to realize your mistakes and change your game accordingly. That and put in your emotions. I found after reading about journaling for trading, that I didn't pay enough attention to that. I found I can't really stand a large loss. That's why "being a long" isn't for me, or trying to get in during a flatline for speculation. It's perfectly fine for others, just not me. Rambling again... I should go to bed, but just got out of work. I want sneak to a jiu jitsu tournament tomorrow, but I likely won't get up on time.

What kind of trader do you want to be? Penny master?

[Sean]

yea i think i will always stick with the under 1$ ones because you can make more % faster but theres more risk, with the big stocks it looks like the patterns stand out more but to make money you'd have to invest like 10,000$because the return seems lower
if the stocks i'm in right now do good then i'll be able to use what i learned to pick stocks that look good.

looking at SARO, it looks like BHWF and TDGI, lol bill's 3 day rule ususally comes true, i just transfered another 200$ into my account i'm thinking about trying to double it on SARO and then look for a more stable penny stock.

[Dr. Dave]

Ok, here's my penny for thought - its in my signature - DKAM. I'm only waiting for a pump, but here here's the deal with the company. First, it's real. They are a booze distributor that had an idea to match up famous people with booze. If you look at the chart, a couple of years ago, it got pumped into the dollar range - that was on Trump vodka - tied in with the Donald. It had a great release - one of the best vodka releases around... but, there was no advertisement (they don't handle that), and likely the Donald wasn't the best choice. Also, the contract was made such that, they paid him for his name, and thus he had no other obligations. Eventually, the fundamentals caught up with the speculation - the earnings release didn't have the numbers, and the pps dropped big time. They also had Newman's own drinks, which still does ok, but not enough, not enough for the price. The following spikes came after such things as an NFL promotion for the vodka, and also hopes it would be somewhat advertised on the TV show. It now appears on the show, but you can't tell what it is. Then the company cut a deal with interscope records, that's more of the spikes. A rapper was to be tied to a cognaq - good play, and the news finally came out that it was Dr. Dre - I think that was the last spike to 0.60. But with all the news, Dre's cognaq has yet to come out - they want to tie it with his record release, or lost their credit to pull it off. Anyway, they finally tied a beer to kid rock. Now the deal is he is part of the deal, and he's promoting it. He just had his second concert in a row tonight, and though the beer wasn't to come out until labor day, but there was talk on "the wheel of misfortune" that he may debut it at his detroit concerts. Not believing the "wheel", I didn't think it would happen. Well, I searched twitter tonight, and it appears it did hit, and people were enthusiastic about it. To read more google/twitter "bad ass beer" or "kid rock beer". The former is the real name of the beer, but fans call it the latter too.

So.. interestingly, there is always this run up on news, or a "deal" (there have been others), then a drop - usually cause earnings or the deal gets delayed. This time, the product has actually came out, and though not really slated to be shipped until the end of summer, it has from what I can tell outside the "wheel", people have heard of the product, and at least in detroit like it... and the price has dropped. So, it could be a dump before good news, as opposed to the pump before the bad news. We'll see monday. Over the longterm though, this company is hurting big time for cash, and fails to deliver, and I don't know for sure what the contract involves (ie. how much % they get for distributing the beer)... so long - I wouldn't recommend it to anybody, but if there is a run up, it could make a good 1-2-3 day play. Recent spikes have been very short - look at the charts. Also, there has been a lot of bashing over at you know where - I guess I should call it the "wheel of misfortune" - so that could also be another good sign.

Take it as you wish, and be careful. I'm usually not to keen on giving out rec's. Even with TA, I won't say, you guys should buy here, and sell there, I just try to say what most TA guys are looking at, but that's all that it is... what a TA guy would see, not really a recommondation or a promise that it will play out - just what the interpretation is. So, do your DD, and like I said, long probably not... but pop and drop - there could be a move coming - either this week, or perhaps prior to the earnings after the beer starts to roll, or before the bigger debut on labor day. Note, they have to report here pretty soon too, I think in the next few weeks, and I'm expecting really bad numbers.

I also know the company is real cause I've bought the vodka at a supermarket.

The guys at the wheel just argue back and forth... and there's both umpers and bashers, so don't get too caught up with it.

[Dr. Dave]

yea i think i will always stick with the under 1$ ones because you can make more % faster but theres more risk, with the big stocks it looks like the patterns stand out more but to make money you'd have to invest like 10,000$because the return seems lower
if the stocks i'm in right now do good then i'll be able to use what i learned to pick stocks that look good.

looking at SARO, it looks like BHWF and TDGI, lol bill's 3 day rule ususally comes true, i just transfered another 200$ into my account i'm thinking about trying to double it on SARO and then look for a more stable penny stock.

I hear you, that's why I'm trying to up my options (option contracts on stocks move like penny stocks, but are way way way way more complicated) skills on the big board stocks. I realize with all the difficulties with options, that trying to get a play that works out over a week or so period is way way too difficult. But, I'm not too bad at calling things for a day or two on specific TA setups - particulary on stocks that I really follow and actually look at the news on, and track fundamentals. I can also set things up to trade automatically if I'm asleep with those.

SARO you should likely get up bright and early for.

[Sean]

when buying on a pump, do you put in a bid before the market opens?
or wait to see what the first buy is and then buy at same level, yea i was thinking about getting in tommorrow and out tomorrow.

[Dr. Dave]

yea i think i will always stick with the under 1$ ones because you can make more % faster but theres more risk, with the big stocks it looks like the patterns stand out more but to make money you'd have to invest like 10,000$because the return seems lower
if the stocks i'm in right now do good then i'll be able to use what i learned to pick stocks that look good.

looking at SARO, it looks like BHWF and TDGI, lol bill's 3 day rule ususally comes true, i just transfered another 200$ into my account i'm thinking about trying to double it on SARO and then look for a more stable penny stock.

$200 isn't a bad trade amount with these guys, it wouldn't do much good on microsoft that's for sure, and it would be nice to double it. Easier said than done sometimes - particularly consistently... I guess, I"d have a website myself if I could do that haha. If that SARO runs though, you could get it in a day.

[Sean]

i just saw a video "most small traders swing for the fences and eventually blow their account up". i don't think i'd ever put all my eggs in one basket thats wayy to risky

[Dr. Dave]

when buying on a pump, do you put in a bid before the market opens?
or wait to see what the first buy is and then buy at same level, yea i was thinking about getting in tommorrow and out tomorrow.

That's the hardest part... it could just rocket, so if you aren't in, its too late, but basically, for me, I look for an unusually large candle following relatively quiet times, that also has a lot of volume - the volume should then put the stock on the radar for the following day, so to me - the safer play is look for that, and buy at the end of the day waiting for "day two" so to speak. The downside is that if you're not in it in the first place (which is then more of a speculative play than a technical play) you could miss it. Look at the BEHL chart - speculative would have been buying on those horizontal moving candles before the move, technical the day of the first bump would have been a (well it was "the") play. After that, if it were to have gapped, you could have lost a lot of upswing before the downturn. But, that's just how I see it. After that day, for me, I didn't ever consider chasing up the price - it would have worked out that time, if it was done early enough, but I like to try to get in at what looks like a beginning... because if it reverses, you can still get out. Again, this is the strategy that mixes with my risk tolerance and emotions. For others, buying earlier, or in the middle of the move is just fine for them.

[Dr. Dave]

i just saw a video "most small traders swing for the fences and eventually blow their account up". i don't think i'd ever put all my eggs in one basket thats wayy to risky

Well a lot of them need to see the price rise quite a bit before they "trust the stock" - and will bail out one stock they were in, to get into the one that is taking off. But they don't have the insight to recognize the turnaround - that a stock hit its resistance level already, or the momentum has decreased, or that it was buy on rumor, sell on news.

They also rush it, and have a feeling that if they are not in the market, they may miss out. The traders that make a lot, have a ton of patience and limit their market exposure. Always in is bad if you don't understand the overall picture. During the 2008 downturn on the big boards, how many were listenting to CNBC saying "the bottom is in" and buying every rally, when the moving averages were showing parabolic downtrends? The bottom was in about every 3 weeks on that channel.

There's a ton of mistakes you can make when you are new.

That's why money management is pretty key. Keep it light on each trade, study each trade, and see if you can keep from crapping out and giving up.

Like I said earlier, no stock will travel up and up day after day, especially at rates of 10-100% a day.

A decent indicator if you have a profit, and your just not quite sure is just to look for candles like the hanging man... play the chart game and see.

It's usually greed that keeps them holding too long, then the reversal comes, then they say, I'll sell when it pops back up to XXX (the old high)... if it does come back, then they are bullish again, or if it doesn't come back, then they worry, and worry, until the stock goes under. Then they hope that it comes back to where they bought it. They may even average down, and its amazing, cause the market will know - it knows when the last average down is, and when the sell button has been pushed, cause it rallies from there. Been there, done that - that one is DKAM for me. I always kept it around though, to stay engaged and see how it all works on the psychology front.

Trading too many stocks too gets people into trouble - my signature looks like I'm juggling a lot, but some are options contracts that went bad... so I'm not actually trading them... they are just sitting there until they expire. Then I have a couple kind of long term plays - but since I can't stomach large losses, the positions are really small. Then I have the ones I'm trading. I can't really handle trading more than 5, and truthfully, 5 is pushing it to the limit.

[Sean]

yea when i played the stock game and started to do good was after i watched a video about the hanging man / hammer, in a downstrend hammer=good and uptrend hanging man=reversal it worked almost every time