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Small Cap Stock Trading

Sep 25

Posted by admin in Investing, Stocks Mutual Funds

Let\’s take the NASDAQ composite. It is made up of a basket of shares, the largest and most well traded stocks and an average of these stocks figures go into making the NASDAQ composite. Remember that word \”average.\”

As with ANY average you will always have shares outperforming and under performing the average. Do a research . Now with all the doom and gloom about how low these markets are heading.

How it is impossible to make money as a bull in this market would you be surprised by these numbers?

26 stocks in the markets have made over a 200% return this year! 7 of these stocks have gone on to make over a 500% return this year! 3 of these stocks have gone on to make over a 1000% return this year!I have had some huge success with stocks such as:

MOVI 84%

ALLY 67%

THQ 59%

So it\’s not all doom and gloom.

When the market averages turn sour – You now have to trade the small cap momentum stocks!

Didn\’t CNN say this is a bear market and there was no money to be made by the bulls? Well seems like someone is wrong.

Bottom line: Market conditions are tough. The big cap stocks are falling far and hard. Mutual funds are losing buckets full of public money. The public are switching off the stock market in their droves as those market darlings they held last year are sinking lower and lower.
But you are doing the wrong thing. Completely the wrong thing!

In a run away bull market you want to be INVESTING in the

BIG CAP Momentum stocks. There simply is no better or easier
way to make a lot of money.

But when the market averages turn sour you have to change your strategy. You now have to trade the small cap momentum stocks! his is where the money is being made now. The last thing you want to do now is leave your hard earned money invested in Yahoo, SUNW, QComm in the hope they\’ll bounce back.

It won\’t happen in our lifetime. Yahoo and a host of other high flying stocks in the 2000 bull market have had their day in the sun. It will not be repeated! Their bubble burst a long time ago. If you can\’t stomach the stock market any-more then get out!

If you are willing to give it another shot with a slightly different
approach then order MSTS now and start trading in those small cap momentum stocks. This is where the money is!

How long can the market keep heading lower? Well I hate to
keep repeating myself but the fact is noone knows. Some bear
markets in the past have lasted over five years. Does it look as if the markets can head higher from here? Do general conditions warrant a new bull market cycle? I see absolutely no sign of that.

Keep your ears closed and trade what you see. Right now I see lower markets ahead. Keep out of the large cap stocks.

Mark Crisp
The Momentum Stock Trader
http://www.stressfreetrading.com

Writen By : Mark Crisp

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Stock Trading Basics

Sep 25

Posted by admin in Investing, Stocks Mutual Funds

One axiom of technical analysis suggests that while prices may fall of their own weight, only volume can drive prices higher over time. The spring
advance of CACI International, an information systems and high technology
\”solutions\” company out of Virginia, is one of the best examples of this
phenomenon I\’ve seen in this spring rally.

CACI was moving in a tight consolidation from mid-February into late March
when the first significant high volume day occurred on March 27th. The
uptick in on-balance volume (overlaid on the volume chart) supports the
heavy buying, as does the bullish candlestick. Even though CACI continued to
trade in a very tight range for another three weeks, the heavy volume day on
March 27th was a tip-off that buyers were interested in seeing this stock go
up–moreso than sellers were looking to get out of their positions. From the
beginning of the year until the first big up moves in late April, CACI has
advanced from about 22.5 to 28. While this 24% increase is a more than
reasonable return, the rising on-balance volume strongly suggested that
holders of the stock believed there was more to come.

In most cases, given a market with a neutral or mildly bullish bias, the
only thing that would keep a stock like CACI down (outside of a catastrophic
event) would be the determination of holders to sell, which is not reflected
in the rising on-balance volume, nor in the tightness of the
consolidation–particularly between late February and early April.

As good as the returns from CACI were from January to late April, the
advance from late April to late May was nothing short of spectacular, In
about 30 days, CACI climbed over 53%, largely on the backs of heavy buying
on May 9th and 10th, as well as on the 22nd, 23rd, and 24th. Unlike many
high-volume, high percentage moves, CACI\’s advance had almost no gaps. In
fact, each advance was supported by a significant support area of at least
two weeks. Nearest support currently is at 36.5 as the stock trades in the
low 40s.

The importance of these small support areas is that the advance is more
likely to be sustainable if there are areas to which CACI can retreat. The
pair of two to three week support areas here can function as places where
selling can occur without overly disrupting any renewed advance. This is in
contrast to what are commonly called \”V\” advances in which stocks that have
declined rocket upwards without pause, often reaping brief, but fleeting
gains. Advances that come with both heavy volume and short-term support
\”platforms\” are much more likely to provide reasonable entry points than
those without.

MSTS picked up CACI last week. Already it is showing a nice profit.

Mark Crisp
The Momentum Stock Trader
http://www.stressfreetrading.com

Writen By : Mark Crisp

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Big Pharma Bottoming Process (BMY PFE

Sep 23

Posted by admin in Stocks Mutual Funds

Big pharma innovators have been under pressure from generic drug competitors, Medicare changes, and lawsuits. There\’s been a general negative feeling towards high drug prices. However, the pendulum may swing in favor of drug innovators, because of greater awareness that large capital investments are required to create a new drug, and if those investments slow, fewer drugs will be created. However, the debate over excessive profits will continue. Consequently, big pharma innovators may be turning the corner, similar to tobacco firms a few years ago.

The three charts below are two-year weekly charts of BMY PFE and LLY. The large weekly volumes after steep downtrends indicate a bottoming process. Buyers were willing to buy as many shares as sellers were willing to sell at a constant price for over a week, which typically creates a \”hard floor.\” Consequently, when selling slowed, prices rose. Prices may continue to rise, until buyers take some profits. Currently, these stocks are relatively and fundamentally undervalued, and many technical indicators remain severely oversold. So, BMY PFE and LLY may be in uptrends for some time.

Charts available at PeakTrader.com Forum Index Top Stock Picks section. Also, free info available at PeakTrader.com Forum Index Market Overview section and other public sections. Other drug stocks to watch are PPH (Pharma Holders Exchange Traded Fund), ABT, and SGP.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA

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Consolidating Gains

Sep 23

Posted by admin in Stocks Mutual Funds

The sentiment indicators in mid-October suggested most investors were expecting the market to fall further. However, sentiment is a contrarian indicator. Currently, many sentiment indicators are far less bearish. For example, the latest American Association of Individual Investors data showed 43% are bullish and 28% are bearish. Last week, 32% were bullish and 46% were bearish.

The chart below is an SPX daily year-to-date chart. The current SPX pattern is similar to the late May pattern (see vertical line). The similarities extend to indicators within, above, and below the price chart, and many exogenous technical indicators. One notable difference is the current rally is about two weeks ahead of the previous rally.

The steep rally suggests consolidation next week and the following week, until options expiration in two weeks. SPX closed at just over 1,220 Friday. Short-term resistance is at the extended Price-by-Volume bar at 1,220 to 1,230. Short-term support is at the 50 day MA, currently at 1,210. So, SPX may trade in a narrow, and volatile, 1,210 to 1,230 range over the next two weeks.

November Max Pain expirations also support a consolidation. Some November Max Pain points and values are: SPX 1,205 with the value of puts over six times greater than the value of calls (which is bullish, since the put/call is a contrarian indicator). OEX (S

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Nasdaq Rising Wedge

Sep 22

Posted by admin in Stocks Mutual Funds

The bulk of third quarter earnings were reported over the past two weeks. Many stocks, particularly tech stocks, fell sharply on above average earnings and guidance. Consequently, the stock market was more predictable than many individual stocks. SPX, for example, generally traded within 1,170 and 1,200, i.e. multi-year support at 1,165 and the 200 day MA at 1,200. Also, the economic data reported Friday showed real GDP expanded at a 3.8% annual rate during the third quarter. So, there was no \”soft-patch\” afterall.

However, the market continues to worry about inflation. The GDP Chain Price Deflator, also reported Friday, rose at a 3.1% annual rate during the third quarter, which was much higher than the 2.6% rate reported for the second quarter. Recently, the market has been fearful that the FOMC will continue to tighten the money supply well into next year. On Tuesday, the FOMC is expected to raise the Fed Funds Rate another 25 basis points to 4%. That would add up to 300 basis points of hikes (25 basis points at each meeting) over the past 16 months.

The chart below is a Nasdaq weekly chart. Nasdaq has been creating a rising wedge for about two years. The MACD indicator has been moving in the opposite direction of the price chart (i.e. negative divergence). The three highs in the wedge fit well. However, it\’s uncertain if the third low will also give a good fit. The wedge is compressing, which should continue to generate volatility. Many intermediate-term technical indicators, e.g. NYSE Summation Index, NYSE Oscillator MAs, CBOE Put/Call, etc., suggest the market will be higher sometime within the next few months.

It\’s possible, the market will fall shortly after the FOMC announcement Tuesday for a better opportunity to buy before a multi-month rally. Also, there may be excellent opportunities to sell, for large gains, taking advantage of trading ranges and volatility. The Nasdaq Rising Wedge and the SPX multi-year support and resistance levels, between 1,165 and 1,250, can be used together for general buying and selling points. However, it\’s also possible the market will continue to trade well within these ranges for some time with greater volatility. Nonetheless, I believe, there will be many excellent short-term and intermediate-term trading opportunities over the next few months.

Charts available at PeakTrader.com Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA

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Stock Options: Limited Loss And Unlimited Profit

Sep 21

Posted by admin in Investing, Stocks Mutual Funds

Many people believe that the stock market can make you rich one day, but also make you bankrupt the next. Well, how eould you like to know about a method of stock trading that completely saves you from unlimited loss, but still leaves the door open for unlimited profit? That method is buying and selling stock options. How to trade stock options would best be explained using the following example.

Lets say a person who thought that a stock selling in the market at 50 would decline to possibly 30, that person could buy a Put stock option. Not, however, that in buying a stock options, one should have some idea to what extent the stock might move.

In inquiring what a Put stock option would cost, the person might receive a nominal quote of, say, $350 for a Put at the market for 90 days. Most options are negotiated \”at the market,\” which means at \”the current market,\” when the option can be obtained by the option-dealer.

Suppose that the stock is selling at 50 and the quoted price of $350 is satisfactory to you. You enter your order: \”Buy a 90-day Put on 100 XYZ [the name of the stock] for $350.\” If you are trading through your stock-exchange broker, the broker will give your order to an option-dealer who will contact one of their clients who sells options on that stock and will attempt to buy the option for you.

When, after this contact or several others, the dealer has obtained the Put option for you, the dealer reports to the stock-exchange broker who gave him the order, and the broker in turn reports to the customer: \”Bought Put 100 XYZ at 50 expires December 30 for $350.\” Let us say that the person who bought the Put option, expecting a decline in the stock, was wrong, and that the stock, instead of going to 30 (as expected), advanced to 70 and was selling when his option expired. The person would have lost the $350 that they paid for the Put option.

Bear in mind that the limit of the person\’s loss was the cost of the Put option, or $350, no matter how high the stock rose and no matter how wrong the person was, and that the person would draw on the equity in the account to that extent only. Suppose, on the other hand, the person had sold the stock short in the market. The loss would have been 20 points and still no knowledge as to the possible extent of loss until the person covered the short sale. But in the purchase of the Put option the account would read:

Bought Put on XYZ at 50 for 90 days: Loss $350

Remember, too, that no trade has been made in the stock, so no stock-exchange commission has been paid. A regular stock-exchange commission is charged by your broker only if a transfer of stock is made in connection with the option.

On the other hand, suppose the person\’s judgment was correct and the stock declined to 30. If the person had instructed the stockbroker to buy 100 shares at 30 and exercise the Put option, the account would look like this:

Sold 100 shares at 50 (through exercise of Put) $5,000

Total Receipts $5,000

Bought 100 shares in market at 30 3,000

Bought Put at 50

Cost 350

Total Cost 3,350

Profit on trade $1,650

The profit then would be almost 500 percent of the cost of the Put contract. The profit is the difference between the cost of the stock plus the cost of the Put option and the proceeds of the Put that was exercised.

In all of these examples showing the use of options, the commission cost has been ignored. But at no time could the loss have been more than the cost of the option – $350 – and any stock-exchange commissions would have been paid out of profit or out of possible recovery of part of the premium which was paid.

For more FREE information and articles on how to correctly buy stock options, when to trade, when to not trade, tips, tricks and advice — visit http://www.UnderstandingStockOptions.com.

Writen By : Jon Weaver

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Six Things To Do In A High Risk Market

Sep 18

Posted by admin in Investing, Stocks Mutual Funds

When the market turns against you, what should you do? Sell everything? We discussed that choice in a recent column. Selling everything draws your ?line in the sand? and announces that you have determined there is no future for you in the market.

There are other steps you can take when things start moving against you. Here are 6 actions you take today to help protect the money you?ve worked hard to get. In my next article, I will share several more ways you can help protect your stock market and mutual fund investments.

1. Decide at what price you will buy the stock or fund if it pulls back. Take a long look at where the stock has been the last few months. Has it gone up without any kind of break? It may be due for a pullback. WRITE DOWN your reasons for buying and the ideal price you?d like to own it at…and be patient. If you miss it, you miss it. Don?t chase stocks.

2. Manage your stops. Re-examine where your stop orders are and decide if you can live with getting stopped out. These days, stop orders usually need to be renewed or revised every 60 days. If your stock has moved up nicely of late, you should move your stop up as well.

3. Buy puts on stocks. You may own a stock where you have a profit. You may really have no intention of selling the stock soon. But you know that the individual stock may have gone up too far, too fast. Buy a put on the position. It is considered protection on your original investment. If the stock falls, the puts should climb in value. This will offset the drop you have (on paper) in the underlying stock. And if you?re right, and take a profit in the put, you may have enough cash from the put sale to buy more shares of that stock at a good price, now that it has dropped.

4. Buy half of what you would normally buy. You want to tread lightly in markets when the risk is high. Buy half of what you?d normally think of doing. You?re automatically keeping more cash than usual on the sidelines, which is smart decision in a risky market.

5. Invest in a basket instead of an individual stock. Exchange-traded funds are a great way to do this. If you feel strongly that a current theme will work, but are unsure about the market, this may be your ticket. Thinking about swapping a single stock for a basket. You?ll get diversified since you own a basket of names instead of one single stock.

6. When stocks start to fall, think about selling stocks short. It?s not for the faint of heart, since being ?short? leaves you on the hook, because your loss is unlimited. But remember, stocks don?t just go in one direction. What makes it an interesting market is that stocks go up AND down.

One decision you won?t see on the list is the choice to do nothing, and just ?sit it out? or ride it out. You?ve worked hard to get where you are financially, the last thing you should do is sit idle and let the market take your profits away from you.

There are other methods you can employ to help reduce the risk in your account, which we will get into in the next article. In the meantime, feel free to contact us, toll-free, at 877-223-7300 if you would like further information on how to protect your assets in a high risk market.

Thomas P. Mullooly, President of Mullooly Asset Management, LLC (http://www.mullooly.net) has spent over twenty years in the investment industry, as a broker and as an investment advisor. Mullooly Asset Management is a fee-only registered investment advisory firm based in New Jersey, specializing in retirement plan accounts, particularly managing 401k, 403b, and deferred compensation accounts for individuals. Feel free to contact us to check out the relative strength of your portfolio by sending an email to tom@mullooly.net or visiting http://www.mullooly.net/403b-plan.html or sign up to receive the market report and tips on how you can soundly invest your money at http://www.mullooly.net

Writen By : Thomas Mullooly

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