Pick Your Spots Carefully

While I wont post charts on the major indices, they are approaching old levels of support that I am anticipating will behaving as new levels of resistance. These are 740 in the S&P, 7100 in the Dow, and 13.80 in the NASDAQ. That being said, I saw a lot of interesting patterns today in the market. Some are patterns on the verge of breaking out, some broke out today, and others broke out already and are retracing just a little bit. Here are a couple examples. ASEI broke out today from a bearish flag pattern. I layed out my trade a little bit in a comment on my last post. The key here is that I think you can still enter this trade early tomorrow before it truly begins its run (its a short trade by the way...buying puts may also worked although I havent looked at options for this stock). While flag patterns typically move a similar amount to the pole of the flag, i have a hard time believing this stock will go down $20 on this next move. Instead I will fall back on my expectation of this moving 20-25%. That still means roughly 10-15 dollars.




BLL is an example of a bearish breakout that is retracing and is providing an entry point for a short position. I entered this trade on the breakout, but the current price also provides a good entry point. Key to this is the area of support it found late last week/early this week around $37. If it breaks through this area the stock could be in for very nice run down. Conversely, you know you are wrong on the trade if it breaks above new resistance (or previous support from the wedge) at around 39-40 dollar level. The risk reward in this case is about $2 risk to $6 profit. Very nice bet that myself and any casino would take anytime.
Finally, DNR provides a bullish case where a previoud breakout seems to be ready to pull back just a tad to provide a good entry point. $14 had been behaving as strong resistance dating back to October. As the stock eventually formed an ascending triangle and broke out on the 10'th. Now it looks to be ready to pull back and retest $14 as new support. A retest would provide a very good entry point for a likely run up to $18 (based on the ascending triangle). $18 also has acted as support/resistance in the past (dating back to at least a 3 year chart). You know you are wrong here if the stock falls and holds below $14 so I am going to set my stop just above $13. That is $1 risk for $4 profit potential. A nice profit:risk ratio.

INTC and GE

I continue to have problems downloading my videos to youtube. So I have to do this the longer way. Anyways, I had a question about INTC and GE as longer term, 2-3 year investments. Let me be clear from the get go, I usually hold about 2 months at most with the rare exception being held longer. About INTC, it is in a downtrend with strong support at $12 and resistance at $15. It has been trading in this range for about a month. Meaning it seems to be trying to find a bottom.

This is a lot more evident when looking the weekly chart. The range bound stock has a target of at least $19 over a longer time horizon. A break above 19 means it will return to the trading range it once held in the $20's. Again, this is why i dont invest, i trade. It is because it becomes more and more difficult to determine price targets, and relies more on fundamental analysis (which I dont really do) and less on technicals (which is my bread-and-butter).


As for GE, this stock is a train wreck. It is in a long term downtrend with no signs of slowing up. There have also been a lot of false bottoms, or kickback rallies, on the way down, making me even less trustful of any "bottom" that may form in the stock. Even though it is at $8 (down from a 3 year high of $42), there is nothing to say that it wont keep going. I do know this stock has been having a lot of problems with bad earnings and the like. So until those start to come back, and a low has been tested several times, I would stear clear of GE.

Hopefully I can have my video problems fixed soon. But in the meantime, keep your eye on GME(enter if it holds above 28.50), GENZ (nearing both horizontal and diagonal support, play the bounce), BIG (long play but earnings are next week), AOC(long at $39.5 or short at $38), PNRA(descending triangle), CRM (descending triangle), plus more bearish flags than I can count.

Next Video coming soon

I will be posting a new video in the next day or two. i tried to post one over the weekend but had some technical difficulties. But i think I have them all fixed now. next video will be up on the afternoon that I think the market, or at least some stocks on my list, get finished with their current swing downs. As for the markets in general, the dow broke through key support, and is just under 200 away from 7000. S&P is sitting a millimeter above support, as is the Nasdaq. Ill go into more detail on these later.

First Video Weblog

RIO

Here is a stock I have been watching for a while. In my real money account, I was buying this puppy up ever since it dipped below $10. With several hundred shares at an average price of 12, I had a large enough position to put on some covered call trades over the past couple days. I sold the Feb. 17 call on monday for 1.25 each while the stock was at just over 17. That was a lot of time value for just two weeks left in the stock. I closed them out today for 0.2 each. That was a nice 1.0 per share, or $100 per contract, profit i made in just a couple days. And with the stock looking like it is ready to bounce here, I may load up with some more shares with my new profits. i would like to see RIO stay above 14.9 by the close.

Need a Stimulus for the Stimulus

WHAMMY!!! And there you have it. Geithner drops the stimulus on our laps and the market hates it. Perhaps it had to do with how vaguely it was described. Perhaps it had to do with the talk being directed to "Main Street" and not towards "Wall Street" (i hate those generalizations by the way). Perhaps it had to do with the fact that wall street hates the idea and wants government out of the way. Either way, the markets responded as expected, with a hard move in one direction. Unfortunately for bulls it was down. But thats okay. I just take things as they come. And right now, all the major indices are sitting right on support. It never fails to amaze me how that happens time and time again. I wont post any charts but ill describe the general levels of support. The Dow is sitting right on support at 7900. This has been acting as support for really dating all the way back to the 2001, but looking at more recent times, it has been hit repeatidly and has ever time but once in November. The S&P is sitting right on diagonal support in the 825 area. If this breaks the next area of support is at 800. The NASDAQ is sitting on horizontal support in the 1520-1530 area. If this fails, which it very well may, the next support will likely be at 1480, where both diagonal and horizontal support will meet. As for my current positions, I closed out LNCR right after the open. The stock gapped lower by a couple bucks following earnings, but as I watched it premarket, the opening price kept creeping up and up. And this continued right through the open. I closed quick as i could. My other 2 positions, BTU and KALU, I am still holding on to. Both followed the market down. No biggie. My stops remain where they are. But I am really watching the diagonal support line to see if it holds. As of right now there is no reason to think it wont, but if it gets penetrated, I may close out before my stops get hit. Perhaps a little pre-emptive but I can always reenter later, whereas i cant necessarily recoup lost money so easily.

A Turning Point In the Market

So last week ended pretty well. All three major indices were up nicely. And ending the week in such a will typically carry over to monday more often than not. However, we didnt see it happen here. From a fundamental standpoint, this could be because the market does not want to get to assertive ahead of the vote on the Obama's stimulus package. From a technical standpoint however, its because all three indices are right up against resistance. The S&P500 is hitting horizontal resistance, and is about halfway to the top of a larger triangle pattern. The Dow is at both horizontal and diagonal resistance, and the NASDAQ is at diagonal resistance. This only means one of two things. Either things will explode through these levels, or they will go down. Neither move will affect me to much as I have plans for either scenario, but for right now, I am leaning towards a move to the downside.

TGIF

Just some updates on my current positions. I closed out of CRS at 18.30 for a 6% loss. I remain short in LNCR as my only remaining short position. As for my longs, they are performing nicely in the early part of the day. BTU is up about $1.20 per share, and has broken out of the ascending triangle. At the end of the day if BTU remains above the breakout point, I will add to my position and raise my stop. As for KALU, the stock is up but on light volume. It cant quite seem to hold above resistance, which i place about about 27.50. Perhaps as the day wears on it will see some more bullish action, but as of right now I am a little skeptical. Also, keep in mind the covered call article I wrote the other day. This stock may be a prime candidate for repeating this. I will however probably hold off until monday to see how stimulus package news affects the general market. At this point in the package's life, its not IF it will pass, but WHEN, and with what details. I am eager to see how the market will react once all the details are finallized. After all, its not the news that matters, but the market's reaction to that news that makes or loses money for the trader.

Covered Calls And Spreads

While I am not trading options on this "portfolio" I do however trade them in real life. My last post I briefly talked about taking a position in KALU. KALU recently had a move that I look for in a stock that provides a short term small scale profit on a position using a covered call or debit spread strategy. Let me start from the beginning. One of the things I like about this stock is that the current trend is linear relative to the diagonal support. A stock like this provides a good opportunity to make short time profits by writing a covered call against a stock position or selling a short dated option to create an option spread (if I was long a call option to begin with). When I do this, I look for stocks that I think will continue in the current overall direction based on strength of support areas. I generally like to do this in stocks that have a relatively low level of volatility. While lower volatility implies a lower option premium, it allows for my strategy to be more effectively executed. Here is what I do. In a bullish stock where I have a long position, I like to sell the nearest out of the money call in the current expiration month. For KALU this would have been the Feb 30 Call. In this case the trade would have brought in a premium of about $90 per option contract if I had sold the call on 1/28/09 when the stock began to show some weakness. I then hold the option until it makes a higher low near support. At this point I rebuy the call (close the position), locking in a profit of about $60 per option in this trade.

The reason I trade the nearest out of the money option is because I want to leave myself room incase what I perceived to be a higher high is just a hitch in yet a larger movement. In this case, the 30 call would have given me just over $2 of reaction time should the stock move higher and I wish to hold onto my position. Plus, options near the money have the highest time value, which is what I am trying to lock in. The reason for selecting the nearest month is because time decay occurs at the highest rate in the final month of expiration. So not only will the option lose value as the stock declines, but it will lose value as the month wears on.

The major difference between a covered call and a debit spread creation is that in a covered call you own the stock where as in the spread you own a lower priced call. In the trade above I locked in a profit of $60 per option that can be deducted from the total price of the long position. This may not sound like much. If i bought 100 shares at the break out above 24 on 1/23/09, i would have spent roughly $2400. In effect I am reducing the total price to $2340 by the end of this trade. Conversely, if I had bought the $25 call upon the breakout, I would have spent about $2.50 per share, or $250 per contract. In this case, I would be significantly lowering the total per contract price of the initial call position (2.5-.6=1.9 and 2.5-1.9/2.5 = .24 or 24% reduction in total cost per long contract.) I have indicated with the big blue arrow where the call should have been sold, and indicated with the big red arrow where it should have been rebought to close the trade. .

EQ

Something is not right about EQ. I have held the position for a couple weeks. But that is not the issue. The issue is that since it made its most recent lowest low on 1/30 and 2/2, the stock has not moved with the kind of strength I would like to see. Plus, today it opened below its diagonal trend line which is setting off some bells and whistles in my head that perhaps the strength that I had percieved this stock to have is evaporating. My trading philosophy is that if you are unsure what to do, go to cash, and that is precisely what I am doing here. I am closing out at 35.82. Rather than staying in cash though, i am taking up a position in KALU. Not sure what they do, nor do I care. The trend in this stock is good. I like trending stocks that stay relatively linear. I am entering in at 26.05. My stop is just below the diagonal support at 22.50. That will give the stock some room to work. It also is an area of support on the 30 minute chart. Max position I can take is 570. Ill take 550 to make it more round. Here are a couple pics of the 2 trades.

Market Review

And we're back!!! Im talking about back to previous levels of resistance which are now behaving as support. I will only pst the 30 minute charts for the NASDAQ and S&P, but suffice it to say the short term trend has gone sideways when viewed from a daily chart. I had mentioned the head and shoulders pattern yesterday that was present across all three major indexes. Well today opened with an explosion to the upside. The markets then slowly lost their initial profits until 1:30 when things dropped heavily down to support at the neckline of these different head and shoulders patterns. Now dont get me wrong, I remain neutral to slightly bullish in the markets right now just because I get the feeling like the market is trying to dig in its heels to prevent any more movement to the down side. That being said I expect tomorrow to finish even to slightly higher, though what happens in between is anybody's best guess.

PCU

Stopped out of PCU at 15.30. I know i had my stop set lower, but it was a mental stop and i missed my exit. In general, this industry is up today. FCX, RIO, PCU and others are all outperforming the market.

While like I was expecting yesterday, the support held in all three major indexes. Upon looking at these closer, i noticed an interesting little pattern forming up on the 30 minute chart. Ill illustrate it on the Dow because it is easiest to see there. However, the same pattern is present in both the S&P500 and the NASQDAQ. Its the classic inverted head-and-shoulders pattern. I highlighted in thick blue where the neckline is at, and i highlighted the shoulders and head in yellow. Based on this set up i would expect the Dow to go up about 120 points from the break out point above the neckline. We got there upon reaching the high during todays move, but then started to pull back a little. Based on technical analysis, I am seeing the strongest support at about 7930 and the strongest resistance at about 8230. Since momentum is up for the moment, i see the Dow going and testing the resistance line.

In the S&P500 and the NASDAQ, I am also seeing upward momentum carrying through for the one to two days. In the S&P, weak resistance is present at 1880 with stronger resistance at 1910 (coincides with diagonal resistance or the upper resistance in a longer term triangle formation). In the NASDAQ there is some weak resistance at about 1560 (the high on 1/28), and stronger resistance at 1590, which just so happens to coincide with the diagonal resistance of a longer term triangle formation (see some of my older psts to view this triangle). Well see what happens when it gets there, but for now I remain neutral to bullish.

Early morning action

Took down BTU at 25.79 about a minute after the open. Stop is at 23.90. 1000 share max. But need to take less based on remaining cash in portfolio. Bought 800 shares. Price target is 36.

Closed out of AOC on todays open. at 38.72. Took a loss on this one.

Market outlook

Sorry, I am not on my work computer so I wont be posting any pictures here so youll just have to follow along on your own charts. Of the three major indexes, the Dow looks the weakest as it closed sitting right on its Support line. This support was penetrated earlier in the day, but prices rose just enough to get the price just above this line. Both the S&P500 and the NASDAQ are sitting on diagonal support. I anticipate these levels holding (perhaps out of hope) but until i see prices close below support, then i will maintain that these levels will hold. For the next couple days i am neutral to slightly bullish in the markets.

January Review

So I have been going over some of my trades, and trade ideas. So far I am not off to a bad start. A 4.7% profit in only a couple of weeks. Not to shabby. Most of the profits came from a fortunate trade in GERN. The kind of situation where i was more lucky than good in my stock selection. Looking at other trades, I closed out of TTI because of general market weakness as well as weakness in the stock itself. I also closed out of PNRA. After reviewing this trade, I was correct in my forcast of direction, but wrong in my timing. If I had either made my stop a little higher, or waited another day to enter, I would have probably stayed in the trade and would currently be enjoying a profit. As for my current positions, i have 4 short positions (AOC, LNCR, PCU, and CRS). These positions represent a relatively diverse range of companies. But thats not why I traded them. PCU, LNCR, and CRS were all traded based on head and shoulders formations, while AOC was traded based on a break below support in the 30 minute chart. Both AOC and LNCR are showing the most strength relative to my trading plan for them and will likely be closed out tomorrow, though i will hold if my stop is not reached. The other two I am anticipating a pullback to the neckline of the head and shoulders pattern followed by a continuation south.

My single long position is in EQ. This stock appears to be setting up in an ascending triangle formation. This stock also represents one of my larger positions in my actual portfolio, so I am definitely in position in anticipation of a breakout. My stop is held pretty tight for this with a plan in place to re-enter incase my stop is to tight.

Other longs that I looked at but did not enter include EGOV, ABX, ABAX, MCK. These all worked out. EGOV broke out today, but i was busy at work so i missed the boat. ABX and ABAX I could not get in at a price that I liked, so I just stayed out. MCK gapped up the morning that I put it on my watchlist, so i never entered. No problem there, i can always get in later if i still like the stocks. We will see. I would like to mention, that MCK appears to be setting up in a bull flag pattern, and ABAX has a very nice nice looking pole forming, and I am anticipating a bull flag formation in this stock as well.

Stocks I may buy tomorrow include:BTU (ascending triangle), CAH (trending), DRQ (trending), GENZ (ascending triangle), KALU(trending-found through OA), MCK (bull flag), MHS (bull flag), OCR, RIO

I wont put on any more shorts for the moment since i a little more short exposed than I prefer. But like I said before, i expect to be closed out of some of these in the near future.

Happy Trading

Additional Trades

Shorting AOC at 37.07. Stop is at 38.50. That means max position size is 1500. Will short 1500.
Target is 31. Margin is $11121.
Shorting PCU at 13.80. Stop at 15.10. Max position of 1500. Shorting 1500. Target is $9. Margin $4131
Shorting LNCR at 24.05. Stop at 25.5. Max position 1300. Shorting 1300. Target is 21. Margin $6253

Longs to watch: AYE, BTU, CAH, DRQ, EGOV, OCR
Shorts to watch: CELG, CXO, DNA,

Early Trades

I am shorting CRS at 17.10. My stop is at 18.15. Max position I can take is 1900 shares. Will short 1500. Based on 20% margin, $5310. Target is $11.

Two trades to watch

Here are to stocks that I am pretty high on right now from a trading foresight point of view.

DRQ: This stock has been on my radar since mid january when signs of a trend first started to show. This stock made a higher high yesterday, and then today began to come back down. I am looking for this stock to hit the trend line in the 23-24 area (highlighted in blue). If this happens I will be looking to enter with the trade with the expectation of a new higher high. Support just so happens to be around 23.70. Resistance is at 29. Thats a nice 5 point move that ill be anticipating to be a part of.

Rio is another stock that just hit resistance yesterday and is looking to come down to support. I have emphasized what I am seeing with big bold Red lines on the chart. Resistance is sitting around 15. Support is rising. I am anticipating a bounce off the trendline support, setting up a nice ascending triangle pattern. I will take a premature position at support (I anticipate to be right around 12.75) and will keep my stop tight incase it falls through. The upside potential based on this pattern is 19. I am expecting this pattern to hit bottom and begin reversing end of next week to early the following week.

Other chart less stocks i like:

Longs: ABX (trendline bounce today), ARO (buying on pullback to trendline), CAH (trending), EGOV (ascending triangle), OCR (trending)

Short: ADBE (trendline bounce today), CELG (ready to bounce down), CRS (head and shoulders)
PNRA (resistance bounce)

So the past two days have seen a good 200+ point move followed by a day of giving those gains completely back. In the S&P500 the chart looks to be forming a triangle pattern. The lows and highs are being slowly squeezed together. The index closed sitting directly on support at 845, with the next level of support present at the last lowest low around 800 to 810.
On a 30 minute chart of the S&P500 these support levels can be seen much more clearly. Resistance levels on the other hand occur at 855 then stronger resistance at 880 where yesterday's high hit its head and rebounded.

The NASDAQ looks much the same on both the daily and 30 minute charts.

The major difference is that the NASDAQ is holding at support levels at 1507 that correspond with the support found at 855 on the S&P. Not quite sure what the significance of this is yet (if it even is significant) but it certainly illustrates the slight disconnect in price movement between the two indices. Other support levels on the NASDAQ are located at 1490 (the equivalent of the 855 level in the S&P) and at 1440 where the most recent lowest low occured on the last downswing in the index. I think all indexes will kind of stumble roughly sideways until the end of next week.

Down to one

Just after open, and I am closing TTI, leaving me holding only EQ. I currently have my eye on several other stocks. GME and DRQ are still on my radar. I am curious to see how they respond in another day or two when they have come back down to their nearest support. Additionally, RIO looks to be forming either a double top, or perhaps an ascending triangle. I am giving this about 3 to 5 days till it reaches support.

GERN

sold half at 7.61.
Sold the other half at 7.50

Stocks From the watch list

Stocks catching my interest this morning:
Longs: ASEI (hitting horizontal resistance), CAH (trendline bounce), CPLA (ascending triangle), DRQ (new 2 month high),GHDX (bull flag),MCK (trendline bounce), GME (ascending triangle)
SHORTs: PG, SAM, AOC, PSYS(descending triangle), FAST (descending triangle)

To be fair, when i first made my watchlist, i was primarily looking for bullish stocks, so the list is disproportionately represented by stocks that may be predisposed to going higher. Also, many short candidates are trading below $5 which is a price level i generally avoid. The number of shares I would need to short in order to generate good %profit would be to large.

Premarket buzz

Premarket open, the DOW and S&P 500 futures are both just above fair value while the nasdaq is just under. This indicates a mixed open with the DOW and S&P opening slightly higher and the NASDAQ opening slightly lower. With an hour to go before open these could obviously change. As for my positions, GERN is set to open below yesterdays close. I will close out at 7.50. While im not selling at the highs, i gave the stock room to run, and now it looks to be coming down. If it opens above 7.50, i will take half the position off the table and close the other half at mystop. EQ and TTI both have a bid ask spread that surrounds yesterday's closing price. This indicates a relatively flat open in each. To put these trades in perspective, EQ closed at resistance yesterday (both horizontal and verticle) so it will be interesting to see how price responds today. TTI is much the same, closing at horizontal resistance. Im raising my stops in each of these to $35.50 for EQ and 4.75 for TTI. In general i need to reduce my position size in EQ. The stock currently holds half my portfolio value, and so it needs to be lowered. I am adding in a rule that no stock can represent more than 20% of my total account value. This will be reduced as the portfolio value increases.

Raise em Up

Raising my stop in GERN to $7.00. Looking for EQ to break above resistance at 38. TTI has resistance in the 5.15 to 5.25 area that its having trouble working through so far. PNRA is creeping nearer and nearer to my stop. Just watching to see if my stop gets triggered. Other than that, the week is off. And the only thing i can really say is thatyou gotta love earnings. Reason i say that is a stock like FCX which I thought had some pretty poor earnings is off to a big start early. This is why i trade based on technical signals only. I just dont know enough about fundamentals to truly and accurately gage a stock's strength. I trade by the old cliche that the experts have already priced the earnings into the price. So i just sit back and try to figure out where the money is going and i follow.

New Positions

I took down 2 more positions. PNRA i sold 1000 shares short at 47.95, watched it run up 50 cents and am now watching it bounce off diagonal resistance. I already explained this trade in an earlier post. I also bought 3000 shares of TTI at $5 even. This is a trending stock, so i dont have a price target as of yet, instead i will keep bumping up my stop and wont close the trade till the stop gets triggered. Right now my stop is at $4.45.

I Love It

I love it. Im talking about being in the right place at the right time. GERN just got approval by the FDA to begin key stem cell therapy research. And wouldnt you know it, the stock opened up 20%. Ill keep an eye on it for the morning and bump my stop up to $6. Others that are still trying to figure out their direction include EQ, which at the time of this post just shortly after market open, is holding at its diagonal support. PNRA is rallying towards its resistance, so i will be looking to take up my short position very soon. Others on my list include PCU which is sitting on support (im bearish on this one), and TTI which is resting on its diagonal support.
Major indices quickly approached all of the key support levels that I layed out yesterday. They remain in this area, so we'll see what the day brings. As I already said, if support doesnt hold, it could be another emotion and wild ride down to the lows in november. Im talking about the heads on CNBC screaming for mercy, and crying out the end of the financial world. They can be so entertaining when they panic like that. LOL!!!
Cheers.

Support Holds

Markets didnt look to bad today despite the sell off across all major indices. The reason i say this is because the S&P500 and the Dow both held above support at around 805 and 7900 respectively. The NASDAQ had a larger relative drop than the other 2 indices, but it to is holding at support above 1340. While i think these support levels will hold, (speculative only), if they do break it could cause the kind of chaos that i sadistically enjoyed watching during late september and october. A break of current support would most likely mean a test of the lowest low across that occured 11/20-11/21.

How Bout a Bearish Position

Of the stocks I mentioned yesterday that I am bearish on, none look better than PNRA.

This stock recently broke down from a Head-and-shoulders pattern on 1/13, and has moved back up to retest resistance around the $47.75 level. The play on this is to sell the stock short, (although i usually use puts to play the market short). However for simplicity sake i will stay with the stock only. The stop is set to $49.01 with a price target of $39 based on the pattern breakout. I will take a position early morning sometime after 10:00 est. 1280 is the max number of shares that i can short. Assuming a 20% margin for the short side as well, with a position of 1000 shorted shares is $9600 set aside for margin purposes. To make this techinical pattern more ideal, the estimated $8-9 move is about 20% of the stock price. I have found, as have many others, that %20 moves seem to be very regular healthy ranges of movement.

Buying EQ at 36.14. Stop at 34.99. Max share of 1725. Buying 1500 right now. Target is $40.

Here are some of the stocks on my list.

BTU is in an uptrend and is at the trend line currently making it a good entry point tomorrow in the morning. Stop is at 22.75. Target is 29 with the next resistance level after that at around 36. This stock could provide a couple of good swing trades in the near future.

BVN has a formation much like BTU. Both are energy stocks so its no surprise. Current target is 20 with a stop at 14.90.



















EQ and TTI are much the same as BTU and BVN. Both are in short term uptrends and are bouncing off of diagonal support. Ideal entry would have been the end of the day today, but early morning entry after 10:00 may also provide another decent entry opportunity. Embarq has a price target right now of 40, with 43 being the next resistance after that. Exit at close below 35.25. TTI is very similar. The next two resistance lines are at 6 and 7 with an stop at 4.60. Again, ideal entry was today but tomorrow between 10 and noon may also provide a relatively good entry price.

First Positions

My current market outlook is neutral:bullish. This is slightly contrarian to what the talking heads on CNBC are saying, thus part of my reason for having this outlook. That being said, stocks on my current radar are GERN. I am taking a long position in this stock if it closes at or above 5.20. By stop is set to 4.75 so max position size is 4500 shares. Initial position size will be 2000 shares.

Other Stocks Im Watching:

Long: BTU, BVN, DRQ, EQ, IPHS, LPNT, ROST, SIGM, SLM, THOR, TTI

Short: FSTR, HRBN, PCU, PNRA, PSYS, SAM, SIAL

More on these later

Trading Rules

These are my general guidelines that I follow. With rare exceptions I follow these rules:

Before Entry:
1. Identify the direction of the stock and why it is going in that direction. Is the stock trending, or is it a pattern breakout.

2. Determine the stop loss at which the position will be exited if the trade goes against the anticipated move.

3. Determine the expected price target based on pattern breakout.

4. Take half the position off the table if the stock reaches the price target. Additionally, adjust the stop out point (a trailing stop).

5. For reversal patterns like head and shoulders or double tops, take the position in anticipation of the breakout, with the stop at or just past the shoulder hieght.

6. For continuation patterns, enter at end of day following a breakout but only as long as the breakout is sustained.

7. For trending uptrending stocks, determine the diagonal support, (or diagonal resistance for downtrending stocks). This will behave as both the entry and exit point of the trade. Enter when the stock is at or near the support on the trend side. Exit is placed just below the support.

8. Maximum position size is that at which 2% of the account will be lost upon being stopped out. Most continuation patterns will be entered half before the breakout and half at the break.

9. Scale out proceedure is used for stocks that are profitable where half the position is exited upon reaching the price target, and the other half held until stopped out by the trailing stop. Additionally, the have out position can be reentered upon a stock bounce in favor of the position.

10. Market outlook is important to determine ratio of position types Long:short. For Bullish markets, the ratio of long to shorts is to be 2:1. Bearish markets the ratio of long to short is 1:2. Neutral markets the ratio is 1:1.

Mission Statement

My name is Dylan Dupuis. I am currently a graduate student pursuing my PhD in molecular biology. However, i have a deep interest in the stock market and in making money through trading. I have been actively trading both stocks and stock options for the past 4 years. I am self taught, having followed various blog sites and read just about every book I can lay my hands on that have to do with the stock market. I will be using this blog as a kind of specialized journal where i lay my thoughts out to the public on what stocks i am looking to enter and why, as well as why i may exit a trade early. I have found that technical analysis suits my personality. I generally like to hold a position for a week to 2 months at most but have on occasion traded for times outside that range for various reasons. That being said, the length of time I am in a position is not what is important, but rather the reason for why I enter and/or exit a trade. My trading rules are simple and cliche, ride the winners and cut losses short. I always have predetermined stops upon entering every trade, and have found that while i am not always correct on every trade, I do have the ability to follow my rules and generally outperform the market. This blog will begin with an artificial $100,000 account that is a scaled version of my own personal account. Many of the trades I take here I am also taking in real money with my own account. That being said, the goal is to use this to generate portfolios that will be successful and easy to manage. The plan is to determine position sizes based on the amount I am willing to lose per trade, ~2%. By determining my stop loss ahead of time, i can back calculate the share size i can hold that would lose 2% of my account should that stop trigger. At the end of each month I will update the account total and will compare it to my performance in the past. Hope the readers can learn from this as well.