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Sunday, December 14, 2003
Good evening friends,
God Bless America, Saddam Hussein has been captured, freedom and democracy wins again - God Bless our troops and their families. This news should seal the election for George Bush. It should also catapult the markets tomorrow, so keep an eye on the futures in pre-market, it should be pretty. The Dow is looking strong with more follow through Friday on that 10,000 close that occurred on Thursday, and it looks like it will stay above this level for now. The NASDAQ is not fairing as well; it seems that a trading channel is forming on this index between 1900 and 2000. Trading channels are not bad, they basically form a base or consolidation pattern from which to move higher. The longer the base or channel, the bigger the break out when it does happen. I think the NASDAQ is safe unless it falls below 1900. If it should to do that, I'd go to cash. Of course I don't think that is likely now with the news of saddom's capture. If it does break above 2000 on a closing basis, then I would start to put much of my available cash to work. The Santa clause rally could likely come on this news.
Trading Ranges and the NASDAQ
So having said this, we know what we do when we break above or below these levels but you may ask, what do we do while we are in this trading range? Because of this trading range the NASDAQ has been in, I'm not finding many stocks on my scans these days. That's not a bad thing either, because many stocks are basing and in a trading range like the index is. The charts are looking good for basing but not necessarily for breakouts at this time. We don't want to get in early and have to wait, so most are not ready for the Bulletin yet. What this trading range does do is provide many day trades for the active trader but unfortunately doesn't provide much for the swing trader. These ranges tend to whipsaw us out of trades and that has been happening to me lately. I'll give you two examples, I sold the rest of my PMU at 1.30 and the low of the day that day was 1.27 and then it shot back up to 1.55 the next day. I sold GBN at 2.45, the low was 2.40 and Friday it was up around 2.79 again. We are being whipsawed in the precious metals sector right now so it's tough to list these stocks and some small cap NASDAQ stocks that are doing the same thing on the Bulletin.
Patience or cash
Patience is going to be required while the NASDAQ is in this trading range because big swings in these stocks are going to happen and you must either have the stomach to sit and hold through it or just be in cash until we can break out over 2000. There are some very strong stocks on the Bulletin that continue to make new highs daily, if you have to be long, I recommend these as part of your holdings, they are TRPH, FLDR, TGA, IKN, ORB, EAR, MDR and IONA - these look best for advances right now. The others look like a trading range is in the works and may not be ready to move for some time yet.
NENG – A Case Study
A chart that looks great for months can break down over night as in the case with our former King, NENG. I held that stock for 8 or 9 months and every day it seemed like it was going up. Bought it at 1.60 and it went to above 11.00 just two week ago. Congrats to all those who road it up and made over 500% on that ride. But all good things eventually come to an end and NENG released bad news about losing its partnership with EMC. Of course with EMC being their biggest source of revenue, this news crushed the stock. My stop order was in place to protect my profits in my IRA at 7.90 and it was filled at 7.89 for a 400% gain. In our style of trading, it's impossible to get in at the low which for NENG was below 1.00 and out at the high (above 11.00) but we do get in when we see a breakout and ride it until the up trend breaks. In the case of NENG, the up trend was broke with the fall below 8.00 and this was identifiable on the charts ahead of time hence my sell stop order was placed at 7.90 and I listed that stop in the comments on the bulletin ahead of time. This is an example of not falling in love with my investments with emotional attachments. Some people still hold the stock, and I ask why? The chart is now broke and sinking lower. We can't predict when a company will release bad news but we can control whether we hold or sell the stock. Believe me, I have experienced first hand ‘buying and holding' a falling stock many times before in my dumboberry days and the outcome is never good. Trust me on this, the stock was a sell when it broke below 8.00 and it still is a sell, it won't come back for a long time. We have made our money in it and now we must move on and not look back.
A Review
I took some time this weekend to review many symbols that have been on our bulletin in the past. An overwhelming number of these stocks (roughly 85%) have been in steady down trends since we discarded them from the Bulletin. This should tell you that once we jettison a stock from the bulletin, it usually means the run is over and we believe the stock is going to go down. The statistics have proven us to be right in the vast majority of the cases. You are welcome to review charts of old bulletin stocks to verify this. In the case of NENG it has also retreated even more since it's dropped off our list. Kings don't live forever and there is always another who wants to be King.
Have a great night everyone; I'll see you all Monday evening.
Make the holiday's Special: There are many children who won't have a gift to open this year, a toy to play with or a coat to keep them warn while they walk to school. Please see it in your hearts to donate a gift to a child this Christmas. Give a toy to the Toys for Tots campaign this holiday season or you can also donate some warm cloths to the Coats for Kids campaign. Your generous gift will be most appreciated by those who receive them. Thank you and happy holidays from TWPD.
Reminder **Holiday schedule** The Bulletin will be produced on 21- 23 December. The market is open a half day on the 24th and 26th of December. I will not produce a bulletin on Christmas day for the 26th half day of trade. The next bulletin after the 23rd will be Sunday the 28th. I will produce a bulletin on New Year's day for the 2nd of January trading.
Flash back Aug 14th Bulletin
New Today PMU 8/14/03 Comments = Nice small cap in the mining group. B P .52
This stock recently reached a high of 1.85 for a 255% gain
Earnings Calendar.
http://biz.yahoo.com/research/earncal/20031023.htm...
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