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Tuesday, December 16, 2003
Good evening friends,
The selling commenced this morning on the NASDAQ as I expected and I sent you a pre-market update making you aware that this would happen. It dropped all the way down to 1901, and at 11:23 I sent an alert to watch for a bounce on this index at that level. Buyers started coming in shortly thereafter and lifted the NASDAQ off the lows of the day and it ended in the green and very close to the highs of the day. The Dow was strong all day long and continues its relentless climb above 10,000 while the NASDAQ lags behind looking like a lost puppy with no sense of direction.
Rotation to Big Caps
It's impossible to take new positions at this time because of the lack of conviction in the small cap arena. Most small cap stocks are currently having a rough go of it and will need time before charts are ready again to trade. The rotation into the big caps continues and we'll either have to sit it out or get into the bigger priced stocks which of course move slower and as a result have lesser percentage gains then we are used to getting. I've tried to avoid these larger stocks for that reason but if our current strategy is not working, we must be flexible and change with the market even if it means smaller gains. A gain is a gain whether it is small or large, and right now, I think we would all agree to take small gains as opposed to none at all.
Thinly Traded Stocks
Let's take a minute to discuss thinly traded stocks; they are a killer to one's portfolio once the volume surge is over. We have seen it time and again in the last 7 months of the service and that is why I try to stay away from them for the most part. I did buy some for the bulletin and I'm now paying the price for that foolish move. I've had emails asking me why I don't send alerts when a sell stop price I put in the bulletin hits. The sell stop price is for you to protect your capital. I would love to send an alert on any sell stop that I have that hits, and I do when they fill. The problem is, without telling you how many shares I own of a particular stock, sometimes I just can't place a stop order, and I'll try to explain it as best I can. For example, I bought AXO, SSTR and TVIA on big volume surges and now, I have been wanting to sell them all for about 3 or 4 days and can't because my position is too big for the volume flow during any given part of the day. It would adversely affect the stock price if I were to sell at the market and send an alert. Anyone holding would be crushed, so I have no choice but to wait for a big volume day and hopefully a bounce to sell into strength. You must keep this fact in mind if you are trading big positions of normally thinly traded stocks. If you are trading small positions then there is nothing to worry about, you'll be able to get out when you want. For instance I said to set a stop on SSTR at 1.75. You can easily get out of that stock if you only own a few thousand shares but If I were to place a stop at 1.75, which I would like to do, the price would fall below it quickly and become a market order and then I'm at the mercy of the market maker, they would steal my position from me and keep in mind, I have a double position in SSTR.
I will now stick to my rule of not trading stocks unless they have an average volume of more than 400K shares per day. There are many thinly traded stocks that have great charts and are going up and you may wonder why they are never on the bulletin. I am aware of them but we don't trade them here for the reasons I have just identified. When they start going down, you can't get out because they slowly drift down on low volume, unless of course they drop out of the sky on news and by then it's too late anyway.
Folks, I had to drop 6 more stocks off our watch list tonight and they were OCPI, MRVC, PMU, SCON, GNLB and NPRO. I'd like to drop some others but unfortunately, they are still open trades. It's not a very good time for small caps but in January, people should be running back to small caps looking for the next big winner. Last January TASR was 3.85 and went to a high of 93.00 in less then a year. We are looking for the next few TASR's and hopefully, we can find them and have them for you on the Bulletin.
Short Positions
If there are any short sellers in the crowd I am starting to track stocks that look good for short positions. If you have been with us for awhile, you know I occasionally do this when I turn bearish. Because we have so few good looking charts to go long in, I will shift focus and look for shorts. There are a ton of stocks with bearish charts that look good for shorting. Remember that we don't care which way the market moves as long as there is some movement. If the market moves up, we want to be long, if the market moves down, we want to be short. On the Bulletin tonight, you'll notice a 2nd page called the ‘short sheet'. I've listed some stocks on this sheet that I'm looking at shorting. I do not recommend shorting if you are new to trading; these are for experienced traders only. I made a lot of money on the short side of the market in 2000-2002 and I think I do my best work in bear markets. I'm not saying this is a bear market but when we have bearish charts we must take advantage. I will not be updating the comments on the short sheet every night. I'll update only when a sell point is hit for that day. For OTC BB players, CBBD and CDSS both look good for a move tomorrow. Have a great night everyone; I'll see you all Wednesday 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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