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Wednesday, December 17, 2003
Good evening friends,
The Dow continues to power forward making news highs again, while the NASDAQ continues drifting aimlessly as mentioned last night - and that little puppy is still lost. I hope he finds his way home soon, LOL. The Dow closed at the highs of the day while the NASDAQ finished slightly in the red. There is not much to talk about in the market unless you are long on some hot small cap energy stocks like TGA and HEC.
We did have a few bulletin stocks making new 52 week highs today including VC, IKN, HOMS, ORB and of course TGA and HEC. It's hard to believe I sold HEC just last week for .63. Same chart pattern as EAG but I wanted to free up some cash and I struggled as to which one to sell. I still made a profit on the trade but it's up 70% since I sold it while EAG is moving slower then a turtle with arthritis, unbelievable.
Shorting Stocks
While there is nothing much else to talk about, I want to mention a little about shorting stocks for those of you who may be contemplating this strategy. Keep in mind when shorting that we will not make the same percentage gains that we have in the past with our long positions. We can only make a maximum of 100% on a short position and that is only if the stock goes to zero! We know that will not happen unless we are lucky enough to short the stock of a company that goes bankrupt. Of the short positions I took today, I only expect to make 10-15% if that on the trades. Take AMGN for example; if the stock gets cut in half, (down to 30.00) I only make 50%. It won't go that low so I know right from the start my profit is not going to be that much. I shorted the stock at 61.37 so it has to drop 12 points to (49.00) just for me to make 20%. In a bear market, that's very possible but we are in a Bull market, so I don't see AMGN falling to that level. A 10% profit on these shorts is more realistic. If you think in those terms, it's almost better to buy CSCO at 24.00 and have it move up 2.50. Then you just made 10% with less risk then if you were to short.
Big Caps
I don't trade CSCO or the other big caps because they take forever to move. If I'm going to be long, I want stocks that will double and triple in a very short period of time. We know CSCO can't do that; it won't run to 48.00 or 72.00 in a matter of days so it's unrealistic to expect enormous gains from these big caps. Our trade record is proof that trading small cap stocks for break outs will yield you the most gains over time but you must know when to exit the stocks. They can drop fast once the momentum is over, in some cases, they can drop as fast as they go up. Our trading style is very risky but very rewarding if you're right. Right now, small caps are out of favor in this market. So for the time being, I'll look for other alternatives to our trading but you must understand that our gains will not be like they have been until the small cap market picks up again. I think sometime in January they may start to move again. If you are like me and think they can't move until charts set up then it makes sense that they won't move until January. This will give them 2 to 4 weeks to set up, and I think the timing is perfect for this to all happen. It's going to take some patience but we'll get there and we'll have the hot hand again. Cash is King right now and I urge you again not to trade for the sake trading. Conserving capital must be your number one mission because if you lose it, the game is over.
For those of you who want to try the OTC BB stocks, all 3 of the ones I had for you last night were up today. Maybe we can start looking at these a little more for some alternatives. Here are a few more I think will move up tomorrow. Remember, these are not buy and hold forever. You simply trade them, holding for a maximum of a few days only: INDOF, SDNA, NMXS, and MXDY. Have a great night everyone; I'll see you all Thursday 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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