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Tuesday, February 03, 2004
Good evening friends,
Rookies Work the Open
Another flat day of trading today with the Dow up only 6 points and the NASDAQ up just 3 points. Everyone was waiting for the CSCO earnings release after the bell. The news wasn't that great, and it could result in some selling at the open tomorrow. I honestly thought CSCO would pull an NT and have blow out earnings, but unfortunately it was wishful thinking and it not happen. The NASDAQ chart is not looking very good right now, but it is close to being over sold so selling in the morning may spark some buying later in the day. Rookies work the open and their reaction to the CSCO news will control the first hour of trading. If selling is heavy, then my guess is that the smart money will follow up and support the market with some buying. This is just a hunch, no guarantees at this point. Charts of the indices look okay except for the NASDAQ. This index is looking weaker than the rest right now. Tight stops on your holdings will be a good idea if you are a short-term trader.
I have recently been adding to my long positions, because I believe we are still in a bull market. In bull markets, we will be buying breakouts or buying pullbacks in strong stocks. These are the only two reasons we should be buying in any market in my opinion. Examples of this type of pullback buying are TPPP, DIGL, GEB, LFP today, and INSG a couple days ago. If you look in the comments on yesterday's Bulletin, you'll see that I had these stocks with limit orders to buy the pullback. I bought TPPP today at 1.06 (which I admittedly got lucky and got in at the low of the day). My whole order didn't fill at that price but that started the buying. My average price for my buy after the whole order was filled was 1.09. When I saw that my entire order wasn't going to fill, I immediately changed my order to a market order. The rest of the order filled at that point. Thus, my average price for this order was 1.09. The stock closed at the high of the day 1.25. Talk about the perfect trade, sometimes you need a little luck?, but good trading brings good luck. I also bought DIGL at 2.92 today, and this stock also closed near the high of the day at 3.23. These were very good day trades, but I chose to hold both because of the strong closes.
Other stocks that were “buy the dips” in yesterday's Bulletin was GEB at 1.60. This was the low of the day, and it bounced off this low and closed at the high of the day which also a new 52 wk high at 1.75. I didn't buy GEB, because I did not want to hold more positions heading into the CSCO earnings after the close.
LFP is another stock that bounced well today. Although I didn't buy this stock either, my buy the “buy the dip” buy point was .44 and the low was .43. LFP proceeded to bounce to a high on .51 on 3X average volume. A few days ago I said INSG support was 2.50 and would be a good bounce play. It closed today at 3.37. Hitting these “buy the dip” plays almost perfectly proves we can trade even a sideways market and still make money.
We can (1) buy the breakouts in a strong market and make money, or (2) we can buy the pullbacks in a sideways market and make money, or (3) in a bear market, we can short stocks and make money. The direction of the market does not matter to us. You can make money no matter what the market is doing. If today's alerts and our limit order buy points on the bulletin aren't enough proof that our system works, I don't know what else we can do.
I received a comment today that said I was just lucky. Folks, if this is luck, I've got to be the luckiest guy in the stock market. I will admit, it does require a certain amount of luck but hitting four “buy the dip” limit orders at almost the low of the day is more than just dumb luck. Now anyone who bought TASR at 3.00 has to admit that was luck; even I'm not that lucky. Nobody could have predicted a run from 3.00 to 155.00 in a year, so I would say if anyone did hold for that long, all the power to them. As for TASR, today was the exhaustion gap IMO. It gapped up and opened at 153.00, but it sold off all day, filling the gap and closing near the low 127.00. Today's action formed a bearish engulfing candle, and for the aggressive short seller, this stock is now in play. But be careful, it can whipsaw you to cover.
A couple of our “New Today” stocks on yesterday's Bulletin did very well today as well. AND was up 10% on 7X normal volume. SOS was up 15% on 2X volume. I would have loved to buy these stocks, but we can't buy every stock listed on the bulletin.
No new stocks tonight; we have enough on our list, and I want to see the markets reaction to CSCO's earnings before taking any new positions. I have also identified more stocks to be removed from our bulletin tomorrow night. Please observe charts of these stocks to study why they are being removed.
As always, thank-you for your support past, present and future! Have a great night everyone; we'll see you all Wednesday evening.
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