Greg's Trading Journal

Brave New World

2008-03-15T15:25:00.004-07:00

Many investors/traders haven’t been here before. They weren’t aware or old enough in the 1970’s to remember the last time the inflation cycle kicked into gear. While I wasn’t old enough to be trading or investing in the 70s, I do remember the how everyone it seemed was interested in owning gold as the decade came to an end. Gold on the April delivery futures contract spiked to $890 an ounce on the 21st of Jan. 1980 and hasn’t seen those highs since. Until Jan. of this year, that is. Then, just last week gold closed over $1000 for the first time ever. So how high could it go? Well, for some perspective, adjusted for inflation, gold would have to rise to $2,239.67 just to get back to the 1980 high. And those figures are if you believe the official CPI numbers. I’m a skeptic.

So, to take advantage of the opportunity I’m in the process of opening a Friends & Family Advisor account with Interactive Brokers (IB), the absolutely best (in my opinion) brokerage there is. IB calls itself a brokerage for professionals and their trading commissions are rock bottom. For instance, to trade 100 shares of stock at Bank of America, they charge customers $14, Charles Schwab $12.95, Ameritrade $9.99, Fidelity $8. Interactive Brokerage charges $1. That is money you get to keep. For active traders like me it really adds up to big savings. Another IB advantage is the interest they pay you. For margin accounts they pay you every singly day. So even if you aren’t an active trader, you’ll see your account grow nicely. If you trade very much at all, it’s a huge savings. IB has also been around over thirty (30) years, and they’re safe. They didn’t invest in the same subprime derivatives many Wall Street firms did, and are having to get bailed out because of.

What is a Friends & Family Advisor account? It’s an account that allows me to trade for my own accounts (individual brokerage, regular IRA, Roth IRA) as well as friends and family’s accounts in one location and even one transaction and have the profits prorated to client’s accounts. The setup is very convenient, very slick, and very profitable, if my trading continues to be as successful as it has been in the last few months. And did I mention IB offers trading in futures. What a product.
Several months ago I told a client that I’d like to be able to REALLY profit when I trade well. I felt I was really trading stocks well but the profit just wasn’t that great. Since then I’ve switched my focus to futures trading and it is paying off. Although I’ve traded futures in silver, copper, palladium, platinum, crude oil, natural gas and heating oil, my main focus has been gold. Since refunding my account on November 29th of last year, my account is up 203.26%.

Back in Black

2007-12-04T20:59:00.000-07:00

Just as planned, I refunded my margin account. Just in time for the final 8.33333333% of the year that is December. The month is starting well for LDK which gyrated upwards of 28% today and on no news at all. Shorts are running for cover right now as they know news is immanent. I still say LDK has a bright future. Another shining example of richness is GOLD, which just bounced powerfully off its 50 day moving average, and looks headed toward an all time high. I’m in. The last time this gold market flirted with new highs, well, I was a very young man. I wouldn’t miss this run for anything. Maybe a more leveraged play is required here. I’ll have to tell you after the fact.
The only new symbol I’ve added lately is Japan Smaller Cap Fund (Symbol: JOF) which is supposed to be bottoming. Yes, I’ve heard that before too.
It’s a small position, and slightly red still to the tune of 2%. The story is that Japan is beginning to improve so, get there early, take a position and have some patience. It sounds so Warren Buffett, but it’s probably not. The chart looks good though.
I heard Jim Rogers said China is just starting. Their markets look like they’re ready for another run higher and the ADR’s even more. The same list is still good. I’m long um all. Except I sold STP – just took profits – all 78% - yummy!

Get Off the Margin and Lock in profits

2007-11-11T21:18:00.000-07:00

In “The Big Picture” article in this Saturdays issue of Investors Business Dailey, journalist Jonah Kery wrote “It’s prudent to get off of margin, cut any losses and focus on a few exceptional leaders, assuming they are acting reasonably well and you have a sizable cushion.” Jonah’s sentiment echoed mine precisely this week as I not only got off of margin in my brokerage account, but I downright liquidated every position in the account. After returning from a long meeting and finding the holdings in that account had taken an 18% swing lower from a being up 10% at the opening, I sold with abandon. In fact I was so busy entering sell orders I actually sold one position of 400 shares twice and found myself 400 shares short which I immediately bought back at a small loss. Many of the stocks I sold in my margin account I also own in retirement accounts or are in accounts I manage for others and we’ll hold them unless this market just falls out of bed so to speak. Later that day I went on line and requested a bank transfer of my profits. Now I'll pay off two verily new vehicles and in doing so reduced my monthly cash out-flow by $800. I’ve made plans to have my trading account refunded to previous levels within weeks and with the market in a confirmed correction maybe the timing is just right. In fact, I’d love it if the market proved my timing wrong. Either way, I've got no regrets. Sometimes, profits are for taking.

Greg's Fundomax Portfolio

2007-11-04T07:55:00.000-07:00

Interactive Brokers (Ticker: IBKR) IB continues to hold above support and had a strong day Friday (up 4.20% to $29) IB is only now returning to its IPO price and I expect continued strength. IB is up 17% from $24.75 buy.

Mindray Medical (Ticker: MR) MR beat earnings estimate and moved up 3.16% Friday. The company was confident sales would continue strong growth due to several new products and China’s economic growth. This is a good Dollar hedge too. We're up 27% from $31.30 buy recommendation.

Comtech Group (Ticker: COGO) China ADR COGO has been in a sideways holding pattern for a month now, but remains firmly in a longer term uptrend. Its up 35.52% from $15.06 buy point. Corporate headquarter is in the city of Shenzhen. Getting the picture? Go where the growth is.

Companhia Vale do Rio Doce (Ticker: RIO) Worldwide producer of, um, well, everything. Brazilian based miner and producer of steel, fertilizer, precious metals, batteries and I could go on and on. They’re growing sales at 42% a year. This is a new holding for us.

Home Inns & Hotels (Ticker: HMIN) One of China’s biggest budget hotel operator and fastest growing is considering expending into other Asian countries and possibly further. The company plans to quadruple total units within three to five years. We’re up 39% from $31.30 buy point.

New Oriental Education & Tech Group (Ticker: EDU) China’s private educational services company teaches English to Chinese students among other courses. The company grew earnings at 55% in the latest quarter (year over year). Our buy point was 54, which gives us over 51% gain. Buy the pullbacks.

Suntech Power Holdings Co. (Ticker: STP) is our best performing solar holding is headquartered in Wuxi China. The solar manufacturer grew earnings at 55.60% year over year. The companies stock is currently forming a high tight flag, and remains in a strong uptrend. We're up 39.72% from our $40.80 buy point.

LDK Solar Co. (Ticker: LDK) is our most interesting Chinese solar holding, and recently the subject of several articles from the likes of Barron’s and Wall St. Journal, and not favorable stories at that. Since we bought at a pullback early we’ve never been to far in the red as this stock tumbled from a high over $75 to a recent trading range between 36 and 42, but we’ve given back some stunning profits. We’re sticking with management on this one, the story is worth it. We've used recent weakness to get our average share price to $38.16.

Focus Media Holding (Ticker: FMCN) stocks chart is a thing of beauty, as well as the companies’ fundamentals. The outside ad company grew earnings 126.2% year over year. Our trade is up 71%.

EMC Corp. (Ticker: EMC) Network storage and 90% owner of VMWare, the streets hottest new IPO. Big tech is back and we’re up over 28% from our $19.10 buy point. The stock trades at $24.55 and change and could trade over 30 within months.

Golf ETF (Ticker: GLD) Gold is back within striking range of its all time high near $850 dating back to 1980. We bought the gold ETF at the flag breakout near $67 and it’s up 19% to just under $80. It’s been good Dollar insurance, inflation hedge, and remains in a confirmed rally.

E-House (China) Holdings Limited (Ticker: EJ) is a Shanghai, China real estate services, brokerage and consulting firm that operates in the hot Chinese home building and management market. The very hot stock which IPO’d in August is up 26% from our $26.50 buy point to $33.60. The company is expected to announce earnings on November 15.

Chinese Outdoor Ad Company - Focus Media (Ticker: FMCN)

2007-11-02T22:07:00.000-07:00

Chinese ADR holdings continue to out-perform. FMCN is up 71% from buy in.

Gold closes in on all time high

2007-11-02T21:36:00.000-07:00

One escape for the Dollar plunge, Gold. Our ETF (Ticker: GLD) play is up 19.04% from break-out.

LDK Solar Flair Up

2007-10-29T20:35:00.000-07:00

Even Barron's and WSJ can't keep it down.

LDK - Spring'll be Sprang

2007-10-22T19:15:00.000-07:00

Home Inns & Hotels Management Inc.(Ticker: HMIN)

2007-10-21T08:44:00.000-07:00

Headquartered in Shanghai, China, 200 hotels, 6300 employees, 67.8% Qtrly revenue growth (year over year), 34.46 million shares, 17 million shares float, 51.4% held by insiders, another China ADR miracle story and Olympics play. .

China 3C Group (Ticker: CHCG) Proof of a bottom...almost?

2007-10-21T08:23:00.000-07:00

Good news on financing growth and strong earning could turn this up.

Owning Bowater requires the patience of a Barron's investor

2007-10-21T08:08:00.000-07:00

Will patience finally begin to pay off?

E-House - Up on a BIG Down Day

2007-10-20T09:04:00.000-07:00

E-House (China) Real Estate Services Company was the lone up-stock on a day when investors sold, and sold, and sold. No panic here.

Another Solar Breakout - Suntech Power Holdings (Ticker: STP)

2007-10-19T06:29:00.000-07:00

Free to run.

What is the truth about LDK Solar?

2007-10-18T18:53:00.000-07:00

This article sure has the ring of truth.

Gold (Ticker: GLD) The Yellow Metal Powers Higher

2007-10-14T06:52:00.000-07:00

Up 11.23% from breakout

Seaspan (Ticker: SSW) Another run higher?

2007-10-14T06:30:00.000-07:00

23 containerships, 1.74B market cap, one full time employee and pays 5.50% dividend.

Home Inns (Ticker: HMIN) 2008 Olympics Play

2007-10-11T05:23:00.000-07:00

Cup N Handle breakout coming right up.

LDK Solar Eclipse

2007-10-06T00:44:00.000-07:00

EMC - High Tight Flag

2007-10-01T19:37:00.000-07:00

Dow Industrial in Record Territory

2007-10-01T19:20:00.000-07:00

The perfect storm for shorts

Where the chips fell

2007-09-29T14:03:00.000-07:00

Focus Media (Ticker: FMCN)

2007-09-29T09:17:00.000-07:00

Chinese digital media company Focus Media Holding Ltd. (Ticker: FMCN) recently completed a successful internal audit, released strong earnings and raised full-year revenue outlook to between $440 million and $450 million from prior forecast of $390 million.

Gold ETF (Ticker: GLD) On the Move

2007-09-29T08:40:00.000-07:00

Up 9.62% from breakout a month ago.

Limited Options

2007-09-29T08:18:00.000-07:00

Q3 2007 - Keeping Score

2007-09-28T20:41:00.000-07:00

The Quarter just felt like a 10% plus quarter. Nice and strong. And it was up 11% in fact. The year over year gain of 17.17% had a tough comparison from a year ago. The quarter was up against a great 36.55% yearly gain from the third quarter of last year. Its only trading but I love it. Hopefully a strong fourth quarter will make for a nice year end print. As they say, 'the trend is your friend'.

Home Inns (Ticker: HMIN) Downtrend Broken

2007-09-27T19:37:00.000-07:00

and up strongly.

EMC=breakout

2007-09-24T19:05:00.000-07:00

Feat Accompli

Home Inns, making a bottom

2007-09-23T18:26:00.000-07:00

Mindray Medical Intl. Ltd. (Ticker: MR)

2007-09-23T17:59:00.000-07:00

This is window dressing week on Wall Street and it couldn't be better timing for continued strength, with the half point drop in the Fed Fund rates, the market is primed and in motion, mostly up. That goes for the Chinese ADRs as well as Gold with its breakout strength move above $700. If the markets can add bonus point moves to the stocks we're holding, the quarter will be a very strong one. Our holding in Mindray Medical Intl. Ltd. (Ticker: MR) is up 33.75%.

The Golden Rule: Gold Rules

2007-09-22T07:10:00.000-07:00

Out Performance.

2007-09-21T20:20:00.000-07:00

China ADRs.

Mindray Medical International Ltd. (Ticker: MR)
Home Inns & Hotels Management Inc. (Ticker: HMIN)
New Orental Education & Technology Group (Ticker: EDU)
Suntech Power Holdings Co. Ltd (Ticker: STP)
LDK Solar Co.Ltd (Ticker: LDK)
Focus Media Holding Ltd. (Ticker: FMCN)

US Growth 2%, China Growth 11%

2007-09-21T20:02:00.000-07:00

EMC - Pre Ignition…

2007-09-15T19:43:00.000-07:00

Breakout over $20 coming?

Gold (Ticker: GLD) Breakout Confirmed

2007-09-15T17:56:00.000-07:00

Gold is taking its direction from a weak Dollar.

Gold (Ticker: GLD) Up 4.37%

Showing muscle - Shanghai B Shares

2007-09-13T20:30:00.000-07:00

China ADRs continue to out perform. Shanghai B shares are up 7.68% at half day mark today. Best gainers:

LDK Solar up 38.20%
Mindray Medical up 23.18%
FocusMedia up 12.97%
Comtech Tech up 9.37%

GOLD. Need I say more?

2007-09-06T17:47:00.000-07:00

Go for the GOLD - Gold is breaking out

2007-09-04T06:51:00.001-07:00

The China Syndrome... in REVERSE!

2007-08-31T20:51:00.000-07:00

Stocks Benefiting our Portfolios Now:

EMC (Ticker: EMC) 50%
LDK Solar Co. Ltd. (Ticker: LDK) 29.96%
Mindray Medical (Ticker: MR) 13.37%
Interactive Brokers (Ticker: IBKR) 8.11%
Comtech Group (Ticker: COGO) 12.29%

Wake me when the Sub-Prime nightmares over

2007-08-26T00:41:00.001-07:00

Outside advertising, online games and information storage, those are the pursuits of the three companies we added to our portfolios this week. Two are China theme companies and one is an US based Technology play, and all three are growing sales and earnings like crazy. [1] Focus Media (Ticker: FMCN) is the dominant leader in new media in China. New media means banks of LCD screens in high traffic areas. Focus Media has $226 million in cash, no debt and grew earnings by 73% year over year in the latest quarter. [2] EMC Corp. (Ticker: EMC) besides being a huge 41.9 Billion market cap company and growing at earnings at 19.80% year over year in the latest quarter, is a proxy play on the spin-off company VMware Inc. of which EMC still retains 87%. VMware Inc. is expected to grow revenue by 60% annually for the next three years. Investors have driven its stock price up over 40% since the initial public offering two weeks ago. [3] The9 Limited (Ticker: NCTY) engages in the development and operation of on-line games in China. The company is expected to announce earnings this week. Last quarter they grew earnings by 12.40% (year over year) but revenue grew 27.30% year over year. The company’s stock has taken a hit lately, trading at $38 and change, down from a high of $52 in July. This could be an interesting week.

Don’t fear the reaper, and Don’t fight the Fed

2007-08-19T15:51:00.000-07:00

If the market climbs a wall of worry, this is a high wall indeed we’re up against. Based on Thursday’s turn-around hammer day and Friday’s vault higher, investors definitely are betting Bernanke blinked and will be easing rates from here. Every time interest rates are at the end of a prolonged rise, the Fed waits until something breaks before they start loosening again. It all seems pretty well engineered. With fifteen months to elections, the markets ought to be in full gallop higher, once again proving the four year cycle is alive and kicking. If I’m wrong about that timing it’ll cost me real money because I used the weakness this week to put on some long positions on stocks that had held up pretty well. No doubt, I’ll have to dump some holdings if the market hasn’t really bottomed, but going against the crowd can be rewarding if done right. I’d been watching Money Center Banks and Brokerage stocks for a turn signal and we got the Bernanke bounce Friday, after Thursday’s deep head-fake down then rally into the close. The next test will be recent highs, and I’m sure the shorts will be out sink the market again, but the Fed has signaled they’re here to help, so the shorts will have that to worry about.

Turtle tell-all

2007-08-11T13:47:00.000-07:00

The new book by Curtis Faith “Way of the Turtle” is an excellent mixture of commodity trading lore, statistical analysis theory and good sense trading psychology lessons. Curtis Faith was the youngest - he was 19 at the time - and most profitable of the ‘Turtles’, a group of apprentice traders that were trained to trade commodities by the legendary team of Richard Dennis and William Eckhardt, and then gave them trading accounts to trade. In four years Curtis Faith made over 31 million for the team. By strictly following the rules he had learned in only two weeks of training sessions, he parlayed millions. The only part of the book that bored me was one chapter on statistics and gaming theory, there is a lot to absorb there, and a lot of reference material. One subject I really took to heart was letting go of ego. Chapter 14 “Mastering Your Demons” subtitle says “The market does not care how you feel. It will not prop up your ego or console you when you are down.” Another excerpt “If you want to be a great trader, you must conquer your ego and develop humility.” is a lesson the market will teach you if you survive it long enough to learn. It looks like Curtis Faith had all the needed characteristics to begin with because he was extremely successful from the beginning. One concept I did glean from the book that goes against the books subtitle “The Secret Methods that Turned Ordinary People into Legendary Traders” is, there really are no ‘Secret Methods’. For anyone who wants to improve their knowledge and understanding of trading theory, I highly recommend reading Way of the Turtle.

Uncle Bernanke will blink… I think.

2007-08-11T09:02:00.000-07:00

Whether the Fed cuts rates or not to stem the current panic in the markets won’t change the way I trade, just the symbols I trade. This week I added all of ProShares ETFs to my watch screen. ProShares offers short and UltraShort (leveraged short) ETFs you can use to get short this market. ProShares has index, sector and style short funds as well as un-leveraged short and index funds. The leveraged funds are very volatile, so be careful trading them.
This week many of the ‘China play’ stocks on my watch screen started flashing buy signals again. It was hard to pull the trigger and ignore the market turmoil, but I did. Maybe the market is going to whipsaw or even continue to dive for awhile, I don’t know, but not taking signals is just as dangerous to a portfolio as ignoring them, which I’ve been known to do.
Actually, three stocks that I did ignore sell signals on fell hard, and have now bounced to where they’re giving buy signals again. Interactive Brokers (Ticker: IBKR), Bowater (Ticker: BOW), and NVE Inc. (Ticker: NVEC) all fall into this camp. All clearly gave sell signals which I ignored. I’d have been a better trader to sell them and buy them back now. I rationalized not selling them by convincing myself that the positions were so small that it wouldn’t affect my performance. I was wrong, it did, and I took a hit for it. Okay, enough confession!
Often, taking the signals correctly will lead to a loss also. That is just part of game. The big gains are made by the few big trends you correctly take and stick with until the run is over. Selling too soon, before the trend ends, can affect the long term performance of your portfolio in a negative way too. The old saying “you can’t go wrong taking a profit” is wrong. If your system is robust and has an edge, over time, you’ll make money by strictly following the rules. If you constantly sell your winners, all you’ll have left is your losers.

It is what it is - why ask why?

2007-08-04T09:09:00.000-07:00

Its human nature to try to figure out why the market is doing what its doing, but in reality, does it really matter why? Answer: no. It only matters that it is. Knowing why it does what it does never made me any money. Only reacting, taking action. And you have to decide to react or not. And you have to decide what will be your strategy, what will be your signal?
Hopefully you have a method that has an edge on the market, or you’ll blow your account. After all, isn’t that the markets goal, to separate you from your money? Any investor or trader who survived the dot.com meltdown after 2000 knows ‘buy, hold, and forget’ doesn’t work - unless you’re Buffett - and have 43 billion you need to get invested. Nice problem.
My long position in ProShares UltraShort QQQ (Ticker: QID) has turned into a hedge - my other holdings go down, as it goes up. I guess that beats taking the full brunt of this markets torrid downturn. These late day swan dives make everything move, BIG! Score: IBKR down 4.24%, QID up 4.35%. And their both still flashing ‘buy’ signals… for now.
Like every other trader, I constantly scan the universe of tickers, looking to the sectors moving up. It was right in front of me, but I missed it - Bond ETFs (AGG, IEF, SHY, TIP and TLT). They’re still looking strong, only now they look a little extended. I missed it because I’ve never been into bonds. Why chance loosing money for 5% interest when cash pays that too, and there’s no downside to cash. Maybe I’m missing something. It is what it is – why ask why.

Long a Short

2007-07-31T21:44:00.001-07:00

I’ve never mastered shorting stocks or trading options either, but when the market is in an obvious pullback or downturn I look for ways to benefit from it. I recently went long in ProShares UltraShort QQQ ETF (Ticker: QID). This ETF is leveraged so it really moves up sharply if the QQQ is moving down, like it did today. Is this what Cramer means by “there’s always a bull market somewhere”? Works for me! I also took a position in Interactive Broker (Ticker: IBKR) again after their recent earnings announcement and bounce. Cash is still my biggest position though by far.

Getting defensive – Cash is not Trash

2007-07-28T23:57:00.000-07:00

I’ve been very busy selling positions this week. When the Dow, S&P500 and Nazdaq all flash sell signals, even stocks that are holding up relatively well become sell candidates, especially if we’re sitting on gains in them. A quick calculation tells me we’re now 67% in cash, and that will grow come Monday as I’ve targeted a couple mutual funds and stocks that just gave sell signals at Friday’s close. All bear markets start as pullbacks so I like to take action quick by beating a path in retreat. I’ll be the first to jump back in when the tone of the market changes, but this is no time to be a hero. Stocks that put me in the “house of pain” (as Jim Cramer likes to say), are the ones I stubbornly refuse to sell or hold because they’re “buy and hold” positions like Bowater, which I’m holding at a 15.82% loss (ouch!), or NVEC which is down about 18% (ouch! Ouch!). Ignoring sell signals can be painful. All said though, we’ve done a great job of locking in profits and becoming defensive quick, without giving back hard won profits.

Current Holdings…. Sold Some, Bought Some

2007-07-23T05:24:00.001-07:00

Some Chinese shares hit air pocket

2007-07-17T19:09:00.001-07:00

Here I go again, having to turn on a dime. Just when I was getting giddy about some of our China theme holdings, a couple of them give me sell signals. So, I took profit in Home Inns & Hotels Management, Inc. (Ticker: HMIN), and took a loss on China 3C Group (Ticker: CHCG). News on how CHCG was selling 11m worth of stock for 5$ and change a share, way less than I paid, frankly confused me. Sellers drove the price lower which triggered a sell signal.

I traded shares of HMIN for BEAS which is technically looking good. AMAT notched up 5.72% and SNDK was up 4.65%. The NAS is the happy hunting ground again for stocks breaking out.

China 3C Group (Ticker: CHCG) selling cell phones to 1.3 Billion People

2007-07-14T14:18:00.000-07:00

The fact that China’s population growth year to date is approximately 8.65 million illustrates how massive the market for consumer products in China is. China 3C Group sells fax machines and chords in one subsidiary, but, the real growth engine is in cell phone sales, China 3C Group holds a 15.7% market share (from here)of total cell phone sales in Eastern China. And, it's in breakout mode.

Other China thematic holdings are:

Taiwan Semiconductor Manufacturing Co. Ltd. (Ticker: TSM)
Mindray Medical International Limited (Ticker: MR)
Home Inns & Hotels Management, Inc. (Ticker: HMIN)

All that was old is new again

2007-07-07T12:53:00.000-07:00

I recently traded in shares of Global Resources (Ticker: GROW), which had traded down until Fridays 6.82% gain, for shares of NVE Corp. (Ticker: NVEC) which is in a strong up trend, and China 3C Group (Ticker: CHCG) which is a Chinese version of Best Buy. Only fifteen percent of Chinese households currently have the internet and that figure will explode in the next decade. A couple other names added recently are SandDisk Corp. (Ticker: SNDK) and Applied Materials Inc. (Ticker: AMAT) both pretty much technical plays.

Q2 2007 – Keeping Score

2007-07-07T12:18:00.001-07:00

The markets spent the first two months of the second quarter charging higher, then the last month drifting sideways. All three indexes look poised to break out to new highs, and in fact the NAZ has since burst to highs not seen since the beginning of 2001. The difference now is that then in 2001 it was headed lower. It’s appropriate that the Nasdaq is now leading the charge higher as tech shares have been lagging most other sectors for years now. For the quarter we notched up 5.27% and scored a 28.74% gain year over year.

Apple Inc. (Ticker: AAPL) Go ahead, bite the red apple, and no maggots here Mick

2007-07-07T10:05:00.000-07:00

It strikes me that Apple has started something really big. Jobs and company have revolutionized the interface for communicating. The clunky mechanical button cell phone could become a relic when other phone manufactures start rethinking their designs. It’s the brains, logic, and programming that distinguish Apple’s icon driven interface iPhone. This thing has the power of a computer inside. The pundits where shorting Apple’s stock, betting nothing could live up to the hype coming out of Cupertino. The “smart money” was buying puts to hedge the selling that was surely to begin when the phone didn’t live up expectation. It exceeded. Apple had been on my radar as a China play and was in a low risk position technically on Friday, June the 29th. The lines at Apple stores were showing up all over the news, with buyers camping in lines. That’s when I pulled the trigger and bought Apple Inc. (Ticker: AAPL) for accounts I manage. The market has decided it likes iPhone’s prospects by vaulting Apples stock $10 higher in three trading days.

Interactive Brokers (Ticker: IBKR) - Know when to fold them

2007-07-06T20:22:00.000-07:00

One thing you’ve got to master in being a trader is turning on a dime. That’s exactly what I had to do with Interactive Broker (Ticker: IBKR). One day after I posted about how much I liked the company, I had to sell it’s stock. I still like the company’s products but the stock wasn’t holding up. It fell below support at 26 and signaled a sell, which I promptly did. Then the stock rallied strongly for a couple days and I wondered, had I been head faked? Today’s 7.89% air pocket that took IB down under 25, a $2.14 drop, settled that question.

If only I was a good shorter.

Two to Go - GROW and STO

2007-06-23T19:20:00.000-07:00

Our two final current holdings are Global Investors, Inc. (Ticker: GROW) an asset management company with 77 employees head quartered in San Antonio Texas and Statoil ASA ADS (Ticker: STO) a Norwegian integrated oil and gas company that trades at a 10.11 trailing P/E and pays a 3.6% dividend (5 year average)……….. and, both stocks have nice looking charts.

2007-06-23T18:20:00.000-07:00

Interactive Brokers (Ticker: IBKR)

2007-06-23T18:02:00.000-07:00

We got a few shares of Interactive Brokers (Ticker: IBKR) IPO in the Dutch auction, then, as the price dipped three more buys were made. Most recently the price has been all red, but the reason I like the stock is because I really like the company. I’ve been taking advantage of Interactive Brokers terrific trading technology and dirt cheap trading commissions for all non retirement (taxable) trading accounts. Another great aspect to Interactive Brokers service is portfolio level margin requirements which effectively allows for larger margining. I recently opened an Advisor account which allows for managing fifteen client accounts. All trades carried out in the master account are passed along to the client accounts. So far I’ve found Interactive Brokers software and trading tools to be nearly flawless and adaptable, and the trades fast and efficient. I usually get a great fill unless I’m trading a low volume stock or option.

And, nobody beats their price!

Bowater (Ticker: BOW) buy / hold

2007-06-23T17:13:00.000-07:00

On April 4th, based on a positive article in Barron’s, and a great looking chart I took a buy and hold position in Bowater (Ticker: BOW). The article said the company was near a bottom in the revenue generation cycle. For the last ten weeks the stock has dipped hard then rallied higher, and went from down some 14% to up 5.63% at Fridays close.

What’s Working, What’s Not…

2007-06-23T12:48:00.000-07:00

With one week left in Q2 of 07, its time to review this quarter’s trade action. This quarter unfolded with some themes gaining traction and some faltering, then stalling. They work until they don’t. In the ‘hasn’t worked lately’ category is precious metals, gold (GLD) and silver (SLV) mining stocks (AUY) and (GFI). Although GFI just gave a buy signal. Our top gainer for the quarter has been EMC. EMC seems like an obvious investment to profit from growth in online storage fueled by the popularity of cell phone pictures and videos, YouTube, blogging and MySpace data demands. We nailed the bottom when EMC dipped to $13 and snapped up shares for two accounts I manage. Lately the stock has been flirting with $18. On the long term chart (right side) it’s easy to see it running to $30 on continued market strength.

The second theme that is working is CHINA. Our current China theme holdings are CNOOC Ltd. (CEO), the Chinese oil company that has a monopoly on half of all oil pumped from Chinese waters. Then there is Mindray Medical Intl. (MR) the Medical Diagnostic manufacturing company that is growing revenue and profits at a healthy clip. Taiwan Semiconductor (TSM) is about to increase manufacturing capacity in a big way in the second half, and Home Inns & Hotels (HMIN), is building its chain by leaps and bounds in China.

Gold – going where it’s not supposed to

2007-06-09T05:54:00.000-07:00

Gold dropped some $14 an ounce on Friday, triggering some negative indicators, at least for the short term and more than likely for the mid-term.

Q1 2007 – Keeping Score

2007-04-11T05:09:00.000-07:00

On Feb. 27th, the day the day the Dow skidded over 400 points, my short term mechanical trading “experiment” ended. I know you’re not supposed to let the market influence your attitude or alter your plan, but it was pretty discouraging to give back several weeks of profit in one fell swoop. Just placing, and recording all those trades was taking up to two hours a day, and worth it if you're making money. But to give it all back in one day was enough to make me reconsider, and alter my strategy. After that I reverted to trading by instinct and actually closed out the quarter with healthy gains. Quarter over quarter profit came in at 8.08%, year over year gain was 28.08%. So, what has been working? Gold (Ticker: GLD), Silver (Ticker: SLV), Goldfields Inc. (Ticker: GFI), Research in Motion (Ticker: RIMM), EMC (Ticker: EMC), Mastercard (Ticker: MA), Yamana Gold (Ticker: AUY), and Digene Corp (Ticker: DIGE). I recently took a “buy and hold” position in Bowater Inc. (Ticker: BOW) based on an article in Barron’s that made a good case for a multi-year upswing in profits.

Riding the Ripples

2007-02-22T01:24:00.000-07:00

When I explained my short term trading system to a friend of mine, he said it was like “riding the ripples” as compared to longer term trend following systems that try to ride the waves. I guess that fits.

The deal is, every day I record the gains or losses into a spreadsheet and average the daily return across all managed accounts to gauge how the system is working. After yesterday’s strong 1.13% move, and seventeen trading days of data, the average daily gain is 0.26%, which if multiplied times two hundred and fifty trading days a year adds up to a sweet 64.78% un-compounded rate of return and a whopping 90.13% compounded annual return. With so few data points that figure varies wildly on daily basis but the figures are encouraging none the less.

One concern I have is that the smaller accounts I manage don’t share equally in those gains as trading sizes are smaller and transaction cost are greater. Recent back testing has me convinced I need to un-diversify (is that a word?) slightly to improve those ratios.

The above charts show a couple of typical trades generated by the system.

2007’s Torrent of Trading

2007-02-11T09:19:00.000-07:00

Here’s a list of stocks traded through February 9, 2007 from the years beginning. Many of these have been traded multiple times. My brokerage love$ me.

Gold Fields LTD. stock (Ticker: GFI) - Good as Gold

2007-02-11T08:35:00.000-07:00

In addition to the mechanical trading system basket of stocks, we’re holding on to Gold Fields LTD. stock (Ticker: GFI), stubbornly ignoring recent whipsaw trading signals because gold is looking strong. The stock has tested my resolve recently but looks to have bottomed and appears that it’ll move higher from here.

Robo Trader

2007-02-11T08:27:00.000-07:00

As I mentioned in my last post, I’m transforming some of my trading methods from discretionary to mechanical. The results from the back testing I’ve been doing are too impressive not to put real money on the line and see if real accounts can profit as much as virtual ones have in testing.

Trading mechanical systems is an undertaking all its own. You have to be disciplined to update your update your stock lists, run your scripts, and create new buy and sell orders for the following day, every day. The program I’m using generates a lot of trades because the average holding period is measured in days as opposed to the weeks or months longer term programs hold positions.

The brisk trading activity can be somewhat grueling, but trading mechanically has its advantages too. For instance, I focus far less on market fundamentals, earnings, press releases and timing the trade. Instead I use my time creating and using scans that will select the top performing stocks to include. I want my universe of stocks to include the best performing companies as well as those that have just emerged and are making powerful moves. My “universe” of stocks includes about 1200 stocks right now, and at any one time we’re holding around 25 positions.

For the last ten trading days the average daily return has been an impressive .22% a day and that extrapolates to over 50% a year. Of course ten days of data does not a trend make, but I’m cautiously optimistic with the results to this point.

Trading Stocks – The Ultimate Puzzle

2007-01-14T08:07:00.000-07:00

It didn’t take long for the outcome of my last post to become obvious. Can you spell HEAD FAKE? At the time I posted it I couldn’t bring myself to go short the NAS by going long ProShares Ultrashort QQQ (Ticker: QID), even though a long term trend-following indicator gave a buy signal. For one thing, I have a bias to being long. Usually if I don’t have buy signal I’m comfortable with I’ll just be out of the market. Another thing was, I just had a gut feeling that that NAS wasn’t going down. There were too many people saying it was going down. One guy on CNBC was so “matter of fact” about the direction of the NAS, it reminded me of a friend I coined this fraise about, “Often Wrong, Never in Doubt”. My buddy can talk so assured about things, even when he doesn’t have a clue what he’s talking about. Not that the NAS isn’t going down at some point, I just don’t think anyone can say with any amount of assuredness exactly when and to what extent that will be. I know other people who are being very conservative right now too. One guy with a rather large account is 60% in bonds right now because Bob Brinker’s Marketimer newsletter says where due for a correction or something. Brinker (http://www.bobbrinker.com/) supposedly had his subscribers safely out of the market when the internet bubble burst. Then I heard about a broker that took all his clients out of stocks in December because the big one is coming. Being the contrarian I am, I figure that if all that money is on the sidelines, the next move for the markets will be up. That’s the way I’ve been playing it. For the last week I’ve been running scans that sift through my universe of stocks, and list stocks that are in general up-trends, but have pulled back to near their 50 day moving average. So far, it seems to be working beautifully. My accounts are growing for the first time in weeks. Of course this all fits into my latest strategy of adding shorter term trading to my trend-following mechanical trading systems. Those longer term indicators are giving a lot of false signals lately. Eventually every system has a drawdown. They work until they don’t. Which means it is time to scale back trade size, not stop taking the trade.

NASDAQ Composite Signaling a Turn Lower?

2007-01-07T13:06:00.000-07:00

There is no denying that the above chart is at the very least saying its time to be careful being long Tech stocks. Both of these charts use a 13 and 39 day simple moving average as an indicator, and both have crossed over. The chart on the left is signaling a sell signal is the NASDAQ Composite and the chart on the right is ProShares Ultrashort QQQ a leveraged and short (also called inverse) Exchange Traded Fund (Ticker: QID) which is signaling a buy signal. By buying the fund you are effectively shorting the QQQ with leverage.

The 13 and 39 day simple moving averages are used as a basis of many trend following systems, used to manage many billions of dollars. These signals do head fake and reverse often, just as U.S. Oil ETF (Ticker: USO) recently did, so caution is always warranted. The markets often give confusing signals at major turning points and its easy to be in a state of denial and give back hard won profits.

Q4 and 2006 Full Year Update – Keeping Score

2007-01-04T19:58:00.000-07:00

All Accounts Summarized

Quarter over Quarter Loss: 4.05%
Year over Year Gain: 32.19%

The final quarter for 06 closed with us taking a 4.05% Loss for the Quarter but the gain for the full year was 32.19%. I stayed with some winners a bit to long and gave back some profit, but for the most part 2006 was a great year for the markets and I expect 2007 to be good too.

Speaking of the future, I’m making changes to some of my trading practices. I’ve recently been digging deeper into mechanical trading systems and I’ve been creating and back testing different trading programs. The beauty of back testing mechanical trading systems is that you can gauge how well your methods would have worked in the past using historical data. Following the systems takes the emotion out of trading decisions somewhat, although it still takes a human decision to perform the trade.

For the most part my methods have previously been trend-following driven utilizing moving averages and channel breakout systems, but I’ve recently started adding counter-trending that work better in non-trending markets. I plan to incorporate both methods into a cohesive system that I feel could provide for a smoother equity curve. Theoretically, one system could perform better as the other was flat. My back testing showed that my trend following systems were profitable only forty percent of the time and you could expect on average approximately 20 percent returns annually, while the counter-trending systems were profitable sixty percent of the time and returned nearly fifty percent average annual returns with some portfolios (in back testing). Another difference is that the trend-following systems tend to stay with trades much longer and the counter-trending systems will often have trade durations that last for only a few days. For that reason it might be hard to post every position and trade, but I'll try.

Gold Fields Ltd. (Ticker: GFI) a Nice Chart and Fundamentals too!

2006-12-27T21:52:00.000-07:00

According to an article by the AP Press, gold was actually the laggard metal in 2006. While gold was up 30%, lead and copper actually advanced around 65%, and zinc and nickel more than doubled. Maybe 07 is the year for the big move and maybe the miners will shine too. This chart looks poised to me.

Market Cap 9.35B
Trailing P/E 34.31
Forward P/E 14.30
Profit Margin 12.40%
Operating Margin 21.29%
Quarterly Revenue Growth (YOY) 56.60%
Quarterly Earnings Growth (YOY) 1680.10% (huh?)
Total Cash 173.84M
Total Debt 314.52M

Find all the above information here

Travelzoo (Ticker: TZOO) An Explosion Waiting to Happen or a Hasty Retreat?

2006-12-09T21:38:00.000-07:00

In the book “the Winning Investment Habits of Warren Buffett and George Soros” author Mark Tier does a great job of painting a picture of George Soros philosophy of investment humbleness (my words, not his). Soros believes strongly in the fallibility of everything, humans, governments, and most applicable in this case, investment decisions. So in that spirit let me say about this position, I COULD BE WRONG. Actually, that applies to anything I’ve posted or will ever post on this site. My only saving grace as far as investments go, like Soros, I’ll try to ‘beat a hasty retreat’ (Mark Tier’s words, not mine) when I’ve blown it. So, with that disclosure neatly disclosed, here is what I see in Travel Zoo.

To start with, Travelzoo’s website is not all that impressive. I know people who use sites like this but I never have. It wasn’t the website that piqued my interest first, as usual, it was the stock chart. The chart looked as if the stock could explode to the upside at anytime. In late 2004 the stock traded above $100 a share after a 1500% run in eight months. Not that past history is any indication of future performance, but it does say something about the volatility this stock is capable off. What are impressive are the companies’ sales growth (31.40% year over year), profit margin (21.55%), Total Cash of 28M, and no debt. Then there are very low float 2.94M shares and high insider ownership (83.65%) and high institutional ownership (32.10%), and the icing on the cake is that 32.90% (1.68M) of the float is short. Here is what income and gross profit looked like over the last few years.

I bought shares last week for two accounts I manage.

NVE Corp (Ticker: NVEC) Showing Strength, Rally underway?

2006-12-09T19:45:00.000-07:00

On Friday Dec. 8th NVE rallied $1.87 (4.97%) and closed near the high for the day. I’d been watching for any sign of strength returning and Friday’s was impressive. On Monday Dec. 4th NVE tested and bounced off the 50% Fibonacci retracement level – see the chart above. I used the weakness over the last few days to build new positions. I may be trigger happy, but this market strength has been forgiving of my over-anxiousness. Lets hope it continues to be.

Exit Triggered on NVE Corp (Ticker: NVEC)

2006-12-03T00:14:00.000-07:00

On Friday my longest trend following indicator signaled a sell on NVE Corp. (Ticker: NVEC). The chart above shows a 5-13 moving average crossover chart I also watch as an earlier indicator, which had signaled a few days earlier. A worthwile future project would be for me to study exit strategies that would get me out without giving such a large percentage of profit back. But, for now anyway, my biggest position is cash, a situation that always stimulates more research for the next great trade. Now that November has passed, here are our other positions and their returns:

Comapany Ticker Gain/Loss

EZCORP Inc. (Ticker: EZPW) up 10.44%
CarMax Inc. (Ticker: KMX) up 26.59%
iShares Silver Trust (Ticker: SLV) up 10.53%
StreetTRACKS Gold Shares (Ticker: GLD) up 3.33%
Central Fund of Canada Ltd. (Ticker: CEF) up 8.33%

Precious Metal Plays

2006-11-16T23:12:00.000-07:00

Precious metals are showing strength again these days. Gold has bottomed twice this year near $570 an ounce and recently broke through the upper resistance line that enclosed a high tight flag formation. Having sold my precious metal holdings earlier this year in July, the collectable metals are once again flashing buy signals. The last couple days I took positions in silver using the iShares Silver Trust (Ticker: SLV) Exchange Traded Fund, gold using the StreetTRACKS Gold Trust Shares (Ticker: GLD) Exchange Traded Fund, and the Central Fund of Canada Ltd. (Ticker: CEF) an Exchange Traded Fund that hold both gold and silver.

Holding HOLDRs No longer

2006-11-16T01:20:00.000-07:00

The last few days I’ve unloaded our holdings of Pharmaceutical HOLDRs Trust (Ticker: PPH) and Telecom HOLDRs Trust (Ticker: TTH). The average gain in the Pharmaceutical HOLDRs Trust as around 7% and the Telecom HOLDRs Trust was around 17%. I had hoped both of these Exchange Traded Funds would trend higher for quite awhile longer, but the elections seemed to change investor’s perception on both of these sectors. While they both may be good long term picks, my trading style leads me to take profits and move on. I won’t get into the politics of how a democratic lead congress could hurt these industries. The market has spoken!

What is so compelling about NVE Corp. (Ticker: NVEC)

2006-11-16T00:44:00.000-07:00

In the world of trading it’s important to make the best of an opportunity when it happens. The first time I heard about NVE Corporation was in late July of this year. I scanned the stock market using TeleChart2007, an awesome tool for stock charting and analysis by the Worden Brothers. My scan is designed to find stocks that had moved up big on big volume and that is exactly what NVE stock had just done. Noticing that the stock had just advanced 25% in one day prompted me to do some more research. The company had just released earnings and their earnings conference call was available on the internet. After listening to that live conference call I decided we needed to own that stock. Looking at my trading log I see that I made five purchases at between $19.50 and $22.37 for accounts I manage. Now that this stock is trading in the 40’s am I still impressed with this stock? The resounding answer is “YES!” Here’s why. This companies name is coming up in so many patents and applications for patents, that if any of those killer ideas comes to fruition, the value of this company is going to explode. Here are a few of those ideas:

GMR Sensors – used in hearing aids made by Starkey. NVE Corp. nanotechnology has vastly improved the technology and Starkey is said to be a year or two ahead of the competition. Sales are ramping.
GMR Sensors in medical devices, pace makers, etc. Sales are ramping.
Sensors in tires – Cooper Tire has named NVE in a patent application that would sense tire pressure, rotation and would send data RFID. This seems to have huge possibilities to improve gas mileage and road safety.
Zero-Remanence Anti-Tamper Cryptokey Storage Device – NVE was awarded a Small Business Innovation Research project to “evaluate the effectiveness of the zeroization mechanisms, power requirements for reading and writing the device, and manufacturing feasibility”.
NVE is working with hard drive manufacturer to bring AT MRAM (Anti-Temper)
Do some due diligence, you’ll find many others.

EZCORP Inc. (Ticker: EZPW) the McDonalds of Pawnshops

2006-10-28T05:34:00.000-07:00

According to Yahoo!, EZCORP Inc. operates pawnshops and signature loan stores that function as sources of short-term cash. The company had 2700 employees in 234 EZMONY loan stores and 98 pawnshops as of September 2005. A week ago the company reported opening 46 stores during the most recent quarter, and they raised earnings expectations to 61 cents to 64 cent a share, up from 43 cents to 46 cents a share. I bought shares on September 20 as the stock ended a two day pulled back, after it had gapped up 15% a few days earlier. Those shares are now up 6.78% in a week. The day after my buy, IBD recommended the stock as a timely purchase buy placing a box around the chart in their IBD 100 stock chart page, which probably juiced additional buying. It can be difficult to buy a stock near an all time high, but you have to realize the largest profits in stocks are all made doing just that. One the day chart (top left) the stock in breaking out of a cup-with-handle base and could continue its strong performance.

Other recent trades

Sold China Automotive Systems (Ticker: CAAS) break even (now it will go up) I don’t like the low volume trade action in this stock - it is still giving a buy signal though
Bought U.S. Global Investors Inc. (Ticker: GROW) also breaking out of a cup-with-handle formation

NVE Corp. (Ticker: NVEC) – A thing of beauty

2006-10-24T03:38:00.000-07:00

If you’re into stock charts, you’ve just got to love NVE Corp’s. I mean, the latest chart action resembles a bottle of champagne just un-corked. It’s a thing of beauty. That is unless you’re a particular staff writer for The Motley Fool, whose ad line is “To Educate, Amuse & Enrich”. In an article dated October 19, 2006, titled “Turn on NVE: Fool by Numbers”, the article says “Fool contributor Stephen Ellis is less than thrilled with the story behind these numbers, even though the stock closed 20% higher Thursday”. Apparently traders don’t care if Stephen is “Less then thrilled”, as they’ve continued to bid NVE Corp’s share price higher on heavy volume. In fact the share price is higher by some 34% in the last three (3) trading sessions. Instead of pointing out NVE Corp’s drawbacks, Stephen should learn how to read stock charts. He might have bought the stock and be better then “even Stephen”. Okay, sorry, I couldn’t resist.

Cups, Handles and ETFs

2006-10-20T19:04:00.000-07:00

Looking at the chart of the Telecom HOLDRs Trust (Ticker: TTH) Exchange Traded Fund assures me that the Cup with a Handle formations first popularized by William J. O’Neil the founder of Investors Business Daily financial newspaper still work, and they even work with ETFs. To this day, the Cup with a Handle patterns remains one of the most powerful tools for spotting proper stock purchase timing. I first posted on this ETF on July 25, less than three (3) months ago. Ever since the ETF broke above the handle (in the Weekly chart- bottom right), in heavy volume, the fund price has been in a strong steady uptrend. I’ve made the Telecom Holders Trust Fund a core holding for several of the accounts I manage. In less than three months the returns are up between 10.54% and 17.76%.

Other Current Holdings and Percent Change

NVE Corp. (Ticker: NVEC) up 30.49%
CarMax Inc. (Ticker: KMX) up 19.17%
FoxHollow Technologies (Ticker: FOXH) up 10.84%
Pharmaceutical HOLDRs Trust (PPH) up 9.91%
China Automotive Systems (Ticker: CAAS) down 3.42% (stop set)
EZCorp (Ticker: EZPW) up 0.47% (new position today)

Recently closed positions in Avici Inc. (Ticker: AVCI)

NVEC (Ticker: NVEC) - No Spin Here!

2006-10-18T19:08:00.000-07:00

NVE Corp., the company that is making its name on a nanotechnology called Spintronics, released 2Q results after the market closed today. The results blew the estimates away. Net income tripled to $1.28 million vs. year ago income, and gross margins increased to 67%. I have to admit that holding this stock through earnings announcement made for a nervous day, but the chart said stay long and following my indicators paid off. The stock was up 13% in after hours. Tomorrow’s conference call could add further fuel to the fire if the company announces progress on intellectual property licenses, or raises future expectations.

This isn’t Rocket Science, its China Automotive Systems (Ticker: CAAS)

2006-10-13T21:10:00.000-07:00

I’ve traded China Automotive Systems (Ticker: CAAS) profitably in the past. So when is came up on one of my favorite stock scans recently, I took notice. I had recently read about several automotive companies opening manufacturing in China and this little company seems to be in the right place at the right time. On their balance sheet they have 19.8M in cash, .7M debt (next to nothing), 23.27M shares outstanding, 1.72M float (what?) and 16.8% of those are short. And most important is that the chart says the timing is right for a powerful move up. I bought shares on 10/9/06 as it pulled back.

Some Current Holdings and Change Percent

China Automotive Systems (Ticker: CAAS) up 13.44%
FoxHollow Technologies (Ticker: FOXH) up 6.85%
CarMax Inc. (Ticker: KMX) up 19.69%
Telecom HOLDRs Trust (TTH) up 15.91%
Pharmaceutical HOLDRs Trust (PPH) up 7.05%
NVE Corp. (Ticker: NVEC) up 5.95%

Stocks I've sold include GigaMedia Limited (Ticker: GIGM) and Datalink Corp. (Ticker: DTLK)

Merck's Little Buddy

2006-10-04T19:16:00.000-07:00

I came across a chart of FoxHollow Technologies (Ticker: FOXH) and immediately noticed that it is breaking out of a cup and handle base with strong volume. The next item I noticed was the soaring revenues year over year, 65.8M in cash and zero debt.

Revenues (in thousands)

2003: 2,585
2004: 38,552
2005: 128,156

Then, there is the fact that Merck is in a Collaboration and License Agreement with FoxHollow and is buying an eleven percent stake. I bought shares of FoxHallow yesterday as it pulled back from its recent run, and was rewarded today as the stock rebounded and put our shares in the green.

Another action I took yesterday was taking profits in MDTL which had moved up over 20%.

Q3 2006 Quarterly Update – Keeping Score

2006-09-29T22:21:00.000-07:00

Quarter over Quarter Gain: 17.40%

Year over Year Gain: 36.55%

Today the book closed on what turned out to be a great quarter. This quarter I moved away from being overly diversified to holding fewer positions, and I focused on not making trading mistakes that would hurt our portfolios. I generally held losing trades to a 5% loss (or less) and tried to let winning trades run. It turned out that the least profitable holdings were accounts that were in mutual funds (401ks) which on average gained less than 5%. Next on the profit curve was ETFs that generally gained between 6 and 13%. The best gains were in stocks, with a few trades that gained up to 80 or 90%. One taxable and leveraged account gained 104.38% for the quarter and another gained 54.81%, even though leverage was rarely used. Those types of trades are all timing and stock selection, and of course the greatest credit goes to the market itself. A rising tide lifts all boats, and rise it did.

Long a heavily shorted stock – Medis Tech Inc. (Ticker: MDTL)

2006-09-28T03:10:00.000-07:00

I created a short list of stocks that were the most heavily shorted stocks in the market and did some research to evaluate if they had potential to grow revenues or profits. One that looked very interesting was Medis Tech Inc. (Ticker: MDTL). The company has a market cap of 710 million, 40.35 million in cash and no debt. The company has 32 million shares outstanding, but only a 18.42 million share float, and the shorted stock is a full 27% of the float (6.87 million). The company is in UL (Underwriters Laboratory) testing of fuel cell that will be used to power cell phones and other hand-held devises. The company claims they’re on schedule to launch the product during the first quarter of 2007. I took a position on Tuesday the 26th of October and the next day (yesterday) the stock moved up 9% on heavy volume. We’ll see if the uptrend continues.

NVE Corp. (Ticker: NVEC) Taking Profits off the Table

2006-09-25T21:16:00.000-07:00

Over the weekend I considered taking profits on NVEC. Based on the weakness the stock displayed over the previous four (4) trading days and the MACD indicator that rolled over on the day chart (top left), I decided to lock in profits and leave the option of jumping back in at a later time open. So when the stock opened to the upside I took advantage of the situation and sold with abandon. For most of the day I was sure I did the right thing, but the last hour saw heavy buying and the stock rebounded to close down 2.83%, but, it had been down nearly 9% before rallying into the close. Was all the buying in the last hour short covering or funds buying? I don’t know, maybe both. But you can bet I’ll be watching this one. I’m not looking to give back any profits, but this stock could still make a run for the Moon. Still I’m glad to have locked in strong gains on this stock with the quarter almost over.

CarMax beats expectations and we have ignition!

2006-09-21T00:47:00.000-07:00

CarMax Inc. (Ticker: KMX) broke to an all time high today on five times its 3 month average volume. The used car Super Store auto dealer announced better than expected earnings and raised its full year projections. The stock closed up $3.16 for a gain of 7.87% for the day. The company is the largest U.S. retailer of used cars, with 71 super stores in 34 states. The company is on track to open 10 additional stores this year and to grow by 20% annually for the next 5 years. The stock is up 17.22% since my initial purchase.

GigaMedia Limited (Ticker: GIGM) Stage II Breakout

2006-09-16T17:49:00.000-07:00

GigaMedia Limited, a Taipei Taiwan company that according to Yahoo! Finance, engages in the development and license of entertainment software and a operator of game portals, to sum it up, they’re into online gaming and they’re growing like gangbusters. GigaMedia Limited is a 567 million company, has close to 31 million in cash and 19.69 million in debt, and their profit margins are 51.44%. Their Income Statement says quarterly earnings growth (year over year) was up 819%. For the company's impressive highlights of the Q2 2006 Results go here. I usually like to buy into a company before it’s gone up 400% in a year, but the great looking cup with handle breakout on the day chart (top left) is an attractive entry from a technical perspective. On Sep. 7 the stock broke to a new high on four times the three month average volume, a very positive confirmation signal of continued growth. I bought shares on Friday 9/15 for two accounts I manage.

William J O'Neil - Words from a truly Great American

2006-09-10T10:44:00.000-07:00

I just finished reading How to Make Money in Stocks by William J. O'Neil for the third time. Every time I read it, it makes even more sense. This book is so full of good advice for trading and investing that anyone who wants to master the art of trading stocks would do well to read it over and over again.

Amazon's book description says "William J. O'Neil's proven investment advice has earned him millions of loyal followers. And his signature bestseller, How to Make Money in Stocks, contains all the guidance readers need on the entire investment process from picking a broker to diversifying a portfolio to making a million in mutual funds. For self-directed investors of all ages and expertise, William J. O'Neil's proven CAN SLIM investment strategy is helping those who follow O'Neil to select winning stocks and create a more powerful portfolio. Based on a 40-year study of the most successful stocks of all time, CAN SLIM is an easy-to-use tool for picking the winners and reducing risk in today's volatile economic environment."

O'Neil’s own success proves you can succeed in stock investing as well as business. The final words in the last chapter from O'Neil say "My parting advice to you is: Have courage, be positive, and don't ever give up. Great opportunities occur every year in America. Get yourself prepared and go for it. You'll find that little acorns can grow into giant oaks. Anything is possible with persistence and hard work. It can be done, and your own determination to succeed is the most important element."

CarMax Inc. (Ticker: KMX) AKA the Walmart of Used Car Superstores

2006-09-09T18:00:00.000-07:00

The stock of the retailer of used cars CarMax Inc. which operates 71 dealerships in 34 markets is showing subtle but steady strength as it broke above a three year high recently. The company is scheduled to release earnings on Sep. 20th and the indications are that the company had a strong quarter. My initial purchase for one account I manage is up 5.99% and the rising price on higher trading volume is encouraging. The company’s share price is also very close to an all time high, which could cause the stock to continue to run higher on a breakout

NVE Corp. (Ticker: NVEC) Deal or no deal?

2006-09-05T20:54:00.000-07:00

Today was another explosive day for the stock of NVE Corp. (Ticker: NVEC). On absolutely no news what so ever, the stock vaulted ahead by 18.87% to close the day at $34.01. I first featured this Sensor maker and patent rich company on Aug. 1, 2006, a few days after the company released its Q1 2007 earnings and the stock zoomed up by 25% in one day. This stock of this company has juiced the returns of several accounts I manage over the last several weeks and I can only imagine what might happen if the company had some really positive news like a license deal with FreeScale Semiconductor. It could happen!

Telecom Stocks – Liking the Unloved

2006-09-02T21:50:00.000-07:00

Telecom stocks continue to gain strength as more investors realize they won’t stay down forever. Once, the rage of the Tech bubble era, telecom stocks had since become so out of favor that many swore them off as viable investments. At the beginning of 2000 Telecom HOLDRs Trust (TTH) Exchange Traded Fund traded at $90 a share as prices of telecom companies were in the clouds. The next two and a half years would see the fund’s share price loose over 75% of its value to $22 a share, then the fund would take another four years to beak convincingly above $30. On Friday 9/1/2005, the fund closed at $32.03, a five year high. Since I first spotted the promising looking chart about six weeks ago, I’ve made five buys, with the lowest gain now at 3.22% and the highest up 9.97%. This sector seems to now be in the beginning stage of a multi year move up. Hold tight.

Long and Strong in Pharmaceuticals

2006-09-02T08:47:00.000-07:00

According to the prospective for Pharmaceutical HOLDRs Trust (Ticker: PPH), they hold twenty of the largest and most liquid Pharmaceutical companies. Since I first profiled this ETF on July 24th the chart action has continues to be constructive. I’ve made three purchases of the fund since I first spotted the nice looking chart which on a week or month chart had completed a head and shoulder bottom basing pattern. Those buys are in the green with 5.18%, 5.47% and 5.63% gains. Not terrific returns but respectable given the short holding period of under six weeks. On the weekly chart (bottom right) the stock price has just broke out from a high tight flag, which is generally a sign of the strength continuing.

August heats up the markets

2006-09-01T22:29:00.000-07:00

Another month has come and gone and the markets just seem to keep on surprising to the upside. Still, I hear a lot of bearishness our there. Many of trading blogs I read warn of the boogie man bear returning from vacation and dashing my hopes for a continuation of what has so far been an exceptional quarter. Granted, it’s only two thirds complete, and if it ended right now it would probably be the best one since the last quarter of 2004, when we gained 36.68% for the quarter. Maybe the doubter’s have a point. It does seem to be the more speculative stocks that are doing the best. You know the Pharmaceuticals and the Semiconductors and the Tech’s are perking up. And maybe that’s a sign the market is on its final accent for this bullish run and traders should be alert to the cliff ahead. But, what else is new? Actually, the more bearishness I hear, the more it makes me want to stay the course. One hedge fund manager I like to follow almost seems to have distain towards bullish traders, like they don’t have a clue to what’s really happening. One thing’s for sure, sooner or later where all right in our analysis, just not at the same time. I try not to forecast, only react.

NVE Corp. (Ticker: NVEC) like TNT, it Explodes!

2006-08-23T20:18:00.000-07:00

I did a lot of ‘soul searching’ the last few days concerning this company. I mean, is this company’s prospects really as good as the explosive stock price says it is? For starters I read everything I could on the company’s IP (Intellectual Property), patents and technology, and I read all past and present news releases about the company, its customers and it’s management.

I then listened to NVE Corp’s last earnings press release again on the internet. I was very impressed with how assured they were that MRAM could not be produced without their intellectual property and it’s a fact that Freescale Semiconductor is currently in production of MRAM, have been for several weeks now, which mean future agreements and royalties.

With the rapid run-up in stock price I wanted to feel assured I wasn’t falling for line of hype. After all, I’ve put a hefty percent of my trading capital on NVE and don’t want to be a bag holder if it crashes and burns.

So, what finally reassured me that I needed to stay long and strong? It’s the same thing that caused the stock to jump when they released earnings. It keeps coming back to the 71% growth in product sales they reported on July 31st, and the future prospects of the Spintronic technology that many think will be very life changing. And for now anyway, the stock refuses to pull back, and just keeps charging higher.

Avici Systems Inc. (Ticker: AVCI) Networking Equipment Gem

2006-08-20T00:29:00.000-07:00

Avici Systems is small (206 Employees) manufacture of high speed data networking equipment. The company has a market cap of 112 million. The company is not yet profitable but revenue growth was 127.50% year over year. They have no debt and nearly 60 million in cash. Total revenue was up 30% in 2005 over 2004 and the latest quarter revenue of 25 million compares nicely to total revenue for all of 2005 of 35 million. The stock has doubled to $8 a share in the last five months after spending a year basing at $4 a share. There are 13.65 million shares outstanding and 1.96 million (15.40%) are short as of last month. It all adds up to a nice opportunity for a strong move up if they continue to ramp revenue and turn profitable.

Used Cars Anyone? CarMax Inc. (Ticker: KMX)

2006-08-19T20:12:00.000-07:00

Not every stock I buy has to be super interesting. They do need to have a growing revenues or at least good prospects, and I like a lot of cash on the books with low debt. A new product that is in demand or great management helps too. But I guess the most important aspect is a chart that is compelling, breaking out of a sound base, or a new high on big volume. That’s where CarMax Inc. (Ticker: KMX) comes in. It looks as if it’s about to break to a new high any day, their quarterly revenue growth has been gaining just under 20% year over year, but quarterly earnings growth, year over year has been 53.5% higher. The stock has been consistently showing up a scan I designed I call my CANSLIM II scan. It searches for stocks that have the attributes the legendary trader William J. O’Neil looked for and history showed stocks had before they made huge moves for their owners. Just the same, if you buy it, use good money management and sell it if it goes down by a predetermined amount. Not every stock goes the way we want.

Cogent Systems (Ticker: COGT) Pay by Finger?

2006-08-19T05:36:00.000-07:00

Since Cogent Systems (Ticker: COGT) traded at $35 and change in November of 2004, it's been all down hill. The stock now trades just under $14. This company manufactures fingerprint identification systems as well as other biometric identification systems for governments, law enforcement agencies and other organizations according to Yahoo!
On Aug. 2 Cogent announced second quarter results that disappointed investors and the stock sold off some 10%, but the stock has since rebounded nicely. For starters, what is compelling about this company is the revenue growth.
2003 32.18 million
2004 87.68 million
2005 159.89 million
While the revenues so far this year have been down the company is upbeat about future orders and their gross margins have remained impressive at 57.7%. Cogent recently announced a $30 million share buyback program as a way to put some of their $365 million in cash to work. They have no debt. What sparks my imagination about Cogent's prospects is the possibility of wide scale acceptance of payment systems that utilize fingerprint identification systems. Fingerprint payment systems are being tested in over 2000 grocery and convenience stores nationwide. The customer puts their index finger on a button and money is deducted from their bank account to pay for their purchase. Now, for what could really make this companies stock fly, 22.50% (9.4 million shares) of the outstanding stock is sold short. Any positive news could send the stock up sharply.

The Spin on Spintronics

2006-08-18T03:57:00.000-07:00

On the 1st and the 3rd of August I talked about NVE Corp. (Ticker: NVEC). This small company in Eden Prairie Minnesota is worth doing some research on. Their founder has spent years developing a new technology that could change the future by changing the way semiconductor chips store information. The company is developing "Spintronics" which utilize the spin of electrons to store data instead of a positive or negative charge. Regardless of whether the buzz is real or just spin, NVE Corporation’s stock has been in a lot of demand lately. The fact that 20% of the stock was short has also been a driving factor for sure. But if the hype becomes reality this company’s stock could go much higher. Yesterday the stock broke to an 18 month high and vaulted 13.23% higher. I’ve made several purchases of NVEC in the last few weeks, with the best entry now up 24.96%. This will be a very interesting company to watch.

Datalink Drama

2006-08-17T18:29:00.000-07:00

Datalink Corp. (Ticker: DTLK) continues it's strong move upward. I'm convinced that the next big move upward in the stock market will be lead by small cap companies in the tech sector. Techs have been so beat up that they are now value stocks. What's more, the short ratio has got so lopsided that any buying pressure seems to provoke a lot of short covering that is driving these small cap tech stocks to move sharply higher. Datalink is up 10.56% since my first purchase on July 31st, less than three weeks ago.

Pharmaceuticals Firming Up

2006-08-16T05:12:00.000-07:00

Speaking of bottom fishing for sectors that are bottoming, take another look at Pharmaceutical HOLDRs Trust (ticker: PPH). This sector is moving up off of a multi-year base and a long term head and shoulders pattern on the monthly chart (right). On the daily chart the action looks as if money is flowing in the sector. My initial buy into Pharmaceutical HOLDRs Trust (ticker: PPH) is up a little more than 3% but looks like a timely entry here.

Turning the Corner - Telecom HOLDRs Trust (TTH)

2006-08-15T23:02:00.000-07:00

On July 25th I posted a message about the Telcom sector, namely Telecom HOLDRs Trust (TTH) Exchange Traded Fund, and I mentioned that I was looking for funds that were out of favor and may be headed for a long term move up. The chart on the right shows how the fund did indeed break above 30 and appears to be headed higher. This morning on Bloomberg, there was a Merrill Lynch analyst that said Telecoms are so out of favor that they are where steel was a few years ago. Looking at a chart of United States Steel USX (Ticker: X) steel rallied seven fold from three years ago. I like getting into a long term uptrend like that. My initial buy of Telecom HOLDRs Trust (TTH) is up 5.89% but the chart is telling me the move is just starting.

Oil Slicks and Prudhoe Bay

2006-08-09T06:50:00.000-07:00

My stop loss got triggered yesterday on Celgene for a six percent loss. From a day chart Celgene looks like a buy, but from a long term chart it is very extended and could fall a very long ways
The other chart here is United States Oil Fund LP (Ticker: USO). I previously owned oil and was taken out of the trade with a stop loss. I know they gun for those stop losses, but it's all about insurance and keeping losses small. As often happens, the stock price dipped to my stop loss price then resumed the uptrend. What are you supposed to do when that happens? If the trade still makes sense, get back it.

More Information on NVE Corp (Ticker: NVEC)

2006-08-03T07:10:00.000-07:00

“This is a revolutionary technology,” Baker said, looking up on his wall to quote a line from a recent Scientific American article on spintronics: “It is an unprecedented opportunity to define a radically new class of device.”

“Spintronics is a once-in-a-lifetime opportunity," Baker said. "It is a chance to revolutionize electronics, a great space to be in and a great time to be in it. Spintronics could provide the successor to the transistor.” See article here