Archive for September, 2010

Thursday, September 16, 2010

Thursday, September 16th, 2010

Market Notes
For the third day in a row, the market rallied right into the close. The only party pooper was the DTX, but it at least had the good manners to close above its intraday low. The VIX began dropping late in the day and the fact that the Trin didn’t follow suit means that there’s probably more upside in the offing. Here’s to hoping that tomorrow will indeed be a good Friday.

New Long Portfolio
Today’s portfolio components were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (4), Low-priced leaders (2), and Darlings of the Day (4).

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/15/10

Wednesday, September 15th, 2010

Market Notes
The fact that the market has rallied off of early morning sell-offs for the past two days is an encouraging sign. The difference between today and yesterday’s action is that the major averages didn’t slump mid-day, instead marching up steadily into the close.

The major averages are just a hair away from testing major resistance. If they break it, the odds of a rally into the holidays are good. If not, then…well, I don’t want to think about it. The next few days will be telling, indeed!

New Long Portfolio and Portfolio Notes
Today’s portfolio components were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (3), Breaking out to new highs on lower volume (2), Low-priced leaders (3), and Darlings of the Day (2).

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Portfolio Notes
As mentioned in yesterday’s blog, if Radware (RDWR), a component of the 9/8 portfolio, declined below $34.50, I’d sell it. I should have kept my big mouth shut because it did exactly that thus triggering my stop/loss. Sigh. If it goes up tomorrow, though, I shan’t feel remorse because one must stick to ones trading rules. Well, not too much remorse…

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/14/10

Tuesday, September 14th, 2010

Market Notes
Late day sell-off, especially in the Dow Industrials, prompted a rise in the (all-stock) VIX which tested the intraday low of 20.90 three times. Today’s “Harami cross” (in candlestick parlance) seen across the major indices most likely portends a stall in the current rally.

New Long Portfolio and Portfolio Notes
Sector rotation continues as investment managers, fresh from vacay, begin implementing their strategies devised over their all-too-brief holiday (like 4 months). Done is income—probably because everyone who wanted in on the space is fully invested and also perhaps because dividend yields compared with other metrics have become too dear. Silver, gold, uranium, and other precious metals ruled the day along with advances in unexpected industries such as laboratory instruments and pet supplies. Bow-Wow!

Insurance did surprisingly well today and that is reflected in the portfolio components. Information Technology (IT for short) is also ripe for the pickin’s and four components were chosen from that sector, albeit from different industries. Today’s portfolio components were selected from the following lists: Breaking out to new highs (2), Low-priced leaders (2), and Darlings of the Day (6).

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Portfolio Notes
Radware (RDWR), a component of the 9/8 portfolio, surged 38% today on an upgrade and takeover rumors. We like that! I’m going to enter a trailing stop on the order of 1.5 times the average true range (ATR) of $2.3. That gives a stop of $34.50 but note that it has a major support level at $32.50.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/13/10

Monday, September 13th, 2010

Market Notes
It seems as if at least some of the big dogs have returned because there’s a lot of sniffing around in issues that have been recently lagging. Market internals were solid at the open probably due to some pent-up (or forced) buying occurring on top of some M&A activity. Tech issues were today’s winners as the Nasdaq closed at the high of the day. Other indexes closed just off their session highs except for the Dow Transports (DTX) which had more of a problem.

But that’s probably not a huge issue as the VIX hit a multi-month low and though the Trin is falling, it has yet to reach extreme levels. Barring any untoward economic news, I’m expecting a near-term rally and if the indices can break overhead resistance (1130 on the SPX and 450 on the DTX) then don’t be surprised if the rally continues, at least until the end of the year.

New Long Portfolio & Portfolio Notes
There was a plethora of choices today and because Dr. Kris slept in this morning due to an oncoming cold, she had to make some quick decisions. To add an extra level of safety, today’s portfolio is heavy on the Darlings of the Day, the steady eddys of the *Blue Plate Specials*. Here are today’s portfolio components selected from the following lists: Breaking out to new highs (3), Low-priced leaders (1), and Darlings of the Day (6).

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Portfolio Notes – Symbol Change & Radcom comment
Please note that 9/9 portfolio component, Sprott Lending, changed its symbol from QCC to SILU.

A colleague sent me a note today asking if I knew why Radcom (RDCM, a 9/3 portfolio pick) has dropped over 30% since Friday’s high. My response was that I have no idea other than it could be a heavy hitter unwinding his/her position. This is not an unreasonable assumption since the stock is thinly traded (normal daily volume around 130K) and volume in the past two days has been greater than average. (Any volume pressure on a thinly traded stock tends to be magnified.) The stock seemed to stabilize today but if it continues to fall tomorrow, I’m exiting the position.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/10/10

Friday, September 10th, 2010

Market Notes
The market action this week has been one of consolidation on very low volume. The good news is that volatility has remained relatively low. A break below 21.25 would be a very bullish sign. We’ll see what the big dogs do next week assuming they even choose to return to the playground.

New Long Portfolio
Today’s portfolio components were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out to new highs on Lower Volume (3), Low-priced leaders (1), and Darlings of the Day (1).

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/9/10

Thursday, September 9th, 2010

Market Notes
The fact that the Dow Transports (DTX) were unable to hang onto key 440 support combined with topping tails on its daily candles in three of the past four days suggests the market is running out of steam, at least for the moment. The good news is that volatility is declining (now at 22.8) and a close below 21.30 would be very bullish.

New Long Portfolio & Portfolio Notes
I exited the BJGP long position initiated in the 9/7 portfolio not because it broke a stop/loss but because of a technical reason. Two topping tails on its daily candlestick chart is a sign that there are no more buyers and when this type of exhaustion sets in the stock typically declines. I could be wrong but in this case I’d rather be safer than sorrier.

It wasn’t easy finding ten candidates for today’s portfolio but I did manage to eke them out. They were culled from the following lists on today’s *Blue Plate Specials*: Breaking out to new highs (4), Breaking out to new highs on Lower Volume (2), Low-priced leaders (2), Speculative Leaders (1), and Darlings of the Day (1).

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 9/8/10

Wednesday, September 8th, 2010

Market Notes
Market has been rangebound for the past 3 trading days. Tepid internals point to more of the same action tomorrow.

New Long Portfolio
Today’s ten long entries were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Low-priced leaders (4), and Breaking Out (1).

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* – 9/7/10

Tuesday, September 7th, 2010

Market Notes
With the Trin scraping the bottom of the barrel last week, it wasn’t much of a surprise that the market took a breather today. Volume remains light and don’t expect the big boys to return until next week—the Hampton’s are just too glorious this time of year!

It’s a law of physics that lighter things are easier to push around than heavier things, a law that also applies to the market. Any unexpected economic news has the potential for greater volatility—good for very short-term traders but not so good for the rest of us. Considering that I have a lot of long positions to manage, this week I’ll be in the “no news is good news” camp.

If there is a silver lining to today’s market action it’s that the Dow Transports (DTX) closed above its intraday low. Since the Transports are generally regarded as a leading indicator of market direction, we could see stocks rally tomorrow. I hope so.

New Long Portfolio
Today’s ten long entries were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (4), Low-priced leaders (5), and Darlings of the Day (1).

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

Chartology 101: A textbook example of a downward channeling stock (OMI)

Friday, September 3rd, 2010

While stock surfing today, I came across a perfect example of a stock in a downward trending channel. While many chartists are able to spot horizontally trending charts (and most stocks do trend in that fashion), they sometimes overlook stocks trending in upwards or downwards patterns.

As you can see by its chart below, Owens & Minor (OMI) stock began sliding in April. It formed a nearly perfect downward channel with a $2 separation between the relative peaks and valleys. The play on this is just like a regularly channeling stock: buy the dips and sell the peaks, and keep doing this until the stock breaks out of its channel. The good thing about channeling stocks is that your stop/loss values are pretty much set in stone (set them just outside of the channel).

And that, folks, is today’s chart lesson. Have a good holiday weekend!

OMI Chart 9-03-10

New long *Blue Plate Specials* Portfolio – 9/3/10

Friday, September 3rd, 2010

New Long Portfolio
I know I said that I was going to pack it in for the weekend, but I was expecting the jobs report to be more of a downer than it was. Wah! With the market up again, albeit on very low volume, I initiated a long portfolio with the ten entries selected from today’s *Blue Plate Specials* lists: Breaking out to new highs (1), Breaking out to new highs on lower volume (3), Low-priced leaders (3), Speculative leaders (1), and Darlings of the day (2).

Enjoy your weekend!

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