Daily Newsletter Picks and Thoughts on Selling
Stockscores.com Perspectives for the week ending March 17, 2006
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In this week's issue:
Stockscores Perspectives Daily Newsletter
Each day I use the Stockscores.com Market Scan tool to apply the Stockscores Approach in search of good stock picks. I feature these along with my market commentary in the Stockscores Perspectives Daily Newsletter. I did a quick survey of the stocks that I featured in December and January and thought I would show a summary of all the stock picks, both good and bad, in this week's newsletter.
EXTR featured Dec. 1 at $5.26, this pick failed getting no higher than $5.30.
PMTR featured Dec. 2 at $1.50, this one worked well hitting a high since of $2.41 for a maximum gain of 60%.
CALL featured Dec. 5 at $4.66, this stock did alright hitting $5.25 for a maximum gain of 13%.
V.CXX featured Dec. 6 at $1.03, this stock did well hitting a high of $1.68 for a maximum gain of 63%.
T.CAE featured Dec. 7, this is a more conservative stock that was featured at $8.91 and has since hit a high of $9.82 for a maximum gain of 10%.
PRTR was featured on Dec. 16at $12.35 but really did not do well, hitting a high of $12.79 which is not enough of a gain to have made money on it.
V.HAO was featured at $0.285 on Dec. 21 and since risen as high as $1.75 for a maximum gain of 514%.
V.KTV was featured on Dec. 20 at $1.02 and has since hit a high of 1.44 for a maximum gain of 41%.
V.TVC was featured on Dec. 20 at $0.77 and went on to achieve a high of $1.91 for a maximum gain of 148%.
For January …
DROOY featured on Jan 4 at $1.79 and went up to a high of $2.02 for a maximum gain of 13%.
LTRX was featured on Jan 5 at $1.80, eventual high was $2.68 for a maximum gain of 49%.
BEAS was featured on Jan 5 at $10.13 and went up a maximum of 22% to a high of $12.34.
V.EWR was featured on Jan 12 at $0.21 and hit a high of $0.32 for a maximum gain of 52%.
HILL was featured on Jan 12 as well at $7.61 and it went up as high as $8.25 for a maximum gain of 8%.
NMHC was featured on Jan 13 at $29.67 and went up as high as $32.29 for a maximum gain of 9%
T.CLL was featured again (it was featured a number of times in the last year) at $4.44 and went up as high as $6.07 for a maximum gain 37%.
Finally, my last feature in January was V.KXL, picked at $0.45 and shot up to a high of $3.54 for a maximum gain of 687%.
You can see all of these stock picks in the back issues of the daily newsletter by clicking here.
The above features cover the entry side of the stock trade, but what about the sell side? The StockSchool Pro course covers the techniques for selling so I won't go in to the details here, but I want to discuss some general principles that should be helpful for all traders in achieving success in the market.
My first big rule is to never plan to sell your winners, always plan to sell your losers. When you enter a stock, decide on the price point where the market will have proven your pick to be a mistake and plan to take a loss when the stock falls to that price.
You should not take this approach to selling your winners, why limit upside with a predetermined sell point? Sell the stock when the market activity indicates the stock is more likely to go lower than higher.
Generally speaking, I sell stocks when they move through support on the chart pattern. There are many ways to define support, some very short term (like intraday floor prices) and some very long term (patterns that form on a weekly chart). What time frame for defining support should depend on a few considerations:
1. The state of the overall market - if the sector of the market that you are trading is in a bullish trend, choose a longer term time frame for defining support. Trust that the optimism of the overall market will favor your stock and carry it through the pull backs that come with long term up trends.
2. The pace of the up trend - the faster the stock is rising, the more aggressive your sell strategy should be. Up trends tend to start slowly and the build exponentially as greed causes a sort of feeding frenzy on a stock. As an up trend goes in to a parabolic curve, plan to sell on a move through a tighter level of support.
3. Liquidity - the more actively traded the stock is the easier it will be to sell. If the stock is not very active and you have a large position you are going to have to sell in to strength over time even if there is no sell signal.
One of the best pieces of advice I can give is to not watch the scoreboard. The profit and loss total that you see in your account is irrelevant to your decision to sell but it will certainly give you cause to sell your winners too early and ignore selling your losers when the time has come. We like to feel the pleasure of locking in a profit and tend to avoid the pain of selling a loser. That is why normal people tend to fail in the stock market. To beat the market you have to reverse this association with pleasure and pain.
Selling correctly is mostly a matter of controlling emotions, work on that and improve your investment performance. Easy to say, harder to do.
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Abnormal Up Strategy
Information affects stock price. The more important the information, the greater the effect on price. Recognizing that there are market participants who act on information that has not yet been made public, we can often predict the arrival of significant news by monitoring market activity. Statistically significant abnormal activity is often an indication that positive new information is becoming a factor in the market. The Abnormal Activity Market Scan and Strategy seeks out the abnormal behavior that can telegraph the future.
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1. ALGN
ALGN made strong gains today with decent volume supporting the breakout from an ascending triangle pattern. There is long term resistance at $11 and support at $8.25 so the risk reward trade off is better than 1:2.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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