The Stock Skimmer
The Stock Skimmer section will now be dedicated to trading setups that occur on monthly charts. It will begin with a paper $100,000 portfolio. The reason I am doing the paper portfolio is because my employer does not allow employees to short stocks. I will be purchasing all of the longs that hit their entry price. The first trade was the UNG trade below. I will first post some of the trades on the radar and will add some more information over the next couple days.
March 24th, 2013 – The Monthly Radar
Ticker: FRAN
Ranking: 5
Long or Short: Long
Entry: 30.15
Stop: 20.75
% of Cap Risk: 2%
Shares: 214
Ticker: UA
Ranking: 104
Long or Short: Long
Entry: 52.72
Stop: 42
% of Cap Risk: 2%
Shares: 188
Ticker: EVK
Ranking: 185
Long or Short: Long
Entry: 2.31
Stop: 0.95
% of Cap Risk: 2%
Shares: 1,473
Ticker: DX
Ranking: 1,409
Long or Short: Long
Entry: 11.17
Stop: 8.36
% of Cap Risk: 2%
Shares: 717
Ticker: BVSN
Ranking: 4,164
Long or Short: Short
Entry: 7.74
Stop: 14.29
% of Cap Risk: 2%
Shares: 307
Ticker: ALTI
Ranking: 3,129
Long or Short: Short
Entry: 1.99
Stop: 4.04
% of Cap Risk: 2%
Shares: 985
Ticker: ARIA
Ranking: 4,656
Long or Short: Short
Entry: 18.05
Stop: 26
% of Cap Risk: 1%
Shares: 253
Ticker: VISN
Ranking: 4,366
Long or Short: Short
Entry: 3.00
Stop: 5.58
% of Cap Risk: 2%
Shares: 780
Ticker: PVA
Ranking: 4,707
Long or Short: Short
Entry: 3.83
Stop: 6.82
% of Cap Risk: 2%
Shares: 673
Ticker: CETV
Ranking: 4,777
Long or Short: Short
Entry: 4.46
Stop: 8.02
% of Cap Risk: 2%
Shares: 565
March 11th, 2013 – The Long Term View On UNG
Natural Gas
Natural gas has been battered over the past few years, but the UNG monthly chart shows that a turnaround is currently developing.
The Setup
The ETF, UNG, has a one year return of -11.81% and a three year return of -36.79% (per Fidelity.com, as of 1/31/13). It has attempted rallies since 2009 only to be knocked down further until a low in April of 2012. The monthly chart presents a doji April 2012 candlestick for UNG. A doji does not always signal an impending reversal, but it does show that a trend is at least slowing down. From April 2012 to October 2012, UNG rallied on solid volume. In the past, rallies have created a very good opportunity to short with UNG cooperating and proceeding to make another low. From November 2012 to January 2013, UNG followed its typical trend of selling off after a rally although this time around it appears things could be different.
January of 2012 created another doji for UNG after the November to January retrace. The retracement was not violent and stopped on a dime with the January candle. This doji could be signaling the overall turnaround in natural gas. If the ETF can make a move up within the next couple months, while at a minimum staying above the January low, then the chart shows the makings of an extremely promising trade. The pattern that could develop is just a basic uptrending pattern; a low followed by a high, followed by a higher low. Although a higher low can only be confirmed by a higher high a trade could still be entered with a good probability of succeeding. The ETF has some support from a trendine that is touching the lows of April 2012, June 2012, and January 2013, which could help catapult UNG. For the early trade to be entered the January high must be broken without the January low being broken. The price action has demonstrated that this could be the bottoming of a massive downwards move, so I feel confident that a trade can be entered before confirmation, but of course proper risk management must be utilized. The next section explains how to trade the setup.
The Entry
I do not want to get into the position just a few cents above the January high. UNG is a volatile ETF, so a few cents does not confirm breaking a high or low. Trading off of monthly charts means a greater range that one will be risking and provides greater upside potential. The entry is 2% above the high of 20.20, which is 20.60. The 2% qualification will protect against a false breakout. I believe a trader or investor should only risk 2% or 3% per trade, which when utilized for this trade means a total of 6% to 10% of one’s capital invested in the trade because of the stop level.
The Stop
Since UNG has not confirmed the uptrend, the stop will be placed below the all-time low of 14.25. The stop should also have some breathing room, so 13.97 should be plenty to prevent a shakeout.
Potential Exits and Additional Entries
The setup has the potential for the ability to add additional shares, while also raising the stop. If the uptrend is confirmed then more shares will be added with new calculations being done for how many shares to purchase based on risk levels. For example, if the risk amount is 3% on a $100,000 account then the original purchase at $20.60 with a stop at $13.96 would call for a purchase of 452 shares, so if the stop is hit then the account loses $3,000. If the trade works and UNG confirms a new high, then the strategy will be to add to the position. The next step will be risking 1.5% on the next trade. The next buy point is $23.73. The stop should be entered at $17.03, the new low that was confirmed with the ETF making a new high. With these risk levels one should purchase 236 shares. The cost basis will then be $21.68 with a stop below the most recent low of $17.03 and the total amount of shares held will be 688. If the trade turns negative and the stop is hit then the dollar loss will be approximately $3,200, which is right around the 3% risk level that began the trade.
UNG does not have much resistance until a consolidation that was put in place from October 2010 to August 2011 between $38 and $52. If the trade makes it to $38 then that is a 75% return or a dollar profit of $11,200, while risking about $3,200. The risk reward on the trade is 3.5:1, which is solid considering how conservatively the trade is being made. There is also a chance that UNG could set another low after the high, so another add to the position could then be entered. It is impossible to plan for that at this point, but is certainly something to keep an eye on. The ETF may also explode past $38 and up to $52, or even beyond. A trader needs to be like a golfer and trade the setup as it lies.
January 30th, 2013
New short target is the head and shoulders on the daily chart for ANR.
January 22nd, 2013
The shorts were not hit today, but three more are CXZ, KIPS, and LPTH.
January 21st, 2013
Updated Short List (and these are on, so if they hit they will be open positions)
| Ticker | Entry |
| ATRI | -185.16 |
| AXN | -0.18 |
| LPTH | -0.8 |
| EMITF | -1.71 |
| ASTI | -0.6 |
| QCOR | -25.37 |
January 21st, 2013
Current Positions (buy price is dividend adjusted)
| Longs | Shorts | |||||||
| Ticker | Buy* | Current | Return | Ticker | Short | Current | Return | |
| AGM | 28.88 | 33.88 | 17.31% | IAU | 16.365 | 16.39 | -0.15% | |
| GPX | 20.8 | 20.82 | 0.10% | MAKO | 11.87 | 10.89 | 8.26% | |
| ISLE | 5.62 | 5.87 | 4.45% | |||||
| JJSF | 59.68 | 66.11 | 10.77% | |||||
| MIC | 42.484 | 48.35 | 13.81% | |||||
| NHI | 54.04 | 61.40 | 13.62% | |||||
| SRCL | 95.91 | 95.00 | -0.95% |
January 7th, 2013
| Long | Short | |||||||
| Ticker | Entry | Current* | Return | Ticker | Entry | Current | Return | |
| SRCL | 95.91 | 95.82 | -0.09% | IAU | 16.43 | 16.02 | 2.50% | |
| MIC | 43.8 | 48.336 | 10.36% | MAKO | 11.87 | 11.33 | 4.55% | |
| GPX | 20.8 | 20.02 | -3.75% | |||||
| AGM | 28.98 | 33.51 | 15.63% | |||||
| JJSF | 59.84 | 63.561 | 6.22% | |||||
| NHI | 54.93 | 59.78 | 8.83% |
January 6th, 2012
The Short List
| Ticker | Break |
| AAPL | 501.23 |
| SLW | 34.03 |
| ACAT | 31.42 |
| SCSS | 24.35 |
| VOLC | 23.08 |
| ARIA | 18.83 |
| INCY | 15.43 |
| MAKO | 11.86 |
| STAA | 5.7 |
| WIBC | 5.55 |
| FSM | 3.85 |
| AAV | 3.14 |
| SCMR | 2.11 |
| JAG | 0.58 |
| HUSA | 0.2 |
Current Positions
| Long | Short | |||||||
| Ticker | Entry | Current* | Return | Ticker | Entry | Current | Return | |
| SRCL | 95.91 | 95.24 | -0.70% | IAU | 16.43 | 16.11 | 1.95% | |
| MIC | 43.8 | 48.266 | 10.20% | |||||
| GPX | 20.8 | 20.68 | -0.58% | |||||
| AGM | 28.98 | 33.38 | 15.18% | |||||
| JJSF | 59.84 | 64.93 | 8.51% | |||||
| NHI | 54.93 | 59.44 | 8.21% |
*Dividend Adjusted
December 15th, 2012
Nothing new. Holding off until a clear edge develops.
December 4th, 2012
All trades are off going into 12/4/12 because of yesterday’s action. I will keep my eye on the shorts, but will not take any positions.
December 2nd, 2012
I am going to start a mock portfolio on this page to show when I would be buying and shorting stocks. The buys I will be doing on my own, but in my position I am unable to short so that is the reason for the mock aspect. The shorts on the table that I am ready to get into are below. I will not be buying at this level. I need a dip to buy. This is the pop to short.
| Ticker | Entry |
| ONE | 8.77 |
| NOV | 67.88 |
| QCOR | 25.58 |
| BSBR | 6.49 |
| CROX | 11.89 |
| APOL | 18.23 |
| ESI | 16.25 |
| HHS | 5.18 |
| WBMD | 13.04 |
November 11th, 2012
The four stocks below, and JAZZ which I broke down earlier, are the top five stocks on my radar right now. The market is approaching oversold conditions, while still being in an overall long term uptrend. This is a fantastic spot to buy if you are able to locate stocks with potential that are breaking out of strong technical patterns. I also have a longer list of stocks I am watching and will soon have break downs for those stocks as well.
Symbol: ADS
Date: 11/11/12
Earnings Date: 1/28/13
Time Frame: Weekly
Buy: 145.85
Stop: 136.32
Why: This is a very solid looking chart. It is on a very nice trendline from the January through now. The pattern it currently is in is solid as well. The week of October 14th created a high volume powerful stick. The past three weeks has seen a consolidation within the top third of the stick. Volume has declined while in the consolidation and this past week’s candle hit the overall trendline and bounced off it. Nothing feels forced about the chart. It flows so well and is so smooth.
Why Not: The only thing I hold against the pattern is the big red stick from the week of October 7th. It presents that there is the possibility of selling in the stock. The volume was fairly high that week and the stock was not very resilient, although the trend still held up.
Symbol: AGM
Date: 11/11/12
Earnings Date: 28.51
Time Frame: Weekly
Buy: 28.51
Stop: 24.57
Why: The stock is putting in a nice uptrend and has consolidated over the past couple weeks. It has a solid stick from the week of October 21st. During the market decline, this stock has held up. The big stick is what makes it a possible trade; just an uptrend does not do it. It is now testing a new high at a level right above previous highs.
Why Not: If we take a broader view, this stock is still recovering from a massive collapse from a few years ago. There is a lot of historical resistance on a longer term time frame. The weekly chart looks great, but the monthly chart looks like a mess.
Symbol: PPP
Date: 11/11/12
Earnings Date: 10/23/12
Time Frame: Weekly
Buy: 8.03
Stop: 4.65
Why: The volume explosion from the week of September 30th is very impressive. That was incredible volume that put in a great stick. Since then the stock has consolidated some. The consolidation has created some odd candles, but it is understandable with the previous volume. When a stock moves up so quickly it is like trying to stop a train. With the big percentage between the buy and sell, this is the type of trade where one only needs to put a small amount of capital into the trade to reap decent returns. The 10 SMA has finally caught up to the price and this thing has the chance to regain its footing.
Why Not: The candles at the top of the pattern are a little sketchy. There is a little bit of push back. This past week also is not the best candle. I would have preferred to see the stock move sideways or at least make a small push back up. It made a move down on big volume and that is never a positive for a potential long.
Symbol: PVD
Date: 11/11/12
Earnings Date: 3/1/13
Time Frame: Weekly
Buy: 108.75
Stop: 88.12
Why: The massive volume and powerful candle from the week of October 7th. The stock made a big move that week and has had a decent consolidation since then. It has created a big of a descending angle, which tends to perform very well if it breaks out with a market downturn like we are currently experiencing. The stock tried to make a move down the week of October 21st, but the stock was able to maintain the top half of its power stick.
Why Not: The pattern is a little sloppy, but tends to happen on thinner stocks such as this one. The volume on the test down was a big higher than I would like. Also, it is a bit extended from its 10 SMA. Would prefer the consolidation to be a bit longer, but oftentimes the most explosive moves happen the quickest before followers can get in.
November 8th, 2012
Symbol: SRCL
Date: 11/8/12
Earnings Date: 1/28/13
Time Frame: Monthly
Buy: 96.16
Stop: 69.7
Why: Kind of a cup and handle pattern with recent tight pressure. The stock was tested once is 2011, but the stock proved resilient and held up. Since June, it has created a very tight consolidation near the previous high. The volume has been low, which is preferable in this pattern, although it would have been nice for the June volume to be higher. The candles look nice inside the recent consolidation. A break to new highs will mean all time highs.
Why Not: The pattern has lacked volume throughout. There has only been one month in the year and a half old pattern that has been above average. The candle in July 2011 was rather violent after testing new highs. This is another one that I want to put a higher stop on, but do not feel totally comfortable with. I always think about De Niro in Heat when he talks about leaving something in 30 seconds if you feel the heat. If I feel the heat from a stock I need to get away from it. This stock I feel pretty good about, but would not want a tight stop.
Symbol: CIB
Date: 11/8/12
Earnings Date: 3/7/13
Time Frame: Monthly
Buy: 69.62
Stop: 46.66
Why: CIB has a tight rectangle pattern that has been created over two plus years. The stick that brought it into the pattern in July of 2010 was on high volume. There have been a couple high volume months this year, which is good to see. This is such a solid pattern. Once it breaks out there will have to be some very heavy selling to bring this thing back down.
Why Not: The candles inside the pattern are not impressive. There are a couple solid red sticks down in the pattern. I would like to see a couple solid up sticks to show buying pressure being put at the top of the pattern. There was a little pressure in 2011 at the top of the pattern, but since then the stock has floated around. The pattern is great, but the price action has not been.
Symbol: BYI
Date: 11/8/12
Earnings Date: 1/31/12
Time Frame: Monthly
Buy: 52.94
Stop: 35.79
Why: The stock has tested the 53 area going back to December 2007. It made a few moves up in between then and now, but came up short. The stock has gone into a tight pattern since April, which leads me to believe a high powered move is in the making. I really like the high volume doji in August. It showed that there are some buyers out there for this stock. It is holding up well turning the downturn. I always like a stock making all-time highs.
Why Not: Some of the sticks that brought down the stock from the 53 area have been solid down candles, which is a concern. I do not feel confident in my buy spot. I want to know how much I am risking and know that it will take a hard move against me to stop me out. Am I giving this setup enough room or maybe I am giving it too much room? Always good to take the cautious option.
Symbol: SLGN
Date: 11/8/12
Earnings Date: 1/30/13 TNS
Time Frame: Monthly
Buy: 45.22
Stop: 33.57
Why: I find this stock very interesting. It has slowly created a cup and handle going back to the powerful stick from April 2011. That stick is the most important part of the chart. The stock then came down on relatively high volume, but the candles have nice looking buy wicks, which is very bullish. The stock then created the other part of the pattern and it has now created the handle part of the cup, it just needs to find the volume to breakout of the pattern.
Why Not: The handle pattern has a few candlesticks that push down, but they are low volume. I do not know where the volume is going to come from. Is this thing just going to fade for months to come or will the breakout be powerful enough to launch this one.
November 7th, 2012
Symbol: NHI
Date: 11/7/12
Earnings Date: 2/11/13 TNS
Time Frame: Monthly
Buy: 54.92
Stop: 47.1
Why: The volume has been very good over the past year and most importantly in June. The June stick was a catapult for new highs. The volume has nicely slowed inside a consolidation since July. The 10 SMA gave some support to October’s candle and the stock is now pushing for new highs. I like the action from last year as well, although it is not that important. It is always good to see previous positive price action.
Why Not: The pattern is too blocky. It is an ugly looking pattern without any grace, if that makes any sense. It is up, down, up without giving much indication of where it wants to go. Previous volume and the trend say the stock is going up, but the pattern is not giving a definitive indication. It would not hurt for this pattern to spend another month or two consolidating and then taking off on its earnings report, but if volume comes in before this thing could be a solid performer.
Symbol: JJSF
Date: 11/7/12
Earnings Date: 11/8/12 AMC
Time Frame: Monthly
Buy: 59.9
Stop: 48.47
Why: Powerful stock in June followed by a resilient stick in July. The July stick really tested this stock. They tried to push it down, but it refused. It pushed itself back into the top part of the June stick and has consolidated in that area ever since. The June candle was on good volume and volume has declined in the pattern, which is always a good sign. It has now consolidated long enough where the 10 SMA has caught up, so the energy has been pent up and can be released with a break of the pattern. Also, this is a very low overall volume stock. I prefer stocks like this. The smaller the stock and the fewer eyes on the stock, the better.
Why Not: Volume has not been outstanding in the past. I am a fan of stocks being tested like this one was in July and creating a big wick, but I do not like that the stock broke the low of June. Also, need to wait out the earnings.
Symbol: PRGO
Date: 11/7/12
Earnings Date: 11/7/12 BMO
Time Frame: Monthly
Buy: 121.02
Stop: 96.42
Why: The June stick set a nice start to the pattern right on top of the 10 SMA. The stocks has consolidated in the upper half of the stock since then with attempts to go above the stick and an attempt to go near the lows of the stick. It has remained rather solid and has always been high in my rankings.
Why Not: The volume has not been all the impressive. There has been some decent volume at the end of 2011 going into 2012, but is has lagged. If the June stick would have been on better volume I would like this stock more. The August indecision candle does not sit well with me either. The October candle is also pushing down on the pattern.
Symbol: JAZZ
Date: 11/7/12
Earnings Date: 11/8/12 AMC
Time Frame: Weekly
Buy: 55.86
Stop: 43.26
Why: Outstanding, tight descending pattern with heavy volume on a powerful stick the week of 9/16. Some heavy buying came in that week and the stock has been very gradually falling on very low volume. It just needs something to ignite it and if they come out with a strong earnings report then that could certainly be it. Also, it is holding its 10 SMA fairly well and has not had any violent moves down recently.
Why Not: Cannot buy before earnings, so earnings could make this gap too far past the buy point or if the earnings suck then the stock will break its pattern and eliminate itself. This is my favorite pattern; the powerful stick followed by the declining trend while the market turns down. There is not much to dislike on this one.
