My del.icio.us feed

Continuing Jobless Claims RISE!

Thu, 08 Jan 2009 08:35 GMT

Initial jobless claims can't fall! The press has bombarded us with headlines about how initial jobless claims fell from a week ago; but to us that is an oxymoron. It is the same as saying the economy contracted by -2% in the fourth quarter to grow by 4% (versus 6% growth a year ago). Nothing really contracted, the economy just grew at a slower rate.

Jobless claims are no different, fewer people reported new jobless claims this week than they did last week, but 467k people still lost their jobs!

We are much more concerned with the underlying continuing jobless claims, which actually rose from a week ago and is now even with the all-time highs set in 1975 and 1982. The change in non-farm payrolls expected tomorrow morning is potentially even more disconcerting. Last month the number came in at -533k, and this month it is expected to be -523k. In this history of the indicator (starting in 1939) there has never been an instance of back to back declines in excess of -500k.

Top Stock Pickers

Thu, 08 Jan 2009 06:33 GMT

Earlier this week we reviewed the performance of members' top picks for the fourth quarter. The best performer was Emergent BioSolutions (EBS) with a +99.47% return which was recommended by two members - Abramov Andrei & Bob Witte.

As I've done in the past, I asked each member to answer a few questions for us and they've been kind to share them. Enjoy!

NAME: Robert D. Witte (Des Plaines, Illinois)

PROFESSION: I earned a B.S. in Civil Engineering from the Illinois Institute of Technology. I retired about five years ago from Harza Engineering Company in Chicago, after a forty year career as a structural designer and Project Manager of hydroelectric projects.

MARKET EXPERIENCE: I bought my first stock in 1965 on a hot tip and lost about 98% of my investment! It was a speculation on the development of oil shale in Utah. After that adventure, I realized that I had some serious shortcomings in my stock market investing skills. I confined most of my trading to mutual funds in my 401k account. My trading decisions were based on emotion and I never made much money.

After I retired, I concentrated on learning how to trade. I have learned more about trading in the past five years than in the previous forty years. The internet has made a tremendous difference. I remember when my “system” consisted of going to the public library and looking at outdated stock charts. It was like trying to read tea leaves and just as effective.

I found an excellent instructor named Russ Rzeszutko at Oakton Community College in Des Plaines and took his courses on technical analysis, interest rates, foreign exchange markets and supply side economics. These courses provided a base for my investment knowledge. Jack Chan at simplyprofits.org has been very helpful in sharing his strategies on technical analysis and money management. Finally, I have learned a great deal from the Kirk Report, and regularly review the stock screens.

MARKET STRATEGY: I use technical analysis and sector analysis for selecting stocks for potential trades. I use a combination of trendlines, RSI, MACD, stochastics, and a series of 3 short term arithmetic moving averages to select entrance and exit points. The moving averages are an effective way to catch a trend early. I also monitor the number of stocks trading above their 50 day moving average as a general timing indicator- an idea courtesy of the Kirk Report. In my experience, the best places to find potential trades in a down market are in the new 52-week highs list and the top 100 stocks list. I found EBS in these lists on September 26. EBS had the best chart that I could find, was in a relatively strong sector, and had significant profits with a low P/E. EBS appeared to have potential as a low risk/ high reward opportunity.

MOST IMPORTANT THINGS I HAVE LEARNED: Investing is a risky business, and profits do not come easily. Exercise patience and develop your investment skills before risking a significant part of your savings. Never stop learning.

NAME: Abramov Andrei (Baltimore, Maryland)

PROFESSION: I’m 42 years old and a fresh investor (2 years). I came to USA from Ukraine 11 years ago with my American dream, working all types of cleaning, kitchen, construction jobs. I have bachelor degree from Madison University in business. (Distance learning). I’m working for small stuff agency and another is renovation and home improvements.

MARKET EXPERIENCE: I started to be interesting in stock 2 years because of Jim Cramer's TV show “Mad Money.” I ordered a lot of translated books from Russia because there were a lot economic and financial slangs that I did not understand the sense even in my native language. I subscribed for WSJ and Barrons. I was keeping reading and studying some books from your recommended list.

I found info about you and your site one year ago in the book "The Dick Davis Dividend." No doubt that I became your member. I learned more from your mailbags, comments, and interviews than I had learned from big and expensive books. For me it’s a big honor to be member of your circle. You are my mentor and distance guru. Thanks Charles for what you are doing.

MARKET STRATEGY: I’m just making my first steps in trade. In addition to your website, my favorite screener is Finviz. I also use MSN Money. I also read some Russian language sites. I'm also a subscriber of Harry Domash's Dividend Detective and find it helpful.

My favorite companies are who pay monthly dividends, have no debts, and hold lots of cash. I also like international dividend payers. I also found out your pre-market winner and loser names have a lot of potential for one-two day’s trade as a strategy. I have tried a lot of your pre-market winners and they work.

I recently took back full control of my investments after my 401K at Fidelity lost about 55% last year. I'm doing a lot of paper trading and portfolio creation right now and I've been successful of late (my portfolio is up 19% for the last month and a half).

MOST IMPORTANT THINGS I HAVE LEARNED: When I came to this country I had several dreams - have a house, my own company, and a couple of investment properties. Now, I want to learn to become a trader. I really enjoy the conquest and new challenges that trading provides. I've learned many things, but translated from Russia, here's a motto I try to live by I'd like to share with you and other members:

"If we might have a second chance to live the days one more. And rectify mistakes we’ve made to even up the score. If we might have a second chance to use the knowledge gained, perhaps we might become at last as fine as GOD ordained. But though we cannot retrace our steps, however stands the score…..tomorrow brings another chance - for us to try one more!"

Thank you Robert & Abramov. I look forward to having you as lifetime members!

Are Earnings Estimates Still Too High?

Thu, 08 Jan 2009 03:30 GMT

Good morning. Negative sentiment continues after Wal-Mart surprisingly lowered its fourth quarter outlook. Meanwhile, weekly jobless claims fell a better than expected 24,000 to 467,000 and the Monster's Employment Index dropped 12 points to 131.

Premarket gainers: SWIM, SHLD, ANDS, CRXL, EMC, TRW, UNM, ISYS, ODP, CPN, LWSN, RBN, WTM, ARO, BLUD, URBN, GME, ANDS, RBN, GOLD, ONNN, RBS, HOTT, & SYT.

Premarket losers: ISRG, PMTC, SAY, WMT, AMTD, JCG, IFX, ICO, CHS, MTW, SONC, EGLE, JAVA, ACAS, SOLF, MICC, DRYS, YHOO, CELG, COST, FSLR, SRG, RTP, WDFC, ANF, M, NAT, & CAH.

Following Wal-Mart, the concern is that earnings estimates are still too high going into another earnings season and we'll need to see some reports that counteract that fear. The news is expected to be bad, but there has been hope that estimates have been taken down enough that it won't matter, which is why how investors react to Wal-mart and others who lower guidance is important to watch.

For today, the main focus will remain on positioning ahead of tomorrow's jobs report and whether we can hold up under more pressure. In addition, Obama is scheduled to speak about the economy at 11:AM.

Go make a great day!

The Single Most Powerful Step Toward Becoming Solution Focused in Trading

Wed, 07 Jan 2009 22:01 GMT

My recent post offered an overview of a solution-focused approach to working on one's trading. Many times, however, traders have difficulty figuring out how to get started with a solution-focused approach. Here's an exercise and a simple framework that can be quite useful:

Step One: On one side of a sheet of paper, write down all the things you most often do wrong as a trader--all your worst trading behaviors. It might help you to think about your most difficult periods of trading performance in the past year and then write down all your worst tendencies that contributed to those poor trading periods.

Step Two: On the other side of the paper, write down all your best practices as a trader: all the things you do best and that work for you. It might help you to think about your most successful periods of trading in the past year and then write down all your strengths and best trading behaviors.

How long is your problem list? How long did it take you to think of the entries and write them down? How long is your list of best practices? How long did it take for you to come up with them?

If you're like many traders, you're more in touch with your problem behaviors than your best practices. Indeed, many traders are stumped when asked to clearly identify their strengths.

If it is much harder for you to identify best practices than to identify problem patterns, then you know that you are problem-focused, not solution-focused. If you were a mouse, you'd only see the holes in the Swiss cheese and you'd never get a bite. It's our cheese, not our holes that nourish us as traders.

The single thing you can do to begin a solution focus is to identify best practices after each of your successful trading days. These best practices may be grouped by category, such as:

Best Practices for Generating Trading Ideas
Best Practices for Executing Trade Ideas
Best Practices for Risk Management
Best Practices for Managing Positions
Best Practices for Exiting Positions, etc.

The key is to stay on the lookout for what works for you. Every successful trading day should contribute to your best practices catalog. Once you generate a list of best practices, each of these becomes an ideal for you to live up to. Indeed, every best practice can become a concrete trading goal that keeps you grounded in your strengths. After all, you can't live up to your best if you're not aware of what you do well.

Best practices become goals; goals become routines: The great individual turns excellence into habit. This is key to successful self-coaching.

More Solution-Focused Resources:

Building Self-Efficacy With a Solution Focus

My Book Chapter on Solution-Focused Brief Therapy (p. 85 ff)

Here is the Book Chapter as a Post

How Traders Can Become Their Own Therapists

Overcoming Market Panic

The Wagner Daily ETF Report For January 8

Wed, 07 Jan 2009 18:00 GMT

It's quite possible the stock market will eventually fall to new lows sometime in 2009. However, considering the extent of last year's losses, the current intermediate-term rally could easily continue much higher before the bears resume control again.

Corcoran Technical Trading Patterns For January 8

Wed, 07 Jan 2009 18:00 GMT

Allstate (ALL) is approaching an area of potential support at the intersection of two key moving averages.

Adrian Manz's Around The Horn Intraday Trading 2008 Results

Wed, 07 Jan 2009 18:00 GMT

Dr. Adrian Manz reviews the results of his trading plan for all of 2008. Click the article title link for a video of the 2008 trading action.

Around The Horn: Extra Innings For January 8

Wed, 07 Jan 2009 18:00 GMT

Dr. Julie Peterson-Manz presents trade ideas that still have the possibility of triggering for January 8.