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In this previous post, I looked at some possible plays of some high dividend yield stocks.
I'm curious to see how they have been performing since my last update.
GLAD: If there is buying volume coming in on a break above 19.75, then buy, with a stop=19.45. This is the best play out of the above group of sorry look stocks.
RESULT - stopped out.
FHN: If it bounces up from 22, then buy the first pullback that retraces less than 50% of that bounce, with a stop placed @21.75
RESULT - criteria not met, no trade
NCC: Look for buying volume to come in on a break above 22, stop=21.
RESULT - criteria not met, no trade
CT: The safer play is to buy the break above 34. But since the stop is going to be initially placed $28.6, it may be less risk to wait for price to drop below 30 before buying. Granted, buying on a drop below 30 may not necessarily be a high probability play.
RESULT - stopped out.
CSE: buy a break above 16.5, stop=15.5
RESULT - criteria not met, no trade
BPOP: buy @mkt if the intraday low is greater than 9.62, stop=9.45
RESULT - criteria not met, no trade
With GLAD, I actually decided to stay in the trade even though it dropped below my stop level. I rationalized it, arguing that it was resilient enough to stay above the 20d EMA. I realize now that I still haven't shaken my bad habit of moving my stop after entering the trade. The other thing was that my trading plan for GLAD was flawed, since I did not account for the scenario where it would tag the 20d EMA and bounce off of it. So that's another thing to work on before I am ready to go back to trading full-time.
Anyways, with that self-analysis out of the way, I must say, I like GLAD out of the whole group. Most of the remaining stocks in that group still look very ill and broken. Except maybe BPOP. BPOP is actually starting to look constructive to me. If it can stay above $9 for the rest of this week, then I will be looking to buy a break above $10 next week.
Wednesday, November 28, 2007
Check Up: High Dividend Yield Stocks
Market Tells
Summary
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I am using the following 7 stocks and 2 ETF's to give me a gauge on the overall health and direction of the market.
I am using BAC as a proxy for the financial sector, and GS as a proxy for the Broker-Dealer sector.
The reason that this particular group of stocks gives me a good tell on the markets is because they all performed relatively well during the August correction.
The first thing that I find interesting about these 9 stocks is that they all gapped up and never closed the gap (except for GOOG). Since none of the stocks in this group are thinly traded, microcap stocks, I find it unusual to find so many of them gapping up during the same market session. If the gap up does not close in the next few sessions, then that would be telling me that a fundamental shift in sentiment has taken place. So, that is the first thing that I will be looking for, either by Friday or next week.
The next thing that stood out when I looked at this group was that almost half of them (IBM, BAC, ISRG, MA) have been grinding out a bottom for the past two weeks. In that time, there were plenty of opportunities for the bears to challenge support, but the bottom did not fall out in this group of stocks. I'm not trying to call a bottom here, since there is no confirmation, but things are certainly looking more constructive and encouraging than they were two weeks ago.
Now the last thing that I noticed is that all of the stocks in this group have almost climbed back up to the their respective price levels at the beginning of November. What this means is that most of them are carving out hammer candlesticks on the monthly chart. They conventional way that most traders play a hammer reversal is to enter on the break above the top of the hammer. Unfortunately, then your stop must be placed at the bottom of the hammer. For the majority of this group of tells, I think it might be just as good to play for the tag of the November highs, instead of waiting for the breakout.
For example:
MA - enter on the gap fill @184, stop=182, price target=200.
RIMM - enter on the gap fill @115.75, stop=113, price target=130
BAC - enter on the gap fill @43, stop=42.4, price target=46
SMH - enter on the gap fill @31.7, stop=31, price target=34
Tuesday, November 27, 2007
This is Why They Call It Turnaround Tuesday
Summary
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Markets are bouncing up today (ie. on Turnaround Tuesday) because of this tidbit of news:
Breaking News from The Globe and Mail
Abu Dhabi fund pays $7.5-billion for 4.9% stake in Citigroup
JOSEPH ALTMAN
Tuesday, November 27, 2007
NEW YORK — — Citigroup said late Monday that the Abu Dhabi Investment Authority will invest $7.5-billion (U.S.) in the largest American bank, offering needed capital to offset big losses from mortgages and other investments.
The cash from the sovereign investment fund of the Gulf Arab state, which has been a beneficiary of this year's surge in oil prices, will be convertible into no more than 4.9 per cent ofCitigroup Inc.'s equity. Citigroup characterized the investment as passive and said the fund will not be able to name any board members to the bank.
The Investment Authority would become one of Citi's largest shareholders.
The Abu Dhabi investment, which was expected to close within the next several days, will be considered Tier 1 capital for regulatory purposes, helping Citi reach its goal of returning to its target capital ratios in the first half of 2008, the bank said.
....
"We see in Citi a highly respected company with a premier brand and with tremendous opportunities for growth," said the Investment Authority's managing director, Sheikh Ahmed Bin Zayed Al Nahayan. "This investment reflects our confidence in Citi's potential to build shareholder value."
Charles Prince stepped down as Citigroup's chairman and chief executive on Nov. 4, the same day Citi announced that it will likely write down the value of its portfolio by $8-billion to $11-billion in the fourth quarter.
In the third quarter, the bank's exposure to assets tied to subprime mortgages led to a loss of about $6.5-billion.
The Investment Authority will receive equity units that pay an 11 per cent annual yield until they are converted into Citigroup common shares at a price of up to $37.24 a share between March 15, 2010, and Sept. 15, 2011.
The overnight session in ES went up well over 3hours before this news hit all the feeds. Note also that the price that Abu Dhabi paid for 4.9% of CitiGroup values CitiGroup at just over $30.72, which is a couple pennies above its closing price on Monday.
So far, it looks like the bulls are resilient in defending the 1415 level . Can this be the catalyst to turn the market around ? We'll have to wait and see what happens on the inevitable re-test of the 1410-1415 level which should occur in the next week or two. The re-test will tell us whether we have bottomed or not.
If my theory about how Fund Managers do tend to act like lemmings turns out to be correct, then there should be a few fund managers coming out of the woodwork (or sellers now converted to buyers) who will start some buy programs over the next few days on the rationale that "well, this other fund is buying now." Let's see what happens.
Sunday, November 18, 2007
Trading Results for Overnight session, Nov. 18/07
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I was playing it cautious tonight.
Friday, November 16, 2007
High Dividend Yield Stocks
Another list of stocks to add to my swing trading watchlist.
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Earlier today, Chairman Mao listed 2 dozen high yielding financial stocks. Here is a chart of the first 10 (because the free version of stockcharts can display only 10):
None of them look particularly attractive from a technical analysis point of view. However, if you put a gun to my head, here are the ones that I would consider:
GLAD: If there is buying volume coming in on a break above 19.75, then buy, with a stop=19.45. This is the best play out of the above group of sorry look stocks.
FHN: If it bounces up from 22, then buy the first pullback that retraces less than 50% of that bounce, with a stop placed @21.75
NCC: Look for buying volume to come in on a break above 22, stop=21.
CT: The safer play is to buy the break above 34. But since the stop is going to be initially placed $28.6, it may be less risk to wait for price to drop below 30 before buying. Granted, buying on a drop below 30 may not necessarily be a high probability play.
CSE: buy a break above 16.5, stop=15.5
BPOP: buy @mkt if the intraday low is greater than 9.62, stop=9.45
Note that 8 out of the 10 closed below its opening price, so it should come as no surprise that they tend to move as a group. Note also that the above buying criteria is a assuming that the market does not move further down from here. Any significant intraday downtrend in SPY and XLF would invalidate all of the above buy scenarios.
Thursday, November 15, 2007
Trading Results, Overnight Session Nov 14/07
Summary
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The cable and gold trades were from yesterday's overnight session. Wheat, ES, and the Loonie were this morning's trades.
I did not get a good sense of where the turning points were in Cable, but still went ahead and traded it and got burned.
I will post charts of the other trades I made this morning (Nov 15) if time permits.
Tuesday, November 13, 2007
Swing Trade Update: Bank of America (NYSE:BAC)
Summary
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I had mentioned preivously that I would set my stop on my Bank of America (NYSE:BAC) at 44.
Well, lucky for me that I decided to change my stop before that happened. I lowered my stop to 43.5. The two worst selling days in the market were Nov 9/07 and Nov 11/07. On these two days, BAC put in a double bottom @43.6-ish. That makes 43.5 a natural stop loss point for me.
Initial Target is 49. If a trendline develops, I will hold for longer.
Swing Trade : Mastercard Incorporated (NYSE:MA)
Summary
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I kept talking and talking about Mastercard Incorporated (NYSE:MA), and today, I finally acted.
Yes, I mentioned that I would be waiting until it dropped below $175 before buying. But in all honesty, I just didn't want to wait and wait until that happened.
There are 3 possible scenarios for MA: it goes up, it goes sideways, it goes down. My worst case is the possible scenario where it goes down, so my analysis will be for the scenario where it goes down.
Based on the above chart, I can see that the bulls took control of the 182 and 184 level. Today, there was definite resistance at the 186 level, but the bulls managed to take control of that level too. But the next couple days will tell whether 186 holds up as support.
Any sustained break below 188 will break today's uptrend. However, a break below 188 does not necessarily mean that it will breakdown, so I am not worried about a break below 188. A break below 186 would likely trigger some stops set by daytraders. But I am not holding this for a daytrade.
MA also put in an insdie day today, so the break of the HoD (high of the day), or LoD will signal a possible continuation move in the direction of the break. So, that means my first warning sign to get out will be a failure to break above 192.2 in the next 2 or 3 days. The second warning sign to get out will be if price stays below VWAP. The last warning to get out would be a break below the gap support @180. Breaking below 180 means that the two support levels above (182 and 184) have failed, so there is no longer any reason to be in the trade.
In short, a break below 180 for MA will be my "uncle" point.
Trading Results for Turnaround Tuesday, Nov 13/07
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I saw something that does not occur too often in the S&P500 eMini futures market, and that was a box play setup.
Trade1.
Trade2.
Orange arrow highlights a trade that I spotted but was not able to get filled at my entry price.
Good points
- kept my losses small
- able to spot the box play pattern in real-time.
Room for Improvement:
- need to overcome fear of using wider stops.
- need to remember how to trade the box play. Whether the box play reached its profit objective of 1470 or not was not as important as knowing what the correct trading decision was at the time I was trading it. Even though there was no way of knowing the reversal at 1466, had I used the wider stop, I would have stayed in the trade, which would have enabled me to capture part of the breakout.
Not much else to say about today's results other than how I wish I was around in the afternoon when ES made its monster 25pt run-up.
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