Sunday, November 27, 2016

Lessons Learnt From Our Webinar


Last Saturday on November 19th, we had a 90 minute Live Webinar presented to show:

How I Scan For Growth Stocks And How I Create A Trade Plan


I shared with the participants my very strict criteria for selecting the best of the best stocks.   Quite often I get questions as to why I have such strict standards and criteria for coming up with the Stock Watch List every week.   I am a retail trader and as such I look for only  "Rock Stars"    At any given time, I am looking for just 1 super stock to trade. That stock has to be the very best stock in a leading sector.   I am also looking for that stock to exhibit strong fundamentals and technicals.     

Currently the market is in a   "Confirmed Uptrend"   with 10 distribution days between the   $NASDAQ   and   $SPY.    We had identified 6 stocks on our watch list and I shared 2 trades with the group on   $NVDA   that appeared on our watch list.   Following are the results of the performance of 6 stocks during the last 4 sessions (the Market was closed for Thanksgiving and Friday was open half a day)

  1. $NVDA   +0.86%
  2. $FFIV     +1.49%
  3. $CFG     +1.53%
  4. $MSCC  + 3.39%
  5. $AMAT   + 3.71%
  6. $SCHW  + 4.03%

Update on  $NVDA  Trades


We had 2 trades constructed that I shared with the webinar attendees.   Following are the results of those trades:

1.  Stock Trade placed on November 16th

Trade Plan:  Entry $89  Profit Target  +10%  at  $97.90   Loss Exit at  -4%    at   $85.44.   Currently the trade is already  +5.80%  in the last 7 sessions.

Stock is extended and is trading at its upper channel.   Analyst upgraded the stock to  $100  after the stock surged    +30%   during earnings in volume   5 times   the average daily volume.   Stock will likely consolidate and trade sideways  before it surges in volume and price to attain our profit target.

2.  Credit Spread Option Trade placed on November 17th

Trade Plan:  Buy Dec (week 1) 88 put and Sell Dec (week 1) 90 put for a  Credit of 65 cents.   Risk in the trade is   $1.35

Stock is extended and we are just looking for the stock to trade sideways until Dec 1st.  We will manage the risk so we don't incur a loss of more than   70 cents   We just want the stock to stay above   $92  since the trade was filled at  $91.87   Currently the trade has attained   75%   of the planned credit.   Our goal is to close out the trade once   80%  of the planned credit is attained.


My Market Outlook


Currently I am very bullish on the market.   $DJX  and  $SPY  has been trending along the   8 day ema (exponential moving average)  in a very orderly fashion for the last 3 weeks.  They are trending along a very well defined channel as well.  

I have the following projections for the 3 major indexes that I monitor:

  1. $DJX ... 19,800
  2. $SPY ... 228.38
  3. $QQQ ...129.50
We have had more than  +6%  gains in the last 4 weeks for  $SPY  and  $DJX.   It is quite normal for the market to retrace and consolidate the gains before marching ahead.  This is the time to observe your loss targets on any position that you have.   If past behavior of the market is any indication to us, we know that these major indexes have plummeted to the   50 day sma (simple moving average)   within 3 to 5 sessions during a counter trend within the established bullish trend.



Happy Trading!

Amin



Sunday, November 20, 2016

Trade Plan


This weekend, we had a very special 90 minutes Webinar on:


How I Scan For Growth Stocks and How I Create a Trade Plan


Lot of my readers and followers were unable to attend the live webinar on Saturday November 19th at 2:00 pm because we had a full class.   Some of you couldn't attend because you had other commitments.   Last year I had written a post on the subject of  "Trade Plan"  and for the benefit of my readers and followers who were unable to attend the webinar, I felt that this subject should be brought back to attention.   Here is the post from last year that is still applicable for our current market environment:  



Every trader looks like a genius when the market supports all of their positions but for me, the smartest traders are those that come up with a system that eliminates their risk variables.  



All too often, traders will focus only on their profit target and overlook properly setting up a contingency plan for when things start moving in the wrong direction.  I believe any trader can benefit from a refresh on the basics so today, we're going to look at some core elements of a good exit plan.  

Work off of the  $1 loss  to  $3 profit  ratio

One of the worst mistakes you can make is to think of the profit to loss ratio only from the profit side.  Let's use our imaginary friend, Terry The Trader, to highlight an example.

Terry feels really good about taking a position on a particular stock.  All of the charts look solid and the profit target is clearly defined.  The overall market has been soaring for weeks. To top it off, recently all of Terry's moves have benefitted from the Midas touch so what's to lose?  Time to pull the trigger and start looking for the next golden goose, right?

Wrong!  

What Terry couldn't anticipate was the upcoming 60 Minutes expose about that company's CEO getting indicted!  By mid week, options are limited and Terry is left scrambling.  

Situations like this have confronted every trader out there but they're completely avoidable if you take the extra steps needed to plan out a loss threshold.  

Stop second guessing your plan

Any time you take a position, you need to place an order for a contingent stop loss right afterwards.  Don't put this off for any amount of time - act immediately before your emotions and biases can enter into the mix.  Just make this a part of your routine for every single position you take.  By the 3rd time, you will have formed a new habit!

It's also important to monitor your position after you've taken it.  In my experience, the   34 day EMA (exponential moving average)   can be an early indicator that a stock is going against your profit plan.  If you see a sudden increase in the selling side of Volume, that's a danger sign as well.  


Focus on emerging opportunities

You can spend days spinning your wheels in analysis paralysis after a position goes against you.  Unfortunately, throwing a pity party sucks up all of your energy and leads to missing the boat on new opportunities.  

When a position goes against you it's important to have your watch list on hand.  In our next series we're going to fully examine the best way to build a watch list but for now, you need to make sure that you at least:
  • Look at stocks in the same industry group as your profitable positions.
  • Avoid stocks that have surpassed their buy point.
  • For an early indicator of a stocks momentum, review the 21 day exponential moving average and the relative strength line.  

If you aren't already aware, relative strength is your best indication of a stocks value against all of the other stocks in that particular industry group.  That's a key metric that you don't want to overlook!



Keep in mind that IBD® is a tremendous resource when you're putting together a watch list.  If your list creation process is solid, you might even be able to identify stocks before they crack the IBD® 50.  The earlier you can identify an opportunity, the more prepared you can be to pounce when a buy point hits. 

I hope this information helps you get into the habit of establishing a proper loss threshold for a position.  Watch for our 3rd and final part of this seres next Wednesday where we will examine ways you can identify a window of opportunity for a position.

As always, keep the comments and emails coming!


Happy Trading!


Amin Hemani
investorspotlight@gmail.com


Sunday, November 13, 2016

The Performance of Stocks on My Watch List of October 30th


Two weeks ago, we had all the 9 major sectors trading below the    200 day sma (simple moving average)   We also had an elevated risk in the market with   14 distribution days   between   $SPY   and   $NASDAQ.    A lot of my readers commented that they were fed up and had lost patience with the market trading sideways and going nowhere.   A disciplined trader continues to be engaged with the market, always has a   Stock Watch List   and a   Trade Plan   ready just in case the market decides to take a bullish turn.   This is exactly what happened Monday morning to everyone's surprise.   Rather than start looking for profitable opportunities on Monday morning,  I had already identified 10 stocks that I was monitoring over the weekend of October 29th.  (Reference my blog post of October 30th).  Here are the results of the performance of those 10 stocks in the last two weeks:

  1. $AKAM   - 6.38%
  2. $NFLX    - 9.32%
  3. $BHI       - 0.82%
  4. $PBR      -18.02%
  5. $MA        - 2.13%
  6. $FFIV     + 4.82%
  7. $NOC     + 8.37%
  8. $BAC     +14.03%
  9. $GS       + 15.13%
  10. $MS       + 14.83%

 

The total profit for all 10 positions combined  (5 losers and 5 winners)  came to a whopping   + 20.51%   in two weeks.   Some of you who know me from our local   IBD (Investors Business Daily)   meet up group in the Tampa Bay area know that I don't ever allow a loss of more than   - 4%.    Limiting losses to no more than  -4%   in the 3 losing positions  ($AKAM, $NFLX, $PBR)  would result in more than doubling the total profit to   + 42.23%   Lessons learned by readers are:

  • Build your  Stock Watch List  every week.
  • Have a   Trade Plan   for every stock on your watch list.
  • Execute your trade according to your trade plan for   LOSS  or  PROFIT   exits defined in your trade plan. 

Register for our 90 Minute Webinar on Saturday November 19th at 2:00 PM Eastern Time


If you would like to learn:

"How I Scan For Growth Stocks and How I Create a Trade Plan"


The session will be live and recordings made available for participants.  The cost of the Webinar is  $49.00.


Please email me at   investorspotlight@gmail.com   to receive a link to the Webinar.


Class size is limited.  Guarantee your spot today.



Happy Trading!


Amin




Sunday, November 6, 2016

CASH is KING


I had a lot of my readers question my judgement last week when I indicated that this might be a good time to be in   CASH   Two weeks ago we had 10 distribution days and last week it mounted to 14.   Currently it is 15.   The bulk of those distribution days came in the last 30 days.   That is quite alarming.   As a Retail Trader who manages his own account,  I consider this to be a   "Market in Correction"   I just tweeted the following statement from  Jesse Livermore ( the greatest stock trader of our time)

"Every once in a while go to CASH, take a break.   Don't try to play the market all the time.   Too tough on the emotions"      



My Market Outlook


More than   75%   of the   S&P 500   companies have already reported their earnings and this week we will have more retailers report their earnings.      Stock Charts of retailers like   $JCP,  $SHLD,  $M,  $TJX   and the   $XRT  (Retail etf)  don't inspire much confidence.   They have been on the downtrend since mid August (back to school season) and now they are all trading below the   200 day sma  (simple moving average)   All the 9 major sector etf's are also trending in a downward slope and heading close to the    200 day sma    As a growth stock investor, I also monitor the small cap and mid cap growth stocks indexes   ($IVW,  $IJK,  $IJT)   and they are all pointing similarly in a down ward slope.   The only good piece of news that I have is that the transportation etf's -   $DJT   and   $IYT   are trading above the    50 day sma   There is a Dow theory that suggests that:
 
 "Transports generally indicate the strength of the economy"  

Quite frankly I prefer to look at the individual stock charts and sector etf's to get my sentiments of the market.

The coming week is an   Election Week   and everyone can expect that the market will have very high volatility.   This is the time to raise your trailing stops to conserve profits in a trade but also liquidate losing positions and build some   CASH   in your portfolio.   Continue to build your Stock Watch List and stay very engaged with the market.   Opportunities will come and you want to be prepared to take a position at the right time and at the right price.


Special 90 minutes Webinar


The subject of this Webinar will be:

"How I Scan For Growth Stocks and How I Create a Trade Plan"


This special webinar will be on  November 19th @ 2.00 pm  (Eastern Time)


The session will be recorded and made available to all participants.  The cost of the webinar will be  $49.00


You will walk away from the session with a   "Stock Watch List"    and a   "Trade Plan"


I shall be sending out the   link   for those of you that have already indicated an interest.   It will be a limited class size so hurry and don't procrastinate.  It will be a high energy and fast paced presentation.   Send in questions that you would like addressed at the Webinar.


Happy Trading!


Amin


DISCLAIMER



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.


The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.


YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A LICENSED PROFESSIONAL. You understand that you are using this Information AT YOUR OWN RISK.