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

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

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

Managing My Portfolio

I always remind myself that Institutions - hedge funds, mutual funds, pension funds etc - are the ones that account for over 75% of the total daily volume in the market.   They determine what the price of any given stock would be on any given day just because of their sheer size of daily trading volume.   It takes them several weeks to accumulate the full position in any stock that they favour.   When they decide to bail out on stocks during earnings and start harvesting profits, stocks will gap down in high volume.   In the last 2 weeks we observed   $EBAY  dropped  (-10%)  and  $AMZN   dropped  (-5%)  during earnings.   Because of the sheer trading volume of these two stocks during earnings, over $1 billion changed hands that day with  $EBAY  and over  $10 Billion  with  $AMZN   This amount of trading volume will drag down all the major indexes as well as stocks that you have in your portfolio.   As a retail trader and investor, I am always fully aware of the earnings calendar since that affects my portfolio.

I was  'Cautiously Bullish'  in my tone with my Oct 9th blog post.   I started raising my trailing stops on my positions to protect my profits.   On Oct 16th blog post, we were in the second week of earnings and my tone changed to   'Bearish'   I began liquidating my losing positions and stayed with technology names only.   That was the only leading sector at that time.   Last week I mentioned that I was mostly in   CASH   This week we have a lot of energy names and 2 tech giants  -  $FB   and  $BABA   reporting earnings.   How the institutions will respond is any one's guess!   I know that  November thru January  are some of the best months of the year for profitable trades.   I would much rather be in    CASH   as a position now to avoid erosion of my capital.   Most of all, I prefer to have monies available to take some bullish positions, once the major indexes trend above the   8 day ema (exponential moving average)

Stock on My Watch List

Currently all the 9 major sectors are trading below the  200 day sma (simple moving average)   That does not bode well for me as a retail trader.   We also have an elevated risk in the market with  14 distribution days   between   $SPY   and   $NASDAQ    Last week we had only 10.   I am constantly scanning for growth and trending stocks that have an RS ratings above 90 and trading above the   8 day ema  in a strongly defined channel.   Following is a list of stocks that I am currently monitoring:

1. $AKAM
2. $FFIV
3. $NFLX
4. $NOC
5. $BHI
6. $BAC
7. $GS
8. $MS
9. $MA
10. $PBR

I am also monitoring 2 etf's -  $EWZ  and  $DXJ   for an Option position.

Mentoring Services

We are offering a 90 minutes  WEBINAR   on:

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

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

Learn to be a successful and a profitable trader/investor from one of the seasoned trader/investor and most dynamic speaker and an award winning educator.

If you would like to reserve a spot for yourself, please contact us at:

investorspotlight@gmail.com

Be sure to check my tweets  @spotlightamin  during the week to keep yourself informed and up to speed with ever changing markets.

Happy Trading!

Amin

Being in CASH is a Position Too

I just got back from a dinner party at my friends house and some of them were discussing the merger between  $T   and   $TWX.   They wanted to know if this would be of a benefit to $T - the acquiring company.   I am a growth stock investor and I focus my energies into looking for only those stocks that are highly accumulated by the institutions.   I also look for stocks that are trading above the    21 day ema (exponential moving average)    Currently   $T   is trading below the   200 day sma (simple moving average)   It sliced through the   200 sma   on August 16th and has been trending below it precipitously for the last 8 weeks.   This is the stock that has not been on my radar in spite of all the noise from the media about the merger.   I am mostly in  CASH   at present.   I know from history, October is a very volatile month.   It is better to hold onto   CASH   as a position right now.   Market is still under pressure with   10 distribution days  -  according to  IBD  (investors Business Daily)   There is an elevated risk under present market conditions in taking stock positions right now.   I consider   CASH    as a position too.

My Market Outlook

This week we are right in the midst of earnings season.   Lot of energy names, airlines and giant tech stocks such as $AAPL, $AMZN, $GOOGL, $BIDU as well as dividend paying defense stocks such as $RTN, GD, $LMT and $UTX will be reporting earnings.   They will move the market just because of their sheer size.   $SPY   and   $DJX   have been trending below the   50 day sma   for the last 8 weeks.   $QQQ    is the only index that is hovering above the   21 day ema    This is the only area where I have been focusing my energies for the past several weeks.   $XLK (technology)   is  even  and   $XLE (energy)   is up by   +2%   since the follow thru day 4 weeks ago.   It appears that we have a sector rotation going on right now.   4 of the 9 sectors -  $XLU (Utilities),  $XLV (Health Care),  $XLP (Consumer Staples)  and  $XLF (Financials)  are trading below the 200 day sma.   It appears that institutions are investing their harvested profits in the depressed energy names.   I had mentioned to my  IBD Meetup group on September 13th that energy sector is where there might be growth stocks popping up in the next growth cycle. 

Stocks on My Watch List

1. $EMES
2. $SLCA
3. $PBR
4. $CLR
5. $FANG
6. $PXD
7. $APA
8. $PE
9. $REN
10. $CPE

Some of these stocks are extended and may provide a good short term bullish Credit Put Spread Option Trades.   I would caution my readers however that we have a lot of stocks reporting earnings this week and the market could either tumble over or punch through the resistance.   It is all up to what the institutions decide to do.   They account for over 75% of the total trading volume daily.   This is the main reason why I have chosen to be in CASH mostly at this time.   I shall lay in wait - just like a leapord in the trees - for the right opportunity to come within my striking zone for a profitable kill.   I have already done my home work over the weekend and created a trade plan for any likely scenario in the market this week.   I hope my readers have done the same.


Happy Trading!

Amin

Bears are Prowling

We are heading into the 3rd week of October and it could be a gut wrenching week.   It is one of the busiest weeks with earnings being reported by the banks, airlines, rail roads and some tech names like  $AMZN  and  $EBAY.    Market could either surge ahead or come crashing down like it did last week.   Last Monday October 10th, the leading index   $QQQ   was hovering above the    8 day ema (exponential moving average)   only to come crashing down to   34 day ema   by the end of the session.   Bears were definately in charge and none of the 9 major sectors were spared.   Currently only   $XLK (Technology)   and   $XLE (Energy)    are the leading sectors.   This is where the retail investor ought to be looking for opportunities in the market.

Market Outlook

My outlook of the market is very dim heading into the third week of October.   7 of the 9 major sectors are already trading below the   50 dma (day simple moving average)    4 of the 7 sectors   ($XLV (Health Care), $XLF (Financial), $XLU (Utilities) and $XLP (Consumer Staples)   are already heading into the bear territory, trading below or touching the   200 dma    How the institutions react to the earnings report this week will determine the direction of the market.   Using history as a guide,  I have to remind myself that major market crashes have occurred during the month of October.   It is also the month when in the year 2014,  $QQQ   surged over   +11%   from October 16th through Dec 5th   This requires for me to be totally prepared for either of those scenarios.   I would suggest to my followers to raise their trailing stops to protect profits in their positions but also to have a ready   "Watch List of Stocks"    to execute a trade, should the market take off like it did in 2014 and 2015 October

Mentoring Services 

We are planning on offering a  ONE TIME  special webinar for 90 minutes session on:

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

It will be a very limited class size for this webinar.  If you would like to reserve a spot, please contact us at:

investorspotlight@gmail.com

We will post the details of the date and time as soon as we fill the class.   There are just a few spots left so don't procrastinate.   You will walk away from the session with a    "Stock Watch List"    and a   "Trade Plan"

Learn to be a successful and a profitable trader/investor from one of the seasoned trader/investor and most dynamic speaker and an award winning educator.   

Be sure to check my tweets   @ spotlightamin   Monday morning before market opens for some of the stocks that are on   "My Watch List"

Happy Trading!

Amin

Be Cautiously Bullish

We are heading into the most bullish period in the stock market.   Historically the market has returned on an average   +14.6%   from November thru April looking at the data from the last 50 years.   October traditionally has been a very volatile month with major market corrections occurring during the month.   We have also had   follow thru   days during this month where the market took off with gains of    +11% to +12.23%    within  5 to 12 weeks.   You want to be prepared and engaged with the market to take advantage of such an opportunity.   Lot of my followers and readers missed out on such an opportunity in:

1. 2013 from Oct 8th thru Dec 31 for  + 11%   gain
2. 2014 from Oct 16th thru Dec 5th for  +11%   gain
3. 2015 from Sept 28th thru Nov 3rd for  +12.23%  gain

May thru September is when everyone should have been sharpening their trading skills.   I had posted a blog on August 28th  (They are archived and you can access them)  on the subject of   Virtual Trades   Hopefully my followers have been following my lead and have learnt to prepare realistic   Trade Plans   for Loss, Profit and Time exits.   

Market Outlook

Market is currently digesting the gains from the July 1st   Follow Thru Day   We do have an elevated   distribution   days count of 4 on the   $NASDAQ   and 7 on   $SPY    We are also heading into the 3rd quarter earnings season with   $AA   entering the confessional booth on Tuesday followed by the big banks on Friday.   This will be a very volatile week since the entire  $XLF (Financial)   sector is under severe stress.   The sector dropped  -18%   on Sept 16th and has stayed below the  200 day sma    $XLK (Technology)   is still leading the pack and that is where one should be looking for opportunities.   

Results of My Virtual Trades for Last Two Weeks

I was off for a mini vacation to Disney with the family last week but I tweeted to my followers that I shall be posting the results on the 19 stocks that I did a    Virtual Trade   on two weeks ago.   My   Trade Plan   was for   +10%   profit target,   -4%   for loss target and to be out of the position prior to earnings report as a time target.   I had  9  positions for a total loss of  -22.06%  (Ouch! Ouch! Ouch!)   I also had  10  positions for a total gain of  +30.64%    (yeah!)   All 19 positions combined, I attained a profit of   +8.58%   in just 2 wks

Here are the results for each individual positions:

1. $GRUB  -0.47%
2. $GIMO  -3.34%
3. $PAYC  -1.57%
4. $VEEV  -4.0%
5. $ATVI   -0.14%
6. $STOR  -4.0%
7. $JACK  -4.0%
8. $BGS   -2.88%
9. $PKG   -1.66%
10. $UBNT   +1.20%
11. $PRAH   +3.21%
12. $LITE     +7.96%
13. $AMZN   +5.04%
14. $MELI    +1.59%
15. $ANET   + 0.06%
16. $BABA   +0.10%
17. $HQY     +3.01%
18. $APC     +8.40%
19. $WMB    + 0.07%

Mentoring Services

If you would like to learn our process of identifying winning growth stocks, sign up for our mentoring services.   we are planning on offering a   ONE TIME  special webinar for 90 minutes session on:

"How I scan for Growth Stocks and How I Create a Trade Plan"

It will be a very limited class size for this webinar.   If you would like to reserve a spot, please contact us at:

investorspotlight@gmail.com

Happy Trading!

Amin