Random Rants and Market Ideas by Brandonf

Discussion in 'Journals' started by Brandonf, Oct 10, 2005.

  1. Brandonf

    Brandonf ET Sponsor

  2. Brandonf

    Brandonf ET Sponsor

  3. Brandonf

    Brandonf ET Sponsor

  4. Brandonf

    Brandonf ET Sponsor

    The thing that I like the very best about the market is that you can never be sure. You can not rest and think oh I am in some great stuff and I can't be wrong. In fact you can be totally bearish and wanting to be 100% short on Monday (and be completly right in feeling this way) and by Wednesday be bullish and be 100% correct in this feeling. For some people this is very frustrating and causing them enourmous problems. For me it is the best part of the market, and it has been seen over the last few days.

    Last night I looked at the market and did the work I do every night. This includes looking at all 197 IBD industry groups plus the top 1500 stocks in terms of average daily volume. I found only a handfull of things that looked like they would be worth buying. When you looked at the market internals they had been terrible with new lows beating new highs by a wide margin, decliners beating out advancers by 2 to 1 or more. When the market did rally it was for 1 or 2 days on very light volume then it would get hit on the back of the head with a roll of quarters. In short classic bear market action. For the last 3 weeks I have been 100% in cash and feeling pretty proud of myself for that trade. It saved me and my clients a TON of money as the market and leading sectors got clobbered.

    Today though things changed. I do not think that the action we saw is a one day thing, it has the potential to be something meaningful. Today's rally after the Fed minutes occured on HUGE volume and we have seen some good leadership emerge from earnings. I even bought a stock (BA) today and am looking to do some more buying.

    Whenever the market declines it is an OPPORTUNITY for you that you can not afford to pass up. Some people are permabulls and think you just go to town buying stocks that sold off, I am not one of those, but the decline is a great opportunity to look for stocks that have resisted the markets downside. You want to use the bear market action in the market to isolate stocks showing leadership traits, stocks that can be bought when the market turns around on heavy volume. Today we had nice reversal on heavy volume. Even better it occured with lousey news in the market. Hurricane Wilma is coming to huff and puff and blow my house away, inflation is going crazy, oil prices are sky high, people are planning to spend less for Xmas this year, the housing bubble is finished, the new bk laws are going to kill people who cant control their finances, the White House is a mess etc etc. None of that mattered today, the market, after gapping down big was up HUGE on HUGE volume by the end of the day. This is what matters.

    Strenght can be found in several names. LRCX, STT, YHOO, PAYX, FAST, RHAT, AAPL , STJ, BA, CHIC, ADM, BEN, MO, CAH, ARBA and SWIR. You should look at the charts on each of these names as they have all shown the type of relative strength patterns you want to see in leaders when the market sells off. Currently I own BA from $67.45 per share. I have 9% of my account commited to this stock.

    Current buy orders are:
    LRCX above $33.55
    PAYX above $37.50
    MDY above $125.50
    CHIC above $17.50
    MO above $74.00
    RTH above $94.00

    Each of these I am looking to put 5 to 10% of my account into if they setup. I am also very tempted by airlines at this point, they are hated by everyone but the technical action in them is very good. I will be watching them closely. I also like retail alot. The short side in that trade has gotten very crowded and I think it could be one of the strongest areas going forward.

    Where do we go from here? Honestly I do not know, but today's action is very strong and suggests we MAY have put in a near term tradeable bottom. I do not want to commit more than about 50 to 60% of my money too it, but if can follow through after today then this move up might have legs. We continue to be in a nausiating trading range which has been very difficult, but if you are discipled and nimble you will make money.

    Brandon
     
  5. Babak

    Babak

    Good stuff Brandon. RE retail, also look at GES - very strong RS.
     
  6. How do u look through the 197 industry groups.. just curious as to where you get the charts of them?
     
  7. The bulk of my trading is somewhat similar as to what Brandon does. I am a discretionary based swing trader.. and i do heavy sector analysis combined with fundemetals and technicals..

    What differentiates our methods is that I dont follow relative strength the same way nor do I buy into strength. Meaning I dont buy breakouts nor do i care what IBD rates the stock.

    I do my own fundemental analysis and really care about the sector and how other companies as a whole are fairing and what is driving the stock in a particular direction..

    People that follow CANSLIM.. want to see earnings, sales growing.. thats fine but I am trying to look forward and decide are the catalysts in place for the company to continue to grow. Just because a company had some good earnings and sales previous quarters does not mean its a buy....


    --MIKE
     
  8. Brandonf

    Brandonf ET Sponsor


    www.dailygraphs.com
     
  9. Its called a short squeeze and major option expiration this Friday.
     
  10. Brandonf

    Brandonf ET Sponsor

    Meaning I dont buy breakouts nor do i care what IBD rates the stock.

    I do buy breakouts, but I don't particularly care about the IBD ratings. For example CHIC has an EPS of 11.


    I do my own fundemental analysis and really care about the sector and how other companies as a whole are fairing and what is driving the stock in a particular direction..

    Is there any other way to do it?

    People that follow CANSLIM.. want to see earnings, sales growing.. thats fine but I am trying to look forward and decide are the catalysts in place for the company to continue to grow. Just because a company had some good earnings and sales previous quarters does not mean its a buy

    We again agree.
     
    #10     Oct 20, 2005