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I thought with the new year starting that it would be fun to track an account using the CANSLIM methodology.
The basic portfolio rules are that the portfolio will have 4-5 positions, investing about $15,000 per position. I plan to buy 60% of the position near the stock's pivot point but sometimes I cheat a little bit for reasons I will discuss in the future and buy the other 40% of the position in either 1 buy or 2 buys depending how my 1st position acts. Depending how skittish I am, I don't always buy 60% of the position at first (see recent ISRG buy).
I have a small margin account that I am going to use for this purpose. As of today's close the account has a balance of approximately $40,000 give or take $10 bucks with a small 15 share position in ISRG established at $448.00 and the rest of the balance is in cash.
The reasoning behind the ISRG trade is that it was breaking out of a 5/6 week flat base or cup w/ handle above a rising 10 wk moving average. This breakout occurred 2 days after the market formed a follow-through day on December 20th. The volume on the day of the breakout is not as much as I would have liked but I also realize that volume is historically low during this time of year. The stop is currently placed at $437.75. Once I figure out how to attach a chart to this forum, I will send a chart of ISRG.
Let the experiment begin,
Sounds like an interesting experiment. Hope you find the time to do all the posts required with what it sounds like you want to do. Don
That is a great idea Steve, and I appreciate you sharing it with the MS community. I would be very interested in following your trades and rationale behind each one. Maybe you can establish a blog here? I think easier to post charts on blog section directly from your MS tool.
I hope so too. I only work 4 months out of the year and trade year round so hopefully I will have enough time. However, there are usually only 2-4 windows of opportunity as William O'Neil would call them that occur each year so there are not as many opportunities to buy leadership stocks as some folks might think. I have found out that the more I trade, the worse I do.
Thanks for the suggestion S. Kostreci. I may just do that.
Bought 100 shares of BIIB at $113.15 with a stop currently placed at $109.15 rising from a upsloping 10wk MA and a 3 weeks tight pattern.
I have a current buy stop order for today only to buy 30 shares of BIIB IF it trades to $115.10 which is about 2% above my 1st purchase price and gets me to basically a full position in this stock.
Also, I am moving my protective stop in ISRG to $449.00 which is just above my $448 purchase price. Generally, I wait for a stock to rally 15%-20% before moving my stop up to about breakeven but due to the current market environment, I have been quicker to move up my stops to breakeven. Now, for the big liquidity stocks like ISRG, I will begin moving them up once they rally 5%-10% above my entry price, especially when the rally is occurring on weak volume which is happening in ISRG after its breakout. This modification in my trading rules really helped me improve my gains in 2011 even though I was stopped out for basically breakeven trades many times. Without this rule in 2011, I would have been stuck with plenty of 3-5% losses which can really add up if you are not careful.
I doubt the order gets filled due to the weakness we are seeing in the major indexes this morning but I am placing the BIIB buy stop order once again. See below for details.
Best of success to all,
I am just letting everyone know that the 30 share add-on position in BIIB mentioned here ahead of time was filled at $115.10.
Here is a recap of the current holdings of this portfolio.
ISRG 15 shares @ $448.00 bought 12/22/11 currently at $472.36
BIIB 100 shares @ $113.15 bought 1/3/12 currently at $115.26
BIIB 30 shares @ $115.10 bought 1/5/12 currently at $115.26
Most of the portfolio is still in cash.
The portfolio is making a little bit of headway but the distribution days in the major indexes have been piling up. A strong reaction in the major indexes will likely lead to more distribution days which will likely put an end to the most recent follow-through day. If a strong reaction does occur, the portfolio's risk is defined by its exit points on the 2 stocks it does own. As always, I will let the market and my stocks determine whether I can continue to buy more leadership stocks as they breakout or move back to the sidelines.
At the close, I exited the 15 share position in ISRG at $460.48 for a gain of only $187.20. The reason for exit was that ISRG was not making much upside progress and the volume has been weak during the rally. Yesterday when volume did increase putting ISRG in a position to continue upward, it falls instead on the widest spread down bar since the breakout began and the volume was about 50% above average.
When demand volume is absent on a breakout and continues to be absent on the next few days, I do not give the stock much wiggle room. When I see strong selling enter the stock, I sell to take whatever small profits I may have.
Buying 100 shares of MELI at $83.50 as it rallies with demand from its rising 10 wk moving average and from its strong gap up bar from November 3rd. MELI is currently trading at $84.22 so the order has not been executed yet. IF the order is filled, the stop will be placed at $79.80. I will probably buy another 50 shares around $83.00 if it gets there. I am just trying to build a position as close as I can to the $82.77 pivot point without missing the trade while at the same time controlling my risk. I am NOT averaging down.
Just to keep everyone up-to-date after today's purchase of MELI, I have listed the portfolio's activity and current holdings.
ISRG bought 15 shares @ $448.00 12/22/11 & sold 15 shares @ $460.48 1/6/12 for $187.20 gain
BIIB bought 100 shares @ $113.15 1/3/12 currently at $114.88
BIIB bought 30 shares @ $115.10 1/5/12 currently at $114.88
MELI 100 shares @ $83.55 1/10/12 currently at $83.70
MELI 50 shares @ $83.10 1/10/12 currently at $83.70
The portfolio is making a little bit of headway but not much. I am still cautious of this market due to the lack of leadership and lack of persistently strong volume entering the market. Based on where my stop orders are currently placed, if the market suddenly begins to turn down with signs of distribution leading to me exiting my positions, the portfolio will only suffer about a 1-1.5% total portfolio loss. However, if the institutions begin to more aggressively accumulate stocks, I should get the opportunity to add more leading stocks to this portfolio.
If you dont mind, can you please tell me what your reason was for buying MELI, do you see uneven cup-with-handle on weekly?
I just exited the 130 share position in BIIB at $115.91 for reasons I will explain after today's close.
I bought MELI because it rallied above its rising 10 wk moving average and it tested the huge breakout bar from November 3rd on the daily chart. Also, looking at the weekly chart, I can see a huge cup w/handle possibly forming where the cup forms from the late April 2011 high and early December 2011 high and last week MELI was at the bottom of the handle. The pivot point for this huge cup with handle would put 10 cents above 95.48 which was the December 2011 high.
Glad to help,
MELI is the AMZN of Latin America. The only problem is they report earnings in USD. Strong USD may hurt earnings reporting. Bit speculative so I'm skipping this one. Otherwise good to go.
The reasoning for my exiting my BIIB position this morning was because yesterday's bar formed an important stalling day in my judgement. Yesterday, the volume in BIIB was the highest in over a month yet BIIB was able to make very little net upside progress and the close of yesterday's bar was at the midpoint of the range. Then today, after the 1st 15 minutes of trading, I saw BIIB struggle to hold above yesterday's close so I went ahead and exited the position for a small gain. Normally, I would not let one stalling day lead me to selling my position but as I have said before, I am cautiously bullish and therefore, not giving my stocks much wiggle room.
Here is a recap of the activity in this account as of today's close
BIIB bought 100 shares @ $113.15 1/3/12 & sold 100 shares @ $115.91 1/12/12 for $276.00 gain
BIIB bought 30 shares @ $115.10 1/5/12 & sold 30 shares @ $115.91 1/12/12 for $24.30 gain
MELI 100 shares @ $83.55 1/10/12 currently at $86.51
MELI 50 shares @ $83.10 1/10/12 currently at $86.51
The portfolio slowly but surely continues to make a little bit of headway. Including the unrealized $466.50 profit in the MELI position, the portfolio has total gains of $954.00 or roughly a 3% return through the first 2 weeks of the year. The 3% return is basically what the major indexes are producing for the year. The portfolio is far under vested but is still doing an okay job keeping up with the major indexes as I continue to look for more buying opportunities which has been a difficult task for me.
Thank you for doing this Real-Time Canslim Experiment. It's always good to see and learn how others trade the system. Quick question regarding position size. I'm trying to get a feel for how you are sizing your positions and I want to make sure I'm following you correctly. Based on yesterday's closing price (1/12/12) in MELI of $86.51, what is your current position size % in MELI in relation to your overall portfolio? Based on my calculations I'm coming up with a position size of appx. 30%-31% in MELI (assuming a portfolio of appx. $41,000).
Better position sizing is something I'm really working on this year and I'm always interested in how others size positions.
You are correct that this account started off at about $40,000 but is a margin account so I actually have $80,000 of buying power. My intention is to have a portfolio of about 4-5 stocks. If I divide the $80,000 by 5, I can allocate $16,000 to each of the 5 positions. In the case of MELI, my average original purchase price was $83.40 so I can buy 190-200 shares ($16,000 divided by $83.40). I like to start off buying about 60%-70% of the number of shares required for a full position and then pyramid up if the trade appears to be working out which is why I only have 150 shares of MELI instead of 190-200 shares at this time.
With all of that being said, I have 2 risk management rules that I NEVER break and that is I will not risk more than 2.5% of my total account on a single stock and I will not risk more than 10% of my total account on all of the stocks I own. In other words, I am willing to risk losing $1,000 (2.5% of $40,000) on a single stock and willing to risk $4,000 on all of my stocks when I am fully invested. In the case of MELI with my stop just below $80.00 and my average purchase price just below $83.50, I am only risking about $525 on this trade which easily meets my risk management rules.
It may sound confusing but I already have the number of shares calculated ahead of time that I would buy IF a trade triggered. So, when the trading day is unfolding, I just have to place the order.
I am just providing an end of the week recap of the portfolio's activity.
Recap of the activity in this account as of today's close
MELI 100 shares @ $83.55 1/10/12 currently at $86.72
MELI 50 shares @ $83.10 1/10/12 currently at $86.72
After about 2 weeks of trading, the portfolio ended the week with a total gain of $985.50 which includes both realized and unrealized gains with one open position in MELI. The 3% return is basically what the
major indexes are producing for the year. After going through my weekend routine, I may come up with a stock or two to add to the portfolio next week. I do not want to get too heavily invested before earnings season gets going next week and then get my head handed to me with a large gap down on a disappointing earnings announcement. I may buy one more stock before the earnings release date and then buy the rest of them based on how they respond to their earnings announcement.
I am moving my stop position in the 150 share MELI position to $82.40 which is just below the January 12, 2012 minor swing low which reduces the risk to a very small $150 potential loss. Today's stalling action is a little bit worrisome due to MELI rallying less than 1% even though the volume was the highest in over a month so we know more supply entered the market to meet the available demand. The subsequent action will tell us if the buying was exhausted or the selling was absorbed which would open the door for higher prices. It is possible that this rally is the right shoulder of a head and shoulders pattern which is worrisome as well. Regardless, my risk in this trade is so small, it really doesn't matter to me what eventually occurs in MELI. If buying continues to overcome the selling in MELI leading to more upside progress then great, I will make more money and should get an opportunity to add to my position. However, if things turn down for the worse, my risk is now so low, I only lose about $150 which is nothing.
Here is the end of the week recap of the portfolio's activity as of January 20, 2012.
MELI 100 shares @ $83.55 1/10/12 currently at $87.40
MELI 50 shares @ $83.10 1/10/12 currently at $87.40
After about 3 weeks of trading, the portfolio has a
total gain of $1,087.50 which includes the $600 unrealized gain in the open position in MELI. Getting over the $1,000 profit mark was nice but the portfolio is under performing the major stock indexes a little bit due to only having 1 position.
I am still cautiously bullish on this market. We saw some of the big cap leaders like ISRG and GOOG get hit pretty hard after their respective earnings announcement this week. But then I see a big cap leadership stock like FFIV act strongly after its earnings announcement. I see that volume continues to be relatively low in both stock exchanges but the higher volume is on the up bars. I see a few stocks breakout of sound bases with strong demand like ALXN, JAZZ, and MNST for example but I would be hard pressed to find 10 breakouts similar to these 3 across the whole market over the last 2-3 weeks. For every bullish clue I see in the market, I also see a bearish clue. For me, the bottom line is that I will continue to buy stocks because my rules have given me the green light but will do so in a cautious manner. In other words, I will take things slow. I still see pullbacks in the major indexes as buying opportunities in the leadership quality stocks on my buy list. Of course, a few distribution days in the major indexes can quickly change my plan.
The year has just started so we have plenty of time to not only easily outperform the market but also have some strong gains by the end of the year, if the market is willing to cooperate.
This portfolio just sold 100 shares of MELI at $87.50. Keeping the stop on the other 50 shares at $82.40.
This portfolio just bought 300 shares of OAS at $33.58 with a stop placed at $31.90. Also, the portfolio is moving its stop on the remaining 50 shares of MELI to $83.40 which basically eliminates all of the risk on this particular trade.
My reasoning behind the OAS purchase was that on January 17th, it broke out of a 11 week cup w/handle base with 109% above average volume with the pivot point being $33.48 which was the high of the handle from January 4th. I actually missed the breakout buy. However, it worked out okay because I missed what I would call a shakeout bar on January 20th when OAS gapped down after the Keystone pipeline project fell through. What was interesting about the shakeout bar was that volume was 115% above average and the close was near the upper end of the range so it looked like the institutions were using the "bad news" as an opportunity to accumulate shares. Therefore, I was ready to begin building a position in this stock as well when it traded 10 cents above the $33.48 pivot point.
Well my OAS trade did not last long. This portfolio sold 100 shares at $31.95, 100 shares at $31.96, and 100 shares at $32.76 for a total loss of $377. OAS is still on my watch list but my timing was definitely off on this one.
I will update the activity of this portfolio after the market closes and add a few comments about the market.
This portfolio just bought 200 shares of JAZZ at $47.99.
Here is the end of the week recap of the portfolio's activity as of January 27, 2012.
MELI bought 100 shares @ $83.55 1/10/12 & sold 100 shares @ $87.50 1/23/12 for $395.00 gain
MELI bought 50 shares @ $83.10 1/10/12 currently at $89.90
OAS bought 300 shares @ $33.58 1/26/12 & sold 100 shares @ $31.95, 100 shares @ $31.96, 100 shares at $32.76 1/27/12 for $377.00 loss
JAZZ bought 200 shares @ $47.99 1/27/12 currently at $47.98
I am still cautiously bullish on this market but am continuing to have a hard time identifying leading stocks breaking out from sound bases in a strong manner. The NASDAQ composite index has rallied 12.5% from its mid-December low in about 6 weeks and the SnP index has rallied 10.9% from its mid-December low in about the same 6 weeks so the market is a bit extended and due for a pullback of some kind. I would like to see the market pull back a couple of weeks similar to what happened in November 2010 which allowed more leadership stocks to form the handle or complete the right side of their base before breaking out. The November 2010 pullback really gave me a great opportunity to add onto some of my strongest stocks and buy new ones.
In the SnP index over the last 3 weeks, I count 4 distribution days which includes a stalling day on January 20th. The distribution days, excluding the stalling day, are on January 13th, 24th, and 26th. But, 2 of those distribution days are weak. The one on January 13th closed near the upper end of its range indicating that buying was present and the one on January 24th closed near the upper end of its range and the close was only 0.1% lower. Some folks may not even judge this day to be a distribution day since it did not close at least 0.2% lower. In my judgment, the SnP is NOT signaling any trouble YET. The NASDAQ composite index paints a rosier story. I only count 1 distribution day which was on January 26th in the last 3 weeks. I need to see a lot more distribution days than what I have seen so far to make me back away from buying stocks at this time. If I saw 2 or 3 obvious distribution days in the next week, then I would change my tune.
Sold the remaining 50 shares of MELI at $89.50 for a $320 gain. The portfolio only owns 200 shares of JAZZ at this time.
The market is doing a pretty good job slapping me around. This portfolio was stopped out of its 200 JAZZ position at $45.25 which was purchased at $47.99 for a $548 loss. This portfolio is back in cash with only a small $277.50 overall gain. I am back to drawing board as I have not given up on the long side YET. In fact, I will not mind buying either JAZZ or OAS again if the recent action turns out to be just a shakeout.
Don't feel bad about all that JAZZ monday....I got slapped pretty hard too...That was insane volatility:)
Well, I usually like to wait about 15 minutes after the market trades before placing my stops to avoid those shakeouts but I have been out of town the last 2 days so I did not have that luxury. I can remember being shaken out of a stock 2 times and then getting in the 3rd time which really paid off. CMG was a great example.
This morning, this portfolio bought 200 shares of JAZZ again at $48.01 with a stop placed at $44.96.
This morning, this portfolio bought 200 shares of IACI at $45.50 which is just about 5% above the $43.38 pivot point from the December 27th high.
Here is the end of the week recap of the portfolio's activity as of February 10, 2012.
MELI bought 50 shares @ $83.10 1/10/12 & sold 50 shares @ $89.50 1/30/12 for $320.00 gain
OAS bought 300 shares @ $33.58 1/26/12 & sold 100 shares @
$31.95, 100 shares @ $31.96, 100 shares at $32.76 1/27/12 for $377.00
JAZZ bought 200 shares @ $47.99 1/27/12 & sold 200 shares @ $45.25 for $548 loss
JAZZ bought 200 shares @ $48.01 2/2/12 & currently @ $48.30 for an unrealized $59 gain
IACI bought 200 shares @ $45.50 2/6/12 & currently @ $45.05 for an unrealized $90 loss
As of this Friday, this portfolio has a total gain including unrealized gains(losses) of $246.50 this year. This portfolio has basically been stagnant over the last week with neither JAZZ nor IACI showing much ability to rally away from their respective pivot points.
My current plan for this portfolio is to let the market indexes react a little more before buying any more stocks. As I discussed over a week ago, the market indexes have gotten extended and are vulnerable to a 1 or 2 week reaction. As long as the next reaction fails to record several days of distribution, I plan to buy additional stocks and possibly add to the 2 this portfolio owns assuming they are showing the best relative strength. If the next reaction contains several days of distribution, I will likely be back on the sidelines waiting for the next window of opportunity, as William O'Neil would say, occur to get back into the market again.
JAZZ is not making the upside progress that I hoped it would make and so this portfolio just sold its 200 shares position at $49.30 for a small $258 gain.
IACI is still hanging in there but I am moving my stop on this stock to $43.80.
Here is the end of the week recap of the portfolio's activity as of February 17, 2012.
JAZZ bought 200 shares @ $48.01 2/2/12 & sold 200 shares @ $49.30 for a $258 gain
IACI bought 200 shares @ $45.50 2/6/12 & currently @ $45.81 for an unrealized $62 gain
As of this Friday, this portfolio has a total gain including
unrealized gains(losses) of $597.50 this year. This portfolio made a little bit of improvement this week but is still under-performing the major indexes by a wide margin. However, we are only about 6 weeks into the new year so this portfolio has plenty of time to catch up and hopefully surpass the performance of the major indexes by the end of the year.
I was hoping that the sideways action before the up day on Thursday would lead to more of a decline which would allow some leadership stocks form handles or at least react toward their respective 20 day or 50 day upsloping moving averages. But, as usual, the market does not care what I want. The market seems to be leaving without me but I am honestly having a hard time identifying stocks on my list setting up to buy. They are way too extended and I have learned the hard way NOT to chase stocks that are extended from their pivot points.
This portfolio just bought a really small 100 share position in CPHD at $40.86 on a test of its pivot point which formed after the very large gap up to its strong earnings report on January 27, 2012.
This portfolio is taking another shot at JAZZ by placing a buy stop order to buy 100 shares IF it trades above $51.20. The stop will be at $47.90 IF the order is filled. Currently, JAZZ is trading at $50.95.
Here is the end of the week recap of the portfolio's activity as of February 24, 2012.
JAZZ bought 200 shares @ $47.99 1/27/12 & sold 200 shares @ $45.25 1/31/12 for $548 loss
JAZZ bought 200 shares @ $48.01 2/2/12 & sold 200 shares @ $49.30 2/15/12 for a $258 gain
IACI bought 200 shares @ $45.50 2/6/12 & currently @ $45.19 for an unrealized $62 loss
CPHD bought 100 shares @ $40.86 2/23/12 & currently @ $41.60 for an unrealized $74 gain
JAZZ bought 100 shares @ $51.23 2/24/12 & currently @ $50.81 for an unrealized $42 loss
As of February 24, 2012, this portfolio has a total gain of $505.50 which is not much of a change from last week's total gain. The portfolio is still primarily in cash. I continue to hope for more of a pullback in the major indexes to unfold to allow some leadership stocks to form handles or to at least pullback to their rising 20 day or 10 week moving average lines. The upside momentum has slowed but the buyers are still overcoming the sellers. We have seen only a few distribution days in the last couple of weeks so the market is in no danger of topping yet.
This portfolio just exited the small position in CPHD at $40.60. It is not rallying away from the pivot point like a strong stock should.
This portfolio just exited its 100 share position in JAZZ at $51.51 for a very small gain. It is not rallying away from its pivot point like it should especially after reporting its earnings.
This portfolio just bought 300 shares of SLXP with 200 shares bought at $50.22 and 100 shares bought at $49.11 rallying from the handle of its cup w/handle pattern.
I will update the portfolio this evening.
This portfolio just bought 200 shares of SWI at $39.26 on a pullback to the pivot point of its 3 week tight pattern.
I keep saying I am going to update this portfolio and I will for sure this weekend.
This portfolio just sold 150 shares of its 300 share position in SLXP at $53.08 for a small gain and moving its stop on the remaining 150 shares to $51.90 guaranteeing a profit on the other 1/2 as well.
Also, this portfolio its stop on its 200 share position in IACI to $49.40 guaranteeing a profit on this position as well.
This portfolio just sold 100 shares of IACI at $50.91as it nears the 15% profit taking area. This late into the current bull cycle, I like to take profits on at least 1/2 of my position in the 15%-20% area rather than the 20%-25% area unless the stock moves up 20% in the first 3-4 weeks then I hold for hopefully a larger profit. I am keeping the stop on the remaining 100 shares at $49.40 just like the morning email stated.
I forgot to update everyone yesterday but this portfolio exited its 150 share position in SLXP at $51.90 and exited its 100 share position in IACI at $49.40 as the earlier forum posts stated. Both positions were sold for small profits.
Also, this portfolio just exited its 200 share position in SWI at $38.35 for a small loss.
The portfolio is 100% back in cash after making some okay profits over the last few weeks.
Since it's the end of 1st Quarter 2012, mind sharing a recap of your portfolio, % net gain, etc?
Also it might be beneficial to do Blog Posts, with annotated charts for entry and exit points, as this is a very useful tool here on MarketSmith. It would help others understand what you are seeing and why you choose the entry points that you do, etc.
Thanks and good luck;
how do you calculate your stop losses??
I generally place my stops about 5-6% below the pivot point but sometimes place them 7-9% if the stock is more volatile. The CANSLIM method suggests that we place them no more than 7-8% below the pivot point.
Best of success to you,
I will do a recap for the 1st quarter this weekend. I have been meaning to do a recap over the last 3-4 weeks but I keep putting it off.
This time of year is my busy time of year so I do not get a chance to watch the market much or participate in this forum much. But, I will be back to full-time trading after April 17th and will participate more so my apologies to everyone that follows this forum.
I am back from vacation and the IBD Market School in Orlando and now back to trading.
This portfolio just bought 200 shares of URI at $44.95 with a stop placed at $42.90.
A summary of the portfolio for the 1st quarter of this year is coming up next. The portfolio was in cash for the month of April.
Sorry for the very long delay of the portfolio update but here it is.
Here is the end of the week recap of the portfolio's activity as of March 31, 2012 (1st quarter ended).
Recap of the activity in this account as of March 31 close
IACI bought 200 shares @ $45.50 2/6/12 & sold 100 shares @ $50.91 3/27/12 & sold 100 shares @49.40 3/28/12 for a $931 gain
CPHD bought 100 shares @ $40.86 2/23/12 & sold 100 shares @ $40.60 2/29/12 for a $26 loss
JAZZ bought 100 shares @ $51.23 2/24/12 & sold 100 shares @ $51.51 3/1/12 for a $28 gain
SLXP bought 150 shares @ $50.22 3/13/12 & sold 150 shares @ $53.08 3/27/12 for a $429 gain
SLXP bought 50 shares @ $50.22 3/13/12 & sold 50 shares @ $51.90 3/28/12 for a $84 gain
SLXP bought 100 shares @ $49.11 3/13/12 & sold 100 shares @ $51.90 3/28/12 for a $279 gain
SWI bought 200 shares @ $39.26 3/22/12 & sold 200 shares @38.35 3/29/12 for a $182 loss
By the end of the month of March, this portfolio was totally in cash with a total gain of $2,078.50 or a 6% gain for the quarter. The S&P 500 index gained 12% for the quarter so I definitely underperformed the index. Hopefully, this portfolio will do better the next quarter. The portfolio did a bad job not outperforming the major indexes but did a good job getting into cash just as the correction in April began.
Now, with the market showing signs of getting back in gear, I am looking for buying opportunities beginning with URI today.
This portfolio got stopped out of its 200 share position in URI on Thursday at $42.90 for a $410 loss. This portfolio is back in the same position it was during the month of April which is 100% in cash.
Friday's very wide range down bar on another day of increased volume in the NASDAQ not only keeps the distribution count over the last 25 days very high but also has confirmed a failure of the follow-through day as far as I am concerned for several reasons. First, the back-to-back increased volume down bars in the NASDAQ Thursday and Friday formed 2 days of distribution so soon after the April 25th FTD in the SnP. Second, both the SnP and the NASDAQ closed below their April 25th up bars on Friday. Third, many of the stocks which have lead in this last bull cycle seem to be rolling over. CMG and AAPL are great examples of what I mean.
On a positive note, some recent breakouts have been successful so far such as LNKD, SXCI, TDG, SWI, Z, FIRE, PII, LQDT and there are other stocks that seem to be building sound bases like RAX and ZUMZ for example. However, a poor response to its earnings report next week can change all of that for RAX. Lastly, there are stocks that are only declining toward their rising 10 week moving average line such as PCLN for example. IF the market can form another FTD, at least there are some stocks worth buying. But, based on the action this week, that might be a big IF. Also, if this week's poor action leads to more weeks of poor action, then what I thought were sound bases, successful breakouts, and declines to the 10 week moving average may turn out to be nothing. Since I am terrible at predicting, I will just try to keep a fresh list of stock leaders so I can be ready when the market gives me the go ahead sign to get back into the market whenever that might be. Until then, this portfolio will stay in cash.
i am a ibd subscriber for the last 2 years, the way i pick stocks is mostly from the IBD 50, but i just reviewed all my picks for the last 2 years, and it seems like then when a stock hits in the first 10 spots on the list, they are almost near top, i,e, i had the last 2 months, ALXN, RGR, GNC, QCOR, CSTR, CELG, and look what happened to all of them,???? the same happened to me when i picked up RVDB, IGTE etc, they were then the #1 picks in the 50 list, any idea where i should start getting my picks??
P.S. how was the CAN SLIM course,??
In my opinion, the IBD 50 is an EXCELLENT source for your stock picks. You owned some wonderful stocks that performed very well at times. One thing that has helped me out and continues to help me out is to print out a chart of all of my stocks that I bought/sold and plot on the chart where I bought them and where I sold them. I usually find some mistakes that I am able to correct in the future. One of the mistakes that I would make is not selling at least a portion of my stocks that make 15-25% gains. Taking one of your stocks as an example, ALXN broke out of a sound base on 12/27 (7 days after the FTD) and went from $70 to $95. Since it didn't rally 20% in 3 weeks, at least some of the ALXN position should have been sold for 20-25% gains or so around $87.
Another thing you may want to consider is begin my sticking to stocks that trade at least $50 million in average daily volume because are usually not as volatile. Also, I think everyone needs to develop a plan on what to do when one of your stocks heads into an earnings report. I personally like to exit 1/2 of my position if I have less than a 5% gain heading into an earnings report.
Lastly, I think many people don't realize how important the M in the CANSLIM method is. I have heard William O'Neil say that you can pick stocks with all of the right criteria but if the market is in a downtrend then it doesn't matter. Over the month of April not much of anything did well except the stocks which responded well to their earnings reports. April was a good month to take profits from stocks bought from December to March rather than building new positions in my opinion based on the number of distribution days building and the number of stocks reaching 20-25% profit targets.
The Market School course was wonderful. They really pounded home the importance of keeping in tune with the market and discussed in great detail a great way to increase/decrease your stock holdings depending where the market is, especially the NASDAQ index.
Thanks, hands up to you Steve
This is not much to say this week. This portfolio remained in cash all week as I wait for another follow-through day to occur. I have been spending this week compiling a fresh watch list to use just in case a FTD occurs next week and running some portfolio simulations to help me fix a few mistakes I made during the last bull cycle.
My plan is to begin getting back into the market as soon as a FTD occurs. Sitting on my hands can be difficult but I am just trying to follow the CANSLIM method as best as I can. I realize sitting on my hands is required at times. Now is one of those times.
what are the stocks you're looking at?? would you mind telling us?
Mostly from the IBD 50 list such as LNKD and SWI and a few others.
I'm following like 20 stocks from IBD 50, and i follow them everyday, my only issue is, when the market turns around to an uptrend, how do you decide which of these 20 to buy? it's so hard to rate them??
buy the ones that breakout of a proper base in high volume
Steve17 makes a good suggestion.
I would focus on those stocks that dominate their market with a new product/service and have a high return on equity. I would focus on stocks that have the potential to change our daily lives. Lastly, focus on those stocks showing the greatest relative strength.
However, I would not get caught up in over-analyzing the situation. For example, during the bull cycle that began after the early September 2010 FTD, there were 4 stocks I particularly liked - PCLN, CMG, BIDU, and NFLX. I bought PCLN and CMG but missed out on BIDU and NFLX. BIDU and NFLX did extremely well but so did PCLN and CMG. The point is, no matter which of the 4 stocks you would have bought, all 4 stocks did well. By the way, notice that these stocks are not small cap stocks. These are stocks that trade 100 million $ volume a day on average. This is the kind of liquidity that the big institutions like. I think many traders get caught up in the small cap stocks and miss out on the big stocks that are the true leaders.
Back in 1997 when I first started trading, the big leaders were DELL, CSCO, MSFT, AOL, and YHOO. I was too inexperienced at the time to understand this point. While I was messing around in stocks that never did much, I was missing out on the big leaders. Sure, there were some smaller stocks that did well too but those stocks that William O'Neil made his big money on were not the small stocks but the big leaders: the AOLs, Charles Schwabs, Nokias, Qualcomms of the world.
Maybe LNKD will be that big leader of the future. It definitely has the institutional liquidity, the impressive quarterly earnings and sales growth numbers, strong estimated earnings growth rates which have been rising, and dominates its market. The only thing that it misses is a high return on equity but does have an accelerating after-tax profit margin. Maybe some other stocks will be the big leaders of the future. The only thing we know for sure is that they will come. We just have to be prepared to look for them and be prepared to take action when the CANSLIM method gives us the go ahead signal.
This portfolio remains in cash as I continue to wait for a follow-through day whenever that might come. The Facebook action didn't live up to the hype. Even some of the social media related stocks fell including LNKD which is one of the top stocks on my watch list.
During market corrections, I like to see which leadership stocks are doing the best at resisting the market decline. SWI and FIRE are a couple that come to mind. Also, I try to keep my watch list fresh as I look for leadership stocks forming sound bases as this correction unfolds. Therefore, even though I am not in the market, I still keep myself busy.
When I am not in the market, sometimes I will read some of the message boards on the IBD site or some other site. I always read messages where people talk down the CANSLIM method which may be a good thing for us. But, what other method gave us the tools to get out of the market on May 4th which was pretty close to this year's high. Also, what other method has kept us on the sidelines over the last couple of weeks while many other investors are losing their capital. When I perform badly, it is not because of the method but because of my own faults. Even with my under performance compared to the SnP in the first quarter, this portfolio's 5% or so year-to-date return is now outperforming the SnP which is now only up 3% for the year thanks to the CANSLIM method which told me to get on the sidelines before this market decline really got going.
I may be biased but I think if more people really studied the CANSLIM method in depth, more people would see it's effectiveness. Admittedly, the method takes a few years to really understand. I still keep learning and correcting my mistakes. I spent last week analyzing my mistakes in the 1st quarter.
You have alot of discipline,I admire that.I am hoping I can improve in that area.Thank-you for sharing your strategy.
Thanks for the kinds words but you will see me make plenty of mistakes of my own as I trade this portfolio throughout the year. But hopefully, this exercise and seeing my mistakes in real-time will improve all of our trading.
Who knows what will happen the next few days but we do know that today is day #3 in our rally count with Monday being the rally day or day #1. As long as the major indexes do not fall below Friday's low, I will be looking for a follow-through day beginning tomorrow. IF it happens, I will be looking to at least get this portfolio 10-20% invested.
All I can do now is wait to see whether or not we get a follow-through day.
We have not seen a follow-through day occur yet in the major stock indexes but yesterday's upside reversal after testing the rally day low strengthens the probability that last week's low is for real. Furthermore, I learned from Jim Roepel, a very successful CANSLIM trader, who said that the best window of time to buy CANSLIM leadership stocks is from 1 week before the follow-through day to 4 weeks after the follow-through day.
Therefore, I am willing to dip my toe in the water in a small way even though I have not seen a follow-through day based on the testing of the rally day action and from what I learned from Jim. On that note, this portfolio is buying 80 shares of SWI at $47.60 and 80 shares of FIRE at $55.20 by placing market-if-touched orders. These are much smaller than usual positions because I realize I am sticking my neck out a little bit so I want to keep the total portfolio exposure to the market in the 10-20% range. I will not increase the amount invested until I actually do see a follow-through day. I realize that without the follow-through day, the probability of me taking a loss on either or both positions increases but since I am risking such a small part of this account, I do not mind taking the chance.
I am just letting everyone know that this portfolio now owns 80 shares of SWI purchased at $47.55 and owns 80 shares of FIRE purchased at $55.10. This portfolio still has a large cash position and will only buy more stocks IF we see a follow-through day occur in the next few days. The exit point for SWI is $43.90 and the exit point for FIRE is $51.40.
Interesting observation. While attending IBD Meet-Ups in Denver, Colorado, one of the experienced investors told me he uses the top 20 IBD stocks as a start to look for Short Candidates. Nothing goes up forever, and those on top also don't stay there forever.
Agree, nothing lasts forever. You make an interesting suggestion. Is that the first 20 on the IBD 50 list or the big cap top 20 list? I may analyze that idea so thank you for the suggestion. I am not a good shorter of stocks so usually when I short stocks in my other accounts, I just buy the leveraged inverse ETFs like SDS, QID, etc. and I only do so for short-term trades which has been working okay for me over the years. However, I am always willing to check out ideas new to me.
The portfolio in this experiment will remain a long only portfolio. The portfolio will stay in cash during weak periods in the market and look to buy stocks that have those CANSLIM characteristics when my rules indicate a potential important turning point may be forming in the major market indexes. This portfolio will nibble on the long side which occurred last week when my rules indicated that a potential turning point may be forming and will buy more stocks if a follow-through day occurs this week.
I do not mind at all running to the sidelines if the follow-through day does not happen and the market looks like it is heading to new lows. Over my years of experience from doing post-analysis of my many mistakes and missed opportunities, I am willing to dip my toe in the water a little early in order to catch those leaders before everyone sees them. Back in August 2010, RVBD was a great example of catching a great leader before the September 1st follow-through day. Even if the follow-through day would have never occurred in September 2010, my loss would have been very small. The bottom line is that I do not mind being wrong and I keep my portfolio risk low anyway so I my losses are extremely small when I am wrong. You will see I am wrong a lot.
Through May 25, 2012, here is a recap of the current stock holdings and performance of this portfolio so far this year compared to the SnP.
Current Stock Inventory
Portfolio Gain(Loss) Year-to-date = $1,714.50 or 4.3%
SnP Gain(Loss) Year-to-date = 4.8%
This portfolio is basically keeping pace with the SnP even though I did a terrible job not capitalizing on the strong 1st quarter in the market. Not being in the market during the May correction thanks to the CANSLIM method of identifying market tops has helped this portfolio catch up to the SnP. Hopefully, I will do a better job when the next bull cycle following a follow-through day occurs.
With the prospects forming a follow-through day in the NASDAQ and maybe the SnP today, this portfolio just bought 150 shares of ALGN at $32.40.
I will watch to see how near the major indexes are to a follow-through day this afternoon and then decide whether or not to buy anything else.
With the recent intraday weakness in the market that appears to be eliminating what I thought was going to be a follow-through day today, I am already running for the hills.
This portfolio just sold all of its positions. It sold FIRE at $56.14, sold SWI at $47.27, and sold ALGN at $32.18.
I will update the portfolio after the close.
I am back in cash waiting for the follow-through day to occur.
I forgot to update this portfolio after yesterday's close so here it is after exiting FIRE, SWI, and ALGN yesterday morning. This portfolio sold its 80 share position in SWI at $47.27 for a $22.40 loss, sold its 80 share position in FIRE at $56.14 for a $83.20 gain, and sold its 150 share position in ALGN at $32.18 for a $33.00 loss.
As of today's close, this portfolio is up $1,666.30 or up 4.2% while the SnP index is up 4.4% so far this year. Also, this portfolio remains in a 100% cash position.
I continue to look for a follow-through day in the major indexes and I am still willing to cheat a little bit IF I see one of my favorite CANSLIM leadership stocks move into a quality buying position. My cheating a little bit these past few days did not hurt this portfolio and even provided it with almost $20 bucks of profits.
After a brutal down day in the major indexes, each of the indexes traded below the rally day low set on May 18th. Therefore, now we have to start all over again searching for another rally day and then look for a follow-through day at least 4 days starting from the rally day. Thursday would be the earliest time a follow-through day could occur unless we see one of those very rare instances where the follow-through day occurs on day 3 after 2 straight days of up action on increasing volume each day. I can't remember a follow-through day over the last 10 years that occurred in this manner but I mention it because it is in the "How to Make Money in Stocks" book.
While the major indexes try to form a rally day and subsequent follow-through day, I wanted to explain my routine of putting together a fresh list of potential new leaders. Specifically what I do every weekend is go through several weekly charts looking for charts that are forming what look to be sound bases based on what O'Neil teaches us to look for. When I find a potential candidate, I look to see if the candidate has CANSLIM fundamentals and is one of the top stocks in its industry group. Often I will go to the company's website and listen to the Q&A section of the last conference call and read any news articles, especially if I see an article in IBD, to get a better understanding of what drives a company's sales and what obstacles it may face in the future. If the stock meets those criteria, it goes on my watch list. I like to keep my watch list to around 40-50 stocks then narrow it down to 10-20 stocks of the stocks nearing their respective pivot points and showing the best relative strength which I put on my "ready to go" list. Basically, I have 2 lists.
I need to have this process complete BEFORE a follow-through day occurs so I will be ready to take action once the follow-through day does occur. I don't want to be caught flat-footed having no plan of action while the market forms a follow-through day. I can't tell you how many times I have been caught flat-footed.
During each day, I analyze the price/volume action on the daily charts of the major indexes and I go through the daily charts of each stock on my watch list to see if any of those stocks can be moved to my "ready to go" list and I look at my "ready to go" list to see if any of those stocks need to be removed. I place stock alerts in Tradestation to let me know when a "ready to go" stock is nearing its pivot point. Also, I run a daily scan similar to the "stocks on the move" list found each day in IBD to see if any stocks need to be moved to my watch list. This whole process does not take very long, especially since I have done the same routine for a very long time.
As of Friday's June 1st close, this portfolio is up $1,666.30 or up 4.2% while the SnP index is up 1.6% so far this year. This portfolio has remained in cash all week waiting for a follow-through day in any of the major indexes to occur. To be honest with everyone, because I played the strong 1st quarter rally in the stock market so badly, I am actually relieved that the market is falling so hard now. It sort of feels like the market is giving me a second chance to participate in the next bull cycle. Hopefully, I will not play the next bull cycle so miserably but I am definitely capable of messing up again.
I am just letting everyone know that a follow-through day can happen as early as tomorrow with today being day 3 of an attempted rally. If it does, I will begin probing the market with some leadership stocks that I am currently watching very closely.
With the NASDAQ composite index posting a follow-through day Friday, I am back in buy mode. My plan is to increase this portfolio's exposure to about 20% in the next couple of days and get the exposure to the 30%-50% range IF the market can continue to show institutional buying in the CANSLIM stocks on my buy list. IF the follow-through day turns out to be a failure, the portfolio's loss will be very small.
I will keep everyone posted when this portfolio begins buying stocks in the next couple of days.
Letting everyone know that this portfolio bought 60 shares of SXCI at $95.10. Also, this portfolio bought 200 shares of ALGN at $32.05.
This portfolio bought 150 shares of TCBI at $40.20.
How big of position sizes do your recent purchases of TCBI, SXCI, and ALGN represent to your overall portfolio on a % basis? Are they each 5% or you overall portfolio? 10%? etc.
I'm just trying to get a feel for how you move into the market once a follow through day occurs.
Each represents about 15% of the whole portfolio so the portfolio is about 45% invested in the market right now. You may want to look at the 1st message of this forum which explains the $40,000 starting position and my overall plan for this portfolio.
One of my weaknesses is that I would have a hard time trying to figure out how much/how little I should be invested in the market at a given time. The IBD Market School workshop really helped me overcome this weakness to some extent. The criteria discussed in detail by Charles Harris & Mike Webster, a couple of O'Neil's internal portfolio managers, and also presented in great detail in the book they give the attendees provide a guide in determining the market exposure for a portfolio. I am trying to follow that guide for this portfolio.
Due to the very wide range down bar today and poor performance of my recent purchases, I am lightening up my market exposure by selling 100 shares of TCBI at $39.23 and 100 shares of ALGN at $32.75 and 30 shares of SXCI at $93.30.
Through June 22, 2012, here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP.
Portfolio Gain(Loss) Year-to-date = $1,643.60 or 4.1%
SnP Gain(Loss) Year-to-date = 6.2%
This portfolio has basically gone nowhere since the follow-through day on June 15th and is now trailing the SnP. All of the portfolio's stocks were doing pretty well until Thursday when the very large down bar on strong volume told me to lighten the market exposure of the portfolio. In fact, if I see the major indexes struggle to go up Monday morning, I will definitely sell TCBI and may even sell ALGN and/or SXCI. However, if the major market indexes, particularly the NASDAQ composite index, can get going to the upside, I plan to buy MLNX. I will just have to see how Monday's action unfolds.
Since the follow-through day is already showing some evidence that it may fail, the key to me is keeping my losses very small just in case it does fail. One weakness that I had to overcome was jumping to the conclusion that every follow-through day would be successful and then get too fully invested too soon and staying in too long. What ended up happening to me was that I would take much bigger losses than necessary if I would have just done a better job managing my portfolio's risk. The "How to Make Money in Stocks" book stresses how crucial it is to keep our losses small so we can recover our drawdown much faster and make some good profits when the true follow-through day finally does come.
With the large gap down at the open, this portfolio sold its remaining positions in SXCI at $93.96, ALGN at $32.40, and TCBI at $39.88.
This portfolio is back to a 100% cash position as it waits for another buying opportunity.
Steve - very interesting to watch. Keep it up.
I - Thank you for the encouragement. Hopefully, this portfolio will help fix some of my mistakes but also help others too in actually seeing how at least one person applies the CANSLIM method in a real-time environment.
Based on how strong the gap will be, easily surpassing the 1.25% minimum requirement for a follow-through day in the major indexes, this portfolio will begin gradually increasing its market exposure by buying 40 shares of V on a buy stop order placed at $124.25 and will buy another 20 shares on a buy stop order placed at $125.20. Also, this portfolio has placed a buy stop order to buy 200 shares of ALGN on a buy stop order placed at $33.15. Lastly, this portfolio has placed a buy stop order to buy 80 shares of MLNX on a buy stop order placed at $69.55.
Do you consider this a potential FTD? Yesterday undercut the low on Tuesday. Wouldnt that negate the rally attempt?
I've also thought that 6/15 wasnt a FTD- so we are on day 21 or something like that of the rally attempt that started June 4th.
Thanks for your thoughts
Sorry for the late response but I just got back from the IBD Level 3 workshop in Dallas and am going through my weekend research routine.
Yes, I definitely consider Friday's action a follow-through day. The NASDAQ would need to undercut the June 4th low to negate the rally attempt. It is true that the probability of a successful follow-through day is reduced when a subsequent decline closes below the LOW of a follow-through day which happened in the NASDAQ on June 25th when it closed at 2836.16 and the low of the follow-through day on June 15th was 2837.94. BUT, this action does NOT negate the rally attempt. In fact, this second follow-through day within the 25 day window from the rally attempt actually INCREASES the probability of a successful follow-through day.
We are only dealing with probabilities so maybe this one fails. But, the rules tell me that IF I see CANSLIM leadership quality stocks breaking out, I need to buy at least something which is what I did Friday morning before I left to Dallas. I intend to buy another stock or two Monday.
SteveG, even if you don't believe the NASDAQ had a FTD, the SPX & NYSE did.
Steve, Enjoy watching your CANSLIM travels. Keep it up.
I am just letting everyone know that this portfolio bought 40 shares of V at $124.25.
This portfolio bought 20 shares of V at $125.25.
With the 2nd quarter of the year over, here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through June 29, 2012.
Portfolio Gain(Loss) Year-to-date = $1,733.70 or 4.3%
SnP Gain(Loss) Year-to-date = 8.3%
Portfolio Gain(Loss) 2nd Quarter = ($344.80) or (0.8%)
SnP Gain(Loss) 2nd Quarter = (3.3%)
This portfolio is still lagging the performance of the SnP index year-to-date but did outperform the SnP during the 2nd quarter due to staying in cash for most of the 2nd quarter while the SnP was falling. However if we included today's action, the portfolio made pretty good progress and is now up 5.8% year-to-date so the portfolio performance is catching up to the SnP performance. Hopefully, the portfolio's performance will surpass the SnP's performance by the end of the year. We will just have to see.
This portfolio is decreasing its market exposure a little bit by exiting its 60 share V position at $124.90 for basically a breakeven trade.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through July 6, 2012.
Portfolio Gain(Loss) Year-to-date = $2,132.70 or 5.3%
SnP Gain(Loss) Year-to-date = 7.7%
This portfolio is lagging the performance of the SnP index
year-to-date but is catching up to it. Currently, the portfolio is only about 30% invested in the stock market. The portfolio should be closer to 55% invested in the stock market according to the IBD Market School rules so I will be looking for more buying opportunities next week assuming the major indexes do not decline with strong signs of distribution next week. I already have a few stocks in mind. I should be able to narrow down my choices after I run through my weekend routine.
My reasoning for exiting the V position was that the breakout did not occur on strong volume (only 9% above average volume) so I put a tighter leash on those weak volume breakout stocks especially when the major indexes appeared to be running into trouble like what appeared to me around lunchtime. I do not mind at all selling a stock at basically where I bought it and immediately buying it back again, even at a higher price, if strong volume enters the stock.
In an effort to get this portfolio more heavily invested, the portfolio is using today's weakness to buy 100 shares of EXPE at $47.20.
The portfolio's stocks continue to advance for us. This portfolio bought 100 shares of TFM at $56.05 as it attempts to increase its market exposure.
With the stock market really taking a hit especially, this portfolio sold its 80 share MLNX at $68.40 for a small loss and will be selling some other stocks in the next day or two if the market cannot start to rally soon.
This portfolio just sold its 100 share EXPE position at $45.65 for a small loss and sold its 200 share ALGN position at $33.54 for a small gain.
This portfolio bought 100 shares of Z at $40.44 as the portfolio is trying to keep its market exposure around the 25%-30% range.
This portfolio just bought 30 shares of NEU at $229.37 and has a market-if-touched order to buy 100 shares of TCBI at $42.05. A market-if-touched order becomes a market order TCBI falls to $42.05. TCBI is currently trading at $42.45.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through July 13, 2012.
Portfolio Gain(Loss) Year-to-date = $1,515.00 or 3.8%
SnP Gain(Loss) Year-to-date = 7.9%
This portfolio lost a little bit of ground to the SnP due to the decline in MLNX wiping out my gain. My rule is that if one of my positions rallies 10-15% above my buy point, I move my stop to about breakeven. I do not let gains of that magnitude turn into a 5% or so loss. I do not mind at all rebuying a stock that I just sold assuming it sets up and triggers.
After reviewing this portfolio, I see that it is 40% invested in the market when it should be closer to 30% at the very most and really closer to 0% based on the IBD Market School rules. I count 5 distribution days in the NASDAQ composite after the follow-through day on June 15th. But, 2 of those 5 distribution days occurred when the NASDAQ closed near the peak of its range and then rallied with wide spread the very next day so I consider these 2 days as very weak distribution and more like support bars. For those who are curious, the 5 distribution days are June 21, June 28, July 6, July 10, July 12. The 2 distribution days that show evidence of support are the June 28 and July 12 bars. Therefore, with this action in mind, I am willing to keep this portfolio's market exposure closer to 30% since I consider 2 of the distribution days are of weak quality. Since my exposure is at 40%, I will probably exit at least 1/2 of the TFM position to get the portfolio closer to 30% and if the rally that started Friday quickly runs out of steam, I may sell all of the TFM position.
This portfolio has not been able to make any progress since the June 15th follow-through day. The best performing stocks in the portfolio after they rallied above their pivot points were MLNX and ALGN. However, both stocks failed to hold above their respective pivot points when they pulled back over the last few days. The same type of action has occurred in several other CANSLIM stocks as well so maybe the major indexes will need more time before the next bull cycle occurs. I remember back in October 2011, I thought the market was ready to begin another bull cycle. I ended up getting smacked around a little bit before the real bull cycle began in late December after the December 20th follow-through day. I am getting smacked around a little bit now so maybe we will get the real bull cycle in the next month or so. Oh well, I will just keep following my CANSLIM rules the best I can and let the chips fall where they may.
The portfolio in an effort to get its market exposure closer to 30% sold 50 shares of TFM at $55.60 for a very, very small loss.
The portfolio sold the remaining 50 shares of TFM at $54.90 for a small loss as it reduces its market exposure.
This portfolio just bought 10 more shares of NEU at $233.24.
Oops forgot, this portfolio also added to its Z position by buying 50 shares at $40.48.
I appreciate your updates- very interesting to follow. Did you cancel your market if touched order on TCBI, or did that fill yesterday?
Yes, I cancelled the TCBI MIT order. At the end of the week I will provide an update of the portfolio. The portfolio is becoming more active now as the major indexes attempt to build upon the recent follow-through day.
Thanks for following and best of success to you,
This portfolio just bought 20 shares of MLNX at $89.97 with the stop placed just below $76.00.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through July 20, 2012.
Portfolio Gain(Loss) Year-to-date = $1,510.60 or 3.8%
The portfolio did not go anywhere this week and picked up another day of distribution on Friday which brings the total number of distribution days to 6 after the June 15th follow-through day. However, I see 2 of the days as weak distribution due to looking like support days. With another distribution day in the picture, I am putting on the breaks to my buying for the time being. The portfolio is about 40% invested when it should be closer to 30% so if the market does not rally early next week, I will likely be selling a portion of my weakest stock.
During this choppy market environment, I am honestly just trying to keep from losing much money by staying mostly in cash until the stocks I own can make some headway. We have seen a few former big leaders really take a hit this week such as CMG and ISRG so I am just trying to stay afloat until the market can show more signs of institutional buying which would give me the green light to increase my market exposure.
This portfolio sold 75 shares of Z at $40.90 for a small gain and sold 20 shares of NEU at $227.90 for a small loss to get the exposure closer to 0% as it looks like the recent follow-through day is going to fail.
This portfolio is reducing its market exposure a little more by selling 20 shares of MLNX at $88.91 for a very small loss and 20 shares of NEU at $232.25 for a small gain.
The portfolio only owns 75 shares of Z right now.
This portfolio just sold its 75 share Z position at $41.93. Now the portfolio is 100% in cash.
I just wanted to give everyone the heads up that I will be buying a couple of stocks tomorrow after today's follow-through day to get my market exposure in this portfolio around 30%.
I feel like a yo-yo going from buying stocks to selling stocks for little losses or little gains to buying stocks again then to selling stocks again for little losses or little gains back to buy stocks once again. All I can say is that by only being invested 50% at the most during the last couple of months has kept this portfolio's draw down to a very small amount so this portfolio is in a pretty good position to make some headway when a successful follow-through day finally does arrive.
I take back my comments on the FTD - it looks as if you were right...
I had posted that I didn't believe that it was for a number of reasons...
I enjoy your posts - I think posting trades in this market is admirable.
This portfolio just bought 100 shares of GILD at $54.25.
This portfolio just bought 75 shares of WPI at $79.40.
This portfolio bought 50 shares of GILD at $55.25 as an add-on buy.
With WPI rallying from what appears to be a shakeout to me of the pivot point, this portfolio just bought 25 shares of WPI at $78.65 to get the average cost in WPI closer to the $78.00 pivot point.
This portfolio bought 50 shares of REGN at $139.42 increasing its market exposure with the market showing evidence of institutional demand following the better than expected jobs report.
I will update this portfolio's progress this weekend.
REGN did not follow-through to the upside like I hoped it would so this portfolio sold 25 shares or 1/2 of its position at $137.75 and still owns the other 25 shares.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through August 3, 2012.
Portfolio Gain(Loss) Year-to-date = $1,707.15 or 4.3%
SnP Gain(Loss) Year-to-date = 10.6%
The portfolio was able to make a little bit of headway over the last 2 weeks but is still under-performing the SnP index. The portfolio has increased its market exposure to 48%. I can be up to 75% invested according to the IBD Market School rules but I am admittedly more cautious given the choppy market environment over the last 6 weeks or so and the lack of CANSLIM quality stocks that I see breaking out with strong volume.
The follow-through day on July 26th and the additional follow-through day on the very next day tell me that institutions seem to be more willing to accumulate stocks. Friday's wide spread up bar following the jobs report was nice to see as well even though I would have liked to have seen a lot more volume. At least we are seeing some evidence that the last follow-through day may have some legs. The next point on the NASDAQ composite chart that am paying lots of attention to is the 2988 resistance point from early July. If the NASDAQ could close above that point on increased volume, my plan is to buy another stock or two. If the NASDAQ closed below 2876, I will likely be back on the sidelines unless I am already stopped out of my stocks before then.
Sorry, I did not see your post from earlier this week.
Well, this latest follow-through day could fail just like the last one did so you may ultimately be right. I am just trying to follow my CANSLIM rules the best I can and let the chips fall where they may. I know from my own mistakes of missing great buying opportunities that when I see a follow-through day occur and I have stocks on my list that are setting up, I MUST buy without second guessing the follow-through day. If it fails, it fails but I don't worry about that since I rarely let stocks I own close more than 5% below where I bought them.
I have been getting chopped up pretty good over the last several weeks but the portfolio has not really suffered very much damage. I realize that we come across market environments that are difficult for me to handle but also know that brighter days are always ahead. I make dumb mistakes all of the time but I have found that as long as I
control my risk pretty well according to the CANSLIM rules, things seem
to turn out okay.
Best of success to you I,
I just did market school this weekend. Thought it was excellent. I thought they said their current count was 4. Which would allow 90% invested. Are you basing your count on the Nasdaq?
No worries - I appreciate your journal.
My take was wrong and I corrected my post after my morning review.If I make a mistake being wrong, I wont compound it by insisting that Im right ;-)
I too bought on the FTD. Like you, I get long on a FTD no matter what I personally think about it - I have cost myself a lot of money in the past doubting a market run so I have rules to prevent that from ever happening again.
I'm long, albeit somewhat small as my own rules prevent me from taking on additional positions until I hit certain profit markers.
Good morning Steve,
Yes, you are right. The current count is +4 which would mean 90% invested like you said. However, I am being more conservative for some of the reasons listed in the back of the book we got from the Market School workshop and because I am not making much upside progress in this portfolio myself.
Good morning Lon,
It looks like you and I have gone down the same road. Yep, I know exactly what you mean.
Best of trading to you,
This portfolio has placed a buy stop order to buy 25 shares of WPI if it trades up to $80.25 and has placed a buy stop order to buy 25 shares of REGN if it trades up to $138.25.
Just updating everyone that the 25 share REGN order was filled at $138.30.
The volume never did come in as I was hoping in REGN so this portfolio sold the whole position at $138.63 for a very, very small loss, basically breakeven. I may revisit the stock once I see volume enter the stock as it attempts to breakout above $142.00.
I missed the breakout entry in TFM as it crossed its pivot point in late July but the market appears to be giving me a second chance at it. This portfolio has a MIT order placed at $58.55 to buy 100 shares of TFM.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through August 10, 2012.
Portfolio Gain(Loss) Year-to-date = $1,816.15 or 4.5%
SnP Gain(Loss) Year-to-date = 11.8%
The portfolio keeps making a little bit of progress but is under-performing the SnP so far this year. The portfolio has
increased its market exposure to 54% after selling its REGN position and then initiating its TFM position on Friday.
This portfolio can be fully invested according to the IBD Market School rules but I remain cautious for a few reasons. First, I still am not seeing many CANSLIM stocks breaking out of sound bases with volume. Second, I continue to see the big cap leaders of this bull market get hit with massive supply. PCLN is the latest example. To me, the 6 big cap growth stocks which have lead in this bull market are AAPL, BIDU, PCLN, CMG, NFLX, and GMCR. All have totally broken down except for AAPL and maybe BIDU which is showing the ability to rally in the last month after holding above its $100 important support level. This action tells me that the current bull market is long in the tooth and may not have much farther to go. I would need to see a new batch of big cap growth leaders show the ability to take the place of these fallen leaders to make me change my view. As of now, the only two I see that may have a chance are MLNX and LNKD.which both have high double digit and triple digit quarterly earnings and sales growth and strong earnings growth estimates. Third, I still see the action in the major indexes as choppy with the major indexes spending the last 4 days going nowhere as volume decreases. I know August is usually a lighter volume month but the lack of volume and already seeing 2 distribution days within a week after the July 26th follow-through day does me cause for concern. Therefore, I am willing to increase my market exposure up to 75% but not much more than that until I begin to make better progress in this portfolio.
This portfolio just placed a buy stop order to buy 50 shares of TFM at $59.45 as an add-on position which is about 2.5% above the pivot point.
Today's TFM order did not execute but I am keeping this order in place for tomorrow.
Just letting you know that the 50 share TFM order got filled at $59.50.
Been on vacation for the last several days. This portfolio just bought 150 shares of FRAN at $33.90.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through August 24, 2012.
Portfolio Gain(Loss) Year-to-date = $2,738.65 or 6.9%
SnP Gain(Loss) Year-to-date = 12.2%
This portfolio was not doing much until Friday thanks mainly to WPI which was up 6% after its generic Lidoderm drug got FDA approval. Some of our stocks are finally starting to make a little bit of upside progress with 3 of our 4 stocks up about 5% each. I actually forgot to add my purchase of REGN at $139.75 to this portfolio. But since I did not list it on the forum in real-time, I am going to keep it off the inventory list to maintain the real-time integrity of this portfolio in the forum.
The portfolio is almost 75% invested and can be 100% invested based on the IBD Market School rules but I did not want to be that fully invested until my stocks started to show better upside progress. I may buy one more stock next week since some of the portfolio's stocks are making enough upside progress to allow me to tighten my stop to reduce my overall portfolio risk on a few of them.
However, if we get some more distribution days next week after already seeing 2 distribution days since the July 26th follow-through day, then I will be a lot more cautious and even begin reducing my market exposure. I already see some potential trouble due to the key reversal distribution bar on Tuesday and the NASDAQ is still at an area of important resistance from the March 2012 high.
This portfolio just sold 1/2 of its TFM position at $61.26 before the earnings report tomorrow morning. I don't like holding full positions before an earnings report unless I have at least a 5% cushion or feel extremely strong that the earnings report will be good.
After the large gap up in TFM after its earnings report, TFM has been selling off. This portfolio has placed a sell market stop order at $61.55 guaranteeing a profit on the remaining 1/2 position. The gap should not fill if the institutions truly like the earnings report.
After selling TFM at $61.55, this portfolio is still looking to increase its market exposure since the distribution days have not started to pile up yet so I have placed a buy stop order to buy 75 shares of FRAN if it reaches $36.10 today only.
I had no idea I was going to be this busy today. The FRAN order got filled at $36.09 and this portfolio just bought 60 shares of EW at $102.09.
Also, the earlier TFM stop order got filled at $61.55.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through August 31, 2012.
Portfolio Gain(Loss) Year-to-date = $2,618.60 or 6.6%
This portfolio lost a little bit of money this week when the overall market fell a little bit as well but gained a little bit of ground on the SnP. We saw a stalling day this week in the NASDAQ composite index which brings the distribution count to 2 in the last couple of weeks and 3 in total but the 1st distribution day will fall off early next week so I am not considering it.
Over the last 3 weeks the major indexes have basically gone sideways. For me, my future trading decisions will boil down to 1 of 2 events occurring in the major indexes unless I get stopped out of my individual stocks or my stocks hit their profit targets first. IF the major indexes, particularly the NASDAQ, form 2 or 3 more distribution days or decisively breaks below this sideways pattern, I will be reducing my market exposure quickly taking whatever profits I can get. IF the major indexes can penetrate the upside of this sideways pattern especially if I see some stocks on my watch list breakout with volume, I will buy more stocks. I really have no idea which way the market will leave this sideways pattern but I got my plan in place no matter which way it goes.
This portfolio just sold 100 shares of its FRAN position at $36.53 taking some profits before the earnings report scheduled to be released after today's close.
With FRAN gapping down after its earnings report, this portfolio sold the remaining 125 shares at $33.20 for a small loss. I did not do well with either of the 2 stocks that I held partial positions in going into their earnings report (TFM and FRAN) but still made money in TFM and had a very small loss in FRAN.
Looks to me like you actually made a net $12 or so on FRAN- on the entire position? Did you have a stop order in at the open today, or enter a trade after the open?
When a stock I own performs poorly after an earnings report, I don't wait around. I just put a market order to sell at the open and sometimes I will get out before the open. I should have done that this time but woulda, coulda, shoulda I guess.
About $12 sounds right. This stock really blew up on me which is why I like to take at least some profits before the earnings report unless I have a good profit cushion. But, I hope everyone sees that even though I did a bad job picking this stock, my portfolio really didn't get hurt very much by just managing my risk and quickly getting out when FRAN gapped down after its earnings.
I think that's what jumps out at me most as I've followed your forum through the year- How you manage risk and keep losses to an absolute minimum. Very interesting!
This portfolio just sold 1/2 of its REGN position at $151.81. I was not quick enough on the trigger to sell at $153.00 which would have given this portfolio a 10% profit on the 1/2 position.
Oops sorry guys, I forgot that REGN is not in this portfolio so please disregard my REGN message.
This portfolio just bought 80 shares of GTLS at $72.25 and has a buy stop market order to buy 100 shares of IPGP at $63.75.
This portfolio just placed a buy stop market order to buy 40 more shares of GTLS if it crosses above $74.50 today only.
This portfolio sold 1/2 of its GILD position at $58.98 for a gain. I will update this portfolio this weekend.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through September 7, 2012.
Portfolio Gain(Loss) Year-to-date = $3,384.65 or 8.5%
SnP Gain(Loss) Year-to-date = 14.3%
Despite the loss I had to take on my remaining 125 shares of FRAN when it gapped down after its earnings report (yuck!), the value of the portfolio still increased for the week thanks to the other stocks all advancing. Thursday's strong upside action indicated institutional buying and really improved the look of the charts of the major indexes to me. Looking at the daily charts of the NASDAQ composite index and SnP index, Thursday's bar looks like a breakout of a cup w/handle pattern. After seeing Thursday's strong up action, the 2 distribution days in the NASDAQ composite index do not look so bad. The market was even able to shrug off the worse than expected employment report on Friday.
This week's action tells me that I can become a little more aggressive in increasing my market exposure. As you know, I have been hesitant to get 100% invested even though I could be fully invested according to the IBD Market School rules. However, after seeing the performance of the stocks in this portfolio, seeing Thursday's action in the major indexes, and seeing more CANSLIM stocks breakout this week with strong volume, I am going to try to buy more stocks next week to get 100% invested. I am going to keep the 40 share GTLS buy stop market order open for Monday and also the 100 share IPGP order open for Monday. Also, I missed buying the breakouts in LNKD and ALGN this week so I am going to try to initiate a position in one or both of these stocks this week if either one of them can pullback near its pivot point. Hopefully, I will be able to increase this portfolio's market exposure among these 4 stocks and I have other candidates on my watch list as well that may offer a buying opportunity in the next week or so.
This portfolio got its 100 share buy order in IPGP filled at $63.75 but due to how poorly IPGP has acted since the 1st 10 minute rally, this portfolio just sold 1/2 of the position at $63.25 for a very, very small loss.
This portfolio just sold its remaining GILD position at $59.70 for a gain.
Hi everyone again,
IPGP is not breaking out with volume like I hoped it would so the portfolio sold its remaining shares for $63.95 for basically a breakeven trade.
With the market rallying strongly following the FOMC announcement, this portfolio bought 250 shares of ELLI at $28.20.
This portfolio currently has a buy stop order to buy 40 shares of GTLS if it reaches $74.10 today.
Also, looking to add to EW but probably will not happen until tomorrow or at the close today. I need to see where it closes and how much volume enters today before making any decisions.
Just letting everyone know that the 40 share GTLS buy stop order was filled at $74.15 today.
With the portfolio's stocks acting well and the market indexes showing evidence of institutional accumulation, this portfolio needs to increase its market exposure so it has placed a buy stop market order to buy 20 shares of EW at $106.40 for today only.
My recent ELLI purchase is reversing down pretty hard and so this portfolio just sold its 250 share position at $25.94 for a $565.00 loss.
After selling ELLI for a loss, this portfolio added to its EW position by buying 30 shares at $104.76.
After being shaken out of ELLI yesterday near the lows of the day, this portfolio just bought 300 shares of ELLI at $28.20.
This portfolio sold 50 shares of 1/2 of its WPI position at $83.65 for a gain. IF EW closes poorly today, this portfolio will likely sell all of its position for basically a breakeven trade.
This portfolio bought 100 shares of ALGN at $36.50 as it pulls back to its $36 pivot point.
This portfolio is lightening up its ELLI position after the sharp reaction about 10 minutes ago so selling 100 shares at $28.31 for a very, very small profit. The portfolio still owns 200 shares of ELLI.
This portfolio is decreasing its market exposure a little more by selling 100 shares of ELLI at $27.87 for a $33 loss.
This portfolio just sold its remaining 50 share WPI position at $83.45 for a gain.
Busy today. This portfolio sold 1/2 or 60 shares of its GTLS position at $74.96 for a gain.
ELLI didn't perform like I hoped so the this portfolio sold the remaining 100 shares at $25.92.
Best of trading,
This portfolio is placing some sell stops in the stocks the portfolio still owns in case the reaction gets worse as more distribution days pile up in the major indexes.
The stop in GTLS is $72.95, the stop in ALGN is $35.95, and the stop in EW is $102.45.
This portfolio went ahead and sold its ALGN position at $36.82 for a small gain and got stopped out of its GTLS position at $72.92 this morning.
I will update the portfolio this weekend which is almost all in cash except for EW which rallied today.
This portfolio just sold its EW position at $108.12 for a gain and is now in a 100% cash position.
This portfolio bought 100 shares of LULU at $75.75.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through October 5, 2012.
Portfolio Gain(Loss) Year-to-date = $2,695.05 or 6.7%
SnP Gain(Loss) Year-to-date = 16.2%
As you can see, I did a pretty bad job trading this portfolio during the 2nd half of September. My losses in ELLI and then not having the patience to hold GILD were 2 of the main reasons this portfolio actually lost value while the SnP actually gained value over the last three weeks. Also, my poor portfolio management from reducing my market exposure too much by my exiting stocks too soon for only small gains contributed to the under performance to this portfolio.
According to the IBD Market School rules, I can be 100% invested but this portfolio is just under 20% invested. Admittedly, I have been too conservative with this portfolio. Part of the reason has been because the bull market is about 3 1/2 years long and is currently in the midst of its 4th bull cycle during the bull market so it is due for a correction. Also, I lost a little bit of confidence in the last month in my own trading due to my feeling of being out of sync with the market leadership so I want to be under exposed until I get my confidence back.
I see that the distribution days are starting to pile up in the NASDAQ with 3 days occurring in the last 2 weeks and could make a case for 4 days if we count the Sept 21st day as a stalling bar. I already see 5 distribution days in the SnP and NYSE composite indexes. IF we get 2 or 3 more distribution days in the next week or so and the NASDAQ breaks below 3080 and the SnPs break below 1430, this portfolio will be heading to the sidelines. For now, since the market is still saying it is okay to buy CANSLIM stocks and market exposure can be 100%, this portfolio will be looking to increase its market exposure as well.
With another distribution day likely forming in the NASDAQ today, this portfolio is placing a sell stop market order at $74.40 on its 100 share LULU position.
Well as you guys probably already know, this portfolio got stopped out of its LULU position at $74.40 for a $135 loss. This portfolio is 100% in cash as I see more evidence from another distribution day that a correction of some kind is likely beginning in the stock market. According to the IBD Market School rules, my buy switch is still on but I would suspect that another couple of days similar to what we saw today will lead to my buy switch turning off. My buy switch turning off would mean that this portfolio would wait on the sidelines for another follow-through day before getting back into the market and may even take a very small position before the follow-through day if a stock I consider to have excellent CANSLIM characteristics breaks out of a sound base. I do sometimes "cheat" a little bit.
With the buy switch still ON according to the IBD Market School rules, this portfolio just bought 200 shares of ALGN at $37.30.
I don't know if it factors into your decision or not, but I think they report tomorrow...
Good Trading ,
Yes you are right, ALGN reports after tomorrow's close. This portfolio would have likely bought 100 more shares due to today's strong close but I take a smaller position when earnings are coming up. I will even sell a portion of the stock I already own if I have a very small gain or very small loss right before an earnings report. Depending how ALGN trades tomorrow, I may sell a portion before tomorrow's close.
This portfolio just bought 200 shares of NSM at $33.62 as it rallies from its rising 21 day EMA. This portfolio also bought 100 shares of PCYC at $69.88 as it rallies from its cup with handle pattern.
With ALGN performing poorly heading into its afternoon earnings report, this portfolio sold its 200 shares at $37.40 for basically a breakeven trade.
It doesn't look like PCYC will be able to hold above it pivot point so this portfolio sold its position at $69.80 for basically a breakeven trade.
This portfolio sold its 200 shares of NSM at $33.50 for about a $25 loss. This portfolio is back to a 100% cash position as it looks like my buy switch will turn off with one more day of strong selling.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through October 19, 2012.
Portfolio Gain(Loss) Year-to-date = $2,583.05 or 6.5%
SnP Gain(Loss) Year-to-date = 14.0%
Over the last couple of weeks, this portfolio has done nothing but lose a little over $100. However, the market has not done much either over the last 2 weeks and has actually done worse after today's large distribution day. Today's strong selling was enough to turn the buy switch OFF according to the IBD Market School rules. Now, I just wait for evidence of a follow-through day and may even "cheat" a little bit if a really great CANSLIM leadership stock is setting up from a sound base. When I do "cheat", my rule is that I will not under any circumstances invest more than 20% of my total portfolio until I actually see a follow-through day occur.
Since a follow-through day could come as early as Thursday, I will spend this weekend going over about 600 weekly charts looking for CANSLIM quality stocks that are either reacting toward their 10 week moving average, forming a 3 week tight pattern, or forming at least 5 week flat bases, 6 week cup w/handles, and 7 week double bottoms. I will even look for stocks that have the potential to rally from a shakeout +3 pattern. If a stock has possibilities, I will flag it in Marketsmith and then revisit the stock on a daily chart and do some more fundamental research on it to get my watch list down to hopefully less than 20-40 stocks. Then I just stalk those stocks every day and place alerts near pivot points or place buy stop market orders depending on the general market environment. Then the idea, even though I have done a poor job executing it, is to build the portfolio's market exposure based on the IBD Market School rules.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through October 26, 2012.
This portfolio stayed in cash all week as it waits for a follow-through day. The major indexes were down for the week so the portfolio gained a little bit compared to the performance of the SnP by just staying in cash.
During times like these, I try to put together a fresh list of CANSLIM quality stocks that may lead when the next bull cycle begins. I pay particular close attention to those stocks that have responded strongly to their most recent earnings/sales reports which in themselves show strong quarterly earnings/sales growth. Also, I pay particular attention to companies that are increasing their earnings guidance for the upcoming quarter or year since I am trying to find those true growth stocks. Lastly, I focus on those stocks that are refusing to fall as the general market declines. In other words, I want stocks showing relative strength.
With the NASDAQ composite index and SnP index making a lower low today, the soonest we will see a follow-through day is Thursday so this portfolio will likely stay in cash at least until then assuming I do not try a small "cheater" position. If I do decide to "cheat", I will not put more than 20% of the value of the portfolio in the market which means about $8,500 of the total $42,550 or so. My rule is that I cannot go over 20% until I see a follow-through day.
For now, cash remains king for this portfolio.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through November 2, 2012.
SnP Gain(Loss) Year-to-date = 12.4%
This portfolio stayed in cash all week just like last week as it waits for a
follow-through day. The SnP index was barely up for the week and the NASDAQ composite index was barely down for the week.
With Friday October 26th being the rally day and day 1, today was the first day we could have seen a follow-through day occur. However, all of the major indexes were down over 1% and closing at the low of their ranges so this portfolio will have to stay on the sidelines for the time being. The NASDAQ composite index only needs to fall another 21 points and/or the SnP only needs to fall 11 points before resetting the follow-through day count. Therefore, even though a follow-through day can occur any day now and this portfolio needs to be prepared to take action if it does occur, the major indexes are pretty close to breaking below the rally day low which can also happen any day now.
Also, I do not see many stocks showing CANSLIM qualities that are near to breaking out of a sound base. SSYS has been high on my list but it got hammered today. AAPL, the great leader of this bull market, continues to show weakness. CTRX tried to breakout today but failed. LL, NEU, and V are recent breakouts that seem to be working and are high on my list. But, who knows? If the market continues to fall, these 3 stocks may eventually come down as well. I just think that the market needs more time, however long that needs to be, to allow leadership stocks to build sound bases for the next bull cycle.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through November 9, 2012.
SnP Gain(Loss) Year-to-date = 9.7%
The stock market had a particularly bad weak following the election results while this portfolio remains in cash. The bad weak in the market is allowing the portfolio's performance to catch up to the overall market performance by doing nothing.
I am sorry that I do not have much to say but all I will be doing over the weekend is going through my normal routine in order to keep my CANSLIM watch list fresh. Once I have a fresh CANSLIM watch list, I locate pivot points which can serve as potential buy points if the major indexes ever form a follow-through day. After today's rally bar, the soonest that a follow-through day can occur would be Wednesday. Unless this portfolio takes a small "cheater" position which is highly doubtful, the portfolio will continue to remain in cash until Wednesday at the earliest.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through November 16, 2012.
SnP Gain(Loss) Year-to-date = 8.1%
The stock market declined another week while this portfolio remains in cash. The year-to-date performance of this portfolio has almost caught up to the performance of the SnP by just staying in cash according to the CANSLIM rules. I really did a terrible job in the first 3 months of the year but the CANSLIM rules have allowed this portfolio's performance to catch up to the performance of the major indexes as the year comes to a close. Hopefully, this portfolio will be able to outperform the SnP over the next 6 weeks.
Friday's rally day counts as day one; therefore, we can see a follow-through day occur as early as Wednesday. Technically, the follow-through day could occur on Tuesday if both Monday and Tuesday were up days with strong volume. Based on the lack of CANSLIM leadership stocks that are close to rallying above a pivot point of a sound base, I would think that we are still a few weeks away before beginning another potential bull cycle. However, I am trying to not be biased toward the market since the market does not care what I think anyway.
I have a few stocks on my watch list that are doing a pretty good job in refusing to fall with the major stock indexes. I want to be prepared to buy some of them just in case a follow-through day does occur next week. To be honest, I was actually pretty close to buying one of those stocks today as a "cheater" position. I may still buy it Monday depending on how Monday's action unfolds. Regardless, my rule is to not be more than 20% invested in this portfolio until a follow-through day occurs. Therefore, I may buy 2 stocks putting 10% of the portfolio or about $4,000 into each position or I may buy 1 stock and put 20% or $8,000 into it. I usually go for the first option unless I see a stock that has such amazing fundamentals and a game changing service/technology/etc. with strong institutional sponsorship in which case I would go with the second option. I do not see a stock like that now so I would "cheat" using option one.
After Friday's unorthodox follow-through day and today's decline, this portfolio is gradually dipping its toe back into the water. The portfolio just bought 50 shares of CVLT at $65.16 and plans to buy more around the $63.50 to $64.00 area.
This portfolio just bought 100 shares of EBAY at $56.50.
This portfolio just bought 100 shares of EBAY at $50.50. Sorry, the previous post was a mistake. This message has the correct price.
You will buy more when the price drops? Isn't that opposite of what IBD says? This is in regards to your CVLT trade.
I'm new to this, so would like to know your train of thought.
Great question. You are correct in stating that IBD prescribes to never ever average down. I will not average down either with one exception and I do not even consider it averaging down.
For example with CVLT, I want to have about a 100 share initial position. However, since CVLT has rallied too far away from its pivot point I will take a very small position (i.e. 50 shares) with the hopes of completing my position closer to the pivot point. You may ask, why not just wait for CVLT to fall farther so that I can establish my 100 share position at a lower price? I would respond by saying I do not know that CVLT will fall closer to the pivot point so I want to have at least some position instead of none at all since I consider CVLT one of the leaders. With EBAY, I was able to establish my 100 share initial position close to the pivot point so I would NEVER average down on this stock. Concerning CVLT, once I get my initial position, I will never average down on it as well.
What price are you using as a pivot on CVLT? When you accumulate a position in this manner, do you use the 8% max stop on each purchase or figure it based on avg cost?
My pivot point for CVLT is $59.50 but I doubt I get that price on a reaction. In the case of CVLT, I use a 7% maximum stop on the average cost. But, generally, I use a 7% max stop on each individual purchase. In the case of CVLT since the original purchase is so small, my stop on it is a daily close just below $60.00.
On a side note, CVLT was the "cheater" position I was talking about in the message I sent about a week ago.
This portfolio just bought 150 shares of URI at $40.09.
This portfolio is adding to its EBAY and URI positions by buying 50 shares of each. EBAY at $51.25 and URI at $40.80.
With the stocks in this portfolio acting well, this portfolio bought 100 shares of TYL at $47.61 and is closely watching VSI to see if it can breakout above $60.75 with volume.
This portfolio just bought 200 shares of QIHU at $24.75.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through November 30, 2012.
Portfolio Gain(Loss) Year-to-date = $3,185.05 or 8.0%
SnP Gain(Loss) Year-to-date = 12.6%
After the unorthodox follow-through day the week ago Friday, this portfolio has been busy this week increasing its market exposure. Except for TYL, the rest of the stocks have been moving up from their buy points. Currently, I am a little bit overexposed according to the IBD Market School rules. This portfolio's market exposure sits at 68% when it should be closer to 55%; therefore, if TYL does not start rallying this week, this portfolio will probably sell this position. The portfolio will just have to see how next week's action unfolds. I still think we are in the late innings of the current bull market and maybe the September high is the beginning of a new bear market. I honestly have no idea. I will just play it day-by-day as I attempt to do a good job in following my CANSLIM rules.
This portfolio only needs to increase its gain another 1 percent to make a new equity high for the year. Using the CANSLIM method to recognize that a correction of some kind was beginning about 6 weeks ago really helped the portfolio hold onto its gains. The portfolio is still under performing the SnP but not by much despite me doing such a terrible job in taking advantage of the bull cycle in the 1st 3 months of the year.
I just realized I got a fill on my 100 share add-on GTC buy stop order in QIHU at $25.49. This portfolio is exiting its 100 share TYL position at $46.70 to keep the portfolio's market exposure where I want it to be according to the IBD Market School rules..
This portfolio just sold its 300 share QIHU position at $24.31 for a small loss. The breakout failed to hold.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through December 7, 2012.
Portfolio Gain(Loss) Year-to-date = $2,967.55 or 7.4%
SnP Gain(Loss) Year-to-date = 12.8%
This portfolio lost a little bit of ground primarily due to its QIHU trade starting out strong but reversing sharply to stop this portfolio out of the position. I should have been quicker in exiting QIHU around $25 when I saw how weak the action was Wednesday morning. After exiting QIHU and TYL this week, the portfolio's market exposure is more in line with the IBD Market School rules.
The major indexes, particularly the NASDAQ composite index, have not made much upside progress since the November 23rd follow-through day. For example, in 2 weeks from the follow-through day, the NASDAQ composite index is only about 11.5 points higher. The SnP is about 9 points higher which is slightly better than the NASDAQ on percentage terms but is still less than 1% higher than the follow-through day close. The performance of this portfolio since the November 23rd follow-through day has not been any better.
I want to see the stocks in the portfolio show more of an ability to rally away from their respective pivot points before getting more involved in the market. So far, URI is the star performer among the 3 stocks but it is up only 6%. QIHU did a great job rallying away from its pivot point but that did not last long.
I do not know if the latest follow-through day will soon flame out or lead to a more substantial rally. So far, based on the lack of CANSLIM growth stocks breaking out from sound bases with volume and the lack of upside progress in the major market indexes, a couple of distribution days in the market will likely be the only thing I need to see that would lead me back to the sidelines. A close in the NASDAQ below 2935 and a close in the SnP below 1385 on a distribution day would be very worrisome to me.
Wow. I am glad you are still in this game. I remember your posts from way back. I believe you are an accountant with a lust for trading. lol. I used to sit in on Gary Fullets chat room too. You guys are Wyckopf oriented in your trading. Very cool. It is always nice to see a familiar handle in these rooms. You used to post somewhere else on the regular. Maybe Yahoo? How do you feel about Taylor and his methodologies. It seems like nothing is working now. Is it just me?
Yes, you got the right guy. Nice to hear from you.
I am honestly not a big fan of Taylor. I still think the CANSLIM method with a little Wyckoff is the best way to speculate, at least for me. I can only speak from my own personal experience.
In my opinion, I think whatever method one chooses to use, he/she needs to understand its shortcomings if that is the right term. Shortcomings are not necessarily a bad thing either. For example, there are times when a particular method will not provide good returns for a period of time but that doesn't mean the method is no good. The CANSLIM method suggests that we sit on the sidelines after a number of distribution days before the next follow-through day occurs. It is boring not making any money while on the sidelines while other methods may be doing fine. This sitting on the sidelines may be considered a shortcoming to some folks but I do not see it as a negative thing. Sometimes the follow-through day will fail and some folks may think that is a shortcoming of the CANSLIM method but I realize no method can pick every important turning point 100% accurately.
In the past, I have been guilty of jumping from one way of trading to the other looking for that "perfect" method. I finally figured out that there is no "perfect" method and searching for it is just a waste of time. Once I began to stick with a method (CANSLIM with a little Wyckoff) through good times and bad, my results improved significantly enough to allow me to just work part-time now. Even throughout my screw ups which start with how badly I handled the market rally in the 1st 3 months of the year in this portfolio, the portfolio is still doing okay. I mean I really screwed up the 1st 3 months but still the CANSLIM method has kept this portfolio in positive territory so I would not discard the CANSLIM method so quickly. There are some CANSLIM traders who handled the 1st 3 months fine and are easily outperforming the major indexes. Last year, I was lucky enough to be one of those traders who easily outperformed the major indexes. I just try to keep learning, improving, and fixing my many mistakes which keeps me busy.
Best of success to you Miller,
This portfolio placed a buy stop market order to buy 200 shares of DGI at $26.35.
The DGI order did not get filled but this portfolio is placing the same order again tomorrow.
would you mind going over the rules regarding how much of your portfolio you invest at any given time. you mention IBD market school rules.
i've only done levels 1 and 2 and haven't come across any such rules.
There are about 12 buy signals and 12 sell signals to guide the investor in either increasing or decreasing his/her portfolio's market exposure. I cannot go into the rules specifically because of that statement they make each attendee of the IBD Market School workshop sign. You may have had to sign a similar statement when you took the Level 2 workshop. However, I think I can share that the workshop provides guidelines on how much of a portfolio can be invested based on the how many of those rules have occurred. The portfolio can be 30% invested once a follow-through day occurs and then goes up to 55% then 75% then 90% then 100% or goes back to 0% depending on what buy/sell signals occur next.
I hope that helps.
This portfolio just bought 200 shares of DGI at $26.37.
If DGI closes poorly, this portfolio will go ahead and sell its 200 share position before the close.
With both the market and DGI rallying into the close, the portfolio is NOT selling DGI at the close.
Well guys, this portfolio sold its DGI position after all at $25.80 for a very small loss. After looking at how the weak the volume was for the day, I went ahead and sold it.
With the weakness in the major indexes, particularly the NASDAQ index, this portfolio is going to reduce its market exposure by selling 1/2 of its URI position or 100 shares at $42.10 for a small profit and selling 1/2 of its EBAY position or 75 shares at $50.35 for a small loss.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through December 14, 2012.
Portfolio Gain(Loss) Year-to-date = $2,636.80 or 6.6%
This portfolio lost a little bit of ground this week as the major indexes lost a little ground as well. With the distribution days piling up in the major indexes. In fact, on the weekly chart of the NASDAQ and the SnP, we can see that volume increased on a weekly bar that closed near its low after trading above last week's high then failing to continue higher. Also, I continue to have a hard time finding strong breakouts from sound bases of CANSLIM quality stocks. Lastly, the stocks this portfolio owns have failed to make much upside progress since the November 23rd unorthodox follow-through day which is understandably a questionable follow-through day to start with.
Another day or two of distribution in the major indexes will likely have this portfolio reducing its market exposure even more. Currently, the portfolio is less than 25% invested in the market and has tightened its stops on the 3 stocks it does own just in case the market begins to decline harder in the coming days. The "fiscal cliff" talks are a wild card and I have no idea how they will turn out. Either way, the portfolio is trying its best to tune out the news and just focus on watching the price/volume of the major indexes and my watch list leadership stocks.
This portfolio just bought 100 shares of IPGP at $62.26 and bought 200 shares of QIHU at $25.95.
This portfolio just bought 250 shares of DGI at $26.63 and has a buy stop market order to buy 60 shares of IGPG at $63.55 which just got filled at $63.62.
This portfolio is busy today. It just bought 100 shares of RAX at $70.25.
It doesn't look like DGI and I are getting along too well. This portfolio exited its 250 share position at $25.82 for another small loss. On the bright side, the other stocks are all performing well.
With the SnP futures diving after the no vote on the fiscal cliff from last night, this portfolio will reduce its market exposure by selling its EBAY, QIHU, and URI positions at the open for gains in EBAY and URI and about breakeven in QIHU.
o the SnP through December 21, 2012.
Portfolio Gain(Loss) Year-to-date = $3,435.50 or 8.6%
SnP Gain(Loss) Year-to-date = 13.7%
After Friday's wide spread distribution bar, one might have thought that this was a tough weak for stocks. But on Monday and Tuesday, both the NASDAQ & SnP indexes rallied on increased volume and closed at the peak of each day. Even after the large gap down at the open on Friday, the major indexes were able to rally into the close. This portfolio was even able to set a new equity high for the year.
Another day of distribution in the major indexes Friday increases the count to 4 in the NASDAQ but 5 to me since I count the action on November 30th as a stalling day even though the IBD paper does not which is part of the reason why this portfolio was a little aggressive in reducing its market exposure this morning. To me, another 1 or 2 distribution days next week which leads to a break below 2960 in the NASDAQ and/or a break below 1410 in the SnP would lead to more selling of this portfolio's stocks.
Merry Christmas to all,
With the major indexes continuing to weaken and my stocks too, this portfolio just sold its 100 share RAX position at $70.95 for a small gain.
Depending how CVLT trades this afternoon, this portfolio may be taking profits on it as well.
With the market continuing to decline and CVLT falling as well, this portfolio sold its 50 share position for $67.45 for small profits.
Only IPGP remains which continues to show good relative strength.
What a crazy day in the market going up and down depending on the latest news out of Washington. With that being said, this portfolio bought back its 100 shares of RAX which was sold earlier in the morning at $72.25.
This portfolio went ahead and sold its 100 share RAX position at $72.70 for a very small gain. The market is not following through to the upside after yesterday's rally and the distribution days have piled up in the major stock indexes so I just want to keep my strongest stock which is IPGP and stay mainly in cash until the New Year arrives. There will be plenty of time to increase this portfolio's market exposure if the market can get going again.
Here is a recap of the current stock holdings
and performance of this portfolio so far this year compared to the SnP through December 28, 2012.
Portfolio Gain(Loss) Year-to-date = $3,099.30 or 7.8%
SnP Gain(Loss) Year-to-date = 11.5%
The portfolio fell short of outperforming the SnP this year but there is always next year. While doing a post-analysis of this portfolio's trades, my poor performance can be boiled down to not taking advantage of the bull cycle in the first 3 months of the year and not being patient enough by taking small profits in GILD, for example, instead of sticking to my sell rules. Hopefully, this portfolio will do a better job next year after learning from my mistakes this year. The portfolio had some good moments as well. It was able to protect most of its capital through the April to June correction and October to November correction. In summary, the portfolio did a good job in dodging market weakness but did a poor job in capitalizing on market strength.
I have several reasons for keeping this portfolio's market exposure under 30% at this time. Distribution days have reached 5 in the NASDAQ composite according to my count. The NASDAQ closed poorly and right at the 2960 support level with no sign of buying. The NASDAQ is back under the 50 day moving average and 10 week moving average. The SnP has already broken under the 1410 support level, is just barely holding onto the 1400 support level, and closed below its 50 day moving average today. The market responds to every little morsel of "fiscal cliff" news. The trading over the last 2 days is a great example of what I mean. Even after today's close, the market continues to sell off following more "fiscal cliff" news. The market seems held hostage to whatever the "fiscal cliff" news is at the moment. Also, all of the past big cap leaders like AAPL, BIDU, PCLN, CMG, NFLX and GMCR are all laggards and some have fallen apart indicating a tired bull market. REGN, EQIX, V, MA, and GILD are a few of the big cap leaders that are still doing fine. The homebuilding related industry groups are still doing okay. LULU is about the only retail stock that is hanging in there pretty well. The past leading retail stocks like UA and KORS have run into trouble. We need some new names to take the lead. Some of the stocks mentioned in the next paragraph may be those new names.
However, there are some leadership quality stocks like IPGP, RAX, N, RKUS, and QIHU that appear to show relative strength but I do not see many stocks breaking out of 1st or 2nd stage bases with signs of institutional demand. There are some leadership stocks which have been pulling back to their respective rising 10 week/50 day moving average such as REGN and CVLT come to mind. IF the market can get going again, we do have some CANSLIM leadership stocks from which to choose. The question is, will the market get going again?
Best of success to all and wish everyone a Happy New Year!!!!!
I honestly did not think I would be doing anything today but the wide spread up bars in the major indexes on increased volume with many of the leadership stocks on my list rallying with increased volume has this portfolio buying 200 shares of URI at $45.55.
Best of success and happy New Year to all!!!!
IPGP got hit with lots of institutional selling today so this portfolio sold its position at $62.80 for basically a breakeven trade. At least URI continues to perform well for this portfolio.
This portfolio just bought 150 shares of CYBX at $54.10 as it pulled back to its pivot point.
This portfolio just sold 1/2 or 100 shares of URI position at $49.40 for almost a 10% gain.
CYBX is not performing as I had hoped. This portfolio has a stop order placed at $51.40 to exit the stock for abut a 5% loss if the order gets executed.
Steve: What was your reasoning for selling half of your URI position if I may ask?
This portfolio just bought 200 shares of OCN at $39.30 as it rallies from a cup with handle formation.
Sorry for just now responding to your question.
I sold 1/2 of URI for 2 reasons. First, it had taken longer than 4 weeks to rally 20% from its $40.02 breakout point on October 31st. Second, its earnings report was coming out in a couple of days and volume had recently dropped off as it was rallying to a new high.
This portfolio just sold its remaining 100 shares of URI at $52.15 for about a 15% gain.
This portfolio just took a 100 share position in PRLB at $49.00.
This portfolio sold its OCN position at $39.42 for about a breakeven trade. The portfolio only owns PRLB now.
This portfolio sold its 100 share position in PRLB at $45.94 for a small loss. This portfolio is in a 100% cash position now.
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