I frequently receive requests for more info regarding the Fab 5 basket of stocks - on how I build the list, what the performance has been like, etc. so I thought I would provide some of that data. Here is the info on stocks that were in the Fab 5 but for some reason or another did not complete the $100 Roll based on the Rules:
The above table show stocks that have been in the Fab 5 basket of stocks but have a “Not Completed” status. One stock, $ROP, did eventually complete the $100 Roll without me. Boo. $ULTA still can qualify once it retakes the $90 price level.
Below is a list of stocks that have Completed the $100 Roll - and are no longer in the Fab 5:
There have been several quality candidates that never made it info the Fab 5 that have comlpeted the $100 Roll:
This week all but 1 of the members held up to the selling pressure well. The lone exception - $DEO - fell under the 100 mark (not by much) but it has completed the $100 Roll already. I will look to sell the May 100 Put this week (from a 105/100 Collar) as this option will expire on Friday. If price can not retake the $100 level, I will also exit the position to protect any gains. I may consider a new collar for June as well.
The newest member is $SXCI. Last week I mentioned that I would look to enter on Monday, but waited until Tuesday for it to stabilize. It has put in a very solid week after holding the 20 day moving average. I have included a Daily chart here to show the key elements to entering the stock:
The Volume at Price (VaP) is VERY significant at these prices, but the Stochastics cross up move was the tell for entry.
The definition of Outsize courtesy of Merriam-Webster:
One of the types of “opportunities” that I look for in the public stock market is the outsized move in price. There are many ways to measure for this, but for the sake of this post the focus is on price as it relates to the Bollinger Bands. In the case of $ADY (Feihe Intl) I had noticed a very outsized move outside the upper Bollinger Band on the Daily chart yesterday evening:
This looked like a great candidate to play for a move back inside and stated such on twitter:
The stock did make its way back inside the upper Bollinger Band where I covered the short position.
If you follow chartist, you will often hear them speak of a “Trend Reversal” signal — derived from some pattern seen in candlesticks. One of the key elements to this however, is that confirmation is required from the next candlestick – to in fact confirm the Trend Reversal.
Some examples of the TR signal are:
- Inverted Hammer
- Shooting Star
To help illustrate, I bring you the Daily chart of $CRI (Carter Holdings):
As noted on the chart, there has been a continual decline since the Shooting Star towards the end of April. This decline has in fact confirmed this TR signal, thus making it valid. A clear example that the upward trend has indeed reversed.
Price is currently hovering above the 50 day moving average (tested once this week already) and looks destined to test it once again soon. Play the reaction if no position.
This week I received several inquiries regarding my trading in $HAIN (Hain Celestial Group). I took the time to review my twitter messages regarding this topic and it became clear to me that the questions were warranted.
There has been a lot of debate about the efficacy of using twitter to relay trading information, and how much may be lost as the days roll by from an initial posting of trade information. For this reason, I take the time to do these blog posts to help bring clarity to my trading. Let’s face it, at times we get very focused on a trade and the updating to twitter is certainly not a priority.
However, I can see where the frequent “holes” in trade information can lead some to get confused or unsure on where I may be at in a trade. With $HAIN as example, I thought I would provide the following information that may help:
- I am long $HAIN in the swing account with a Collar. This collar consists of being short the June 55 Call and long the May 50 Put. This cost me $.20 cents to put on last week.
- I do daytrade this stock as well, and have done so 3 times over the past 10 trading days. These trades are done within my Daytrade account and so I have a very specific timeframe and profit goal for the trades.
- I do try to be specific when I do a trade, to provide timeframe information, but no doubt I fail to do this at times. I will continue to work on that.
- If you are utilizing twitter to obtain trading ideas, be sure that you trade YOUR PLAN as you will frequently have elements to your trading that do NOT match up to other traders. Trade. Your. Plan.
One of the simple approaches that I use frequently is to use RSI (Relative Strength Index) to find long or short entries that present a high probability of success.
I came across the Daily chart of $CAT today and thought this would be a good candidate to review:
If you take a look at the price movement after the RSI touches at 30 (noted in the Green boxes), you can see that nice bounces occurred. As RSI once again tests the 30 level, will history rhyme?
There are two key differences this time that I’d like to point out:
- price is below the 200 day moving average and has been Resistance today.
- price has fallen through the Horizontal Support line (early January breakout level).
Also, note the volume footprint. Be patient, let a few things improve here before considering a RSI buy this time - but certainly worth keeping a close eye on it.
One of the common equity/option combo trades is the Buy-Write. Here is a brief explanation courtesy of Investopedia:
I currently have this type of trade on with $SPXU - the ProShares Ultrapro Short S&P 500 ETF. I am long the ETF and short the May 10 strike Call on average of $.36 cents. The initial motivation of the trade was simply to capture the negative move in the S&P and to hedge current long positions.
There are several reasons to trade $SPXU but let me highlight a few key elements to it:
- This should only be traded short-term if just an equity position
- With my trade, my gain is capped at $10.36 (strike at $10 plus premium collected) and my downside is protected to $9.64.
By having the option premium as cushion, I can leave this position on to protect my other long positions that I have in my portfolio. This “hedge” gives me a $.72 cent range to let it gyrate within. The ideal outcome for me is a clost near $10 at expiration next Friday (May 18) thus keeping the premium collected.
A few times a week I do some tasks involving stock screeners and tonight I thought I would share one of the scans I use when I go bottom fishing:
Show stocks where close is below lower bollinger band(30)
and Average Volume(90) is above 250000
and close is between 5 and 250
The above is the syntax I use within StockFetcher that does the following:
- show me stocks where price is below the lower Bollinger Band(30)
- Average volume is above 250000
- Price has a close between $5 and $250
If you run this scan now, here are your Top 5 results:
Each of these stocks presents an opportunity where the stock is under selling pressure, but price is at a point where Dip Buyers should show up looking for price to move back inside the lower Bollinger Band.
Here is a sampling of charts for $VALE & $RIMM:
Last week certainly provided one significant trading day for $MNST as rumors proved to have some meat to them that $KO was taking a look under the hood for an acquisition.
For a quick look at what the action looked like, let’s view a Daily chart:
That candle with the REALLY long tail at the top is what I refer to as a “marshmallow on-a-stick” candle. There are some trapped longs above who are not real comfortable at the moment.
Since we now know that the 2 companies were in talks, I thought I would take a look at the Ratio chart to see what had been brewing there recently (if anything):
This ratio has been holding the test of the 50 day moving average quite well and looks to have a nice bottoming process working (on rising volume too). The 1st target is .900 and then .910 – and then it is anyone’s guess.
I am coming in to the week with an empty spot to fill (replace $LMT – gave it 2 chances) and I find that the candidate list is quite thin again this week. I am looking at $SXCI as the next candidate and will look for an entry on Monday, May 7.
I currently have the 6th man $DLTR in the game, a nice fill-in for $MELI that just can’t hold above the key $100 level.