Okay I have a dilemma here. Since I bought LOCM based on daily graph and now I want to revise my method to use weekly graph, therefore my entry price of $6.85 looked very expensive. Given that LOCM now sitting at $5.66, i'm down by almost 20%. If I got into the post based on weekly graph, guess I would only have got in last week at around $6.00.
I'm near a technical bottom (I think), if it holds around $5.50 I think there is a chance that it will go up from there, but no guarantee. I want to give the post a bit more time, if it doesn't hold $5.50 I must sell.
EFUT gave back a lot from yesterday. Well yesterday's volume did not give too much power, but still good. A back-to-normal-volume pull back may not be bad. We'll see.
The Fed is due to announce fund rate tomorrow. A cut is not guarantee. Even a cut is in I don't think we can expect a lot of upside based on the cut.
Tuesday, October 30, 2007
Monday, October 29, 2007
EFUT and CEDC
I sold CEDC at $49.62, took a loss of about 2%. Now I can have some spare money for the new weekly-graph method.
EFUT finally moved today, suddenly I came all the way back from a loss of more than 20% to breakeven. Let's see what will happen tomorrow. EFUT is a small company that a little money can move it very quickly.
Remember I said I missed EDU at $61.75 at around the beginning of the month? It's now $90.68..... Almost a 50% return just missed in front of my eyes... my god.....
I'm loooking at FMCN now. It made new high today. Just about a month ago they reclaimed compliance with listing on Nasdaq, the stock made new high by that time with significant weekly volume. I hope it will pull back some and I can buy a little. But prices around $53 could be a pretty strong support, though the 20-week EMA is now about $49.
Finally, LOCM is not doing anything here.....
EFUT finally moved today, suddenly I came all the way back from a loss of more than 20% to breakeven. Let's see what will happen tomorrow. EFUT is a small company that a little money can move it very quickly.
Remember I said I missed EDU at $61.75 at around the beginning of the month? It's now $90.68..... Almost a 50% return just missed in front of my eyes... my god.....
I'm loooking at FMCN now. It made new high today. Just about a month ago they reclaimed compliance with listing on Nasdaq, the stock made new high by that time with significant weekly volume. I hope it will pull back some and I can buy a little. But prices around $53 could be a pretty strong support, though the 20-week EMA is now about $49.
Finally, LOCM is not doing anything here.....
Sunday, October 28, 2007
AMZN
These days, technology stocks come back as the talking point. Thanks to the lunatic price appreciation from GOOG, RIMM, AAPL, AMZN, BIDU, even newcomers like VMW. I wrote about GOOG, RIMM, AAPL and BIDU already. Want to use my new thinking of graph on AMZN this time.
Using the 4 weekly EMAs (20, 50, 100 and 200) as my new tool, let's went back to mid-April 2007. AMZN reported earnings there, it broke out significant from somewhere around $45 to over $60 in that week with a weekly volume of about 250 million shares traded, significantly higher than the usual volume of around 30 million shares a week.
Note that before that break out, the 4 EMAs were so tied up, after that break out the 4 EMAs of course started to diverge, with the shorter-time-EMA moved up faster. The next 2 to 3 weeks AMZN traded with volume closer to usual level, as well, less volatile, it traded within $60 to $65, a pretty small range of a famous technology stock.
AMZN by that time fulfilled many criteria that I would look for:
1. price break out with good earning expectation and much larger volume than usual
2. the price in the following week or so did not come back down to pre-break out level
3. volume went back to close to usual level and traded within much narrower range
4. all 4 EMAs became one higher than each other, while the 20-week EMA was not significantly higher than the 100 or 200-week EMAs
Point 1 is important because that means the price break out was appreciated by majority of investors. Point 2 is important because that means majority investors did not believe AMZN has much chance to go lower, so if they didn't get in now they probably would miss the boat. Point 3 is important because it means even after daytraders left the stock price did not fall, meaning there were really some serious longer term investors buying, the price appreciation was not just a hype. Point 4 is important because it means the stock still has a way before it becomes overbought.
With all these qualified criteria the stock continued to march up from around $63 all the way to a touch of $100. Note that along the way a significant weekly upward movement usually came with a higher than usual volume. A somewhat 50% return over about 5 months is not bad.
Okay now we turned the clock to last week, AMZN reported good earnings again but some experts said they worried a bit about AMZN's profit margin may shrink. It went up quite a lot before the earnings but then it dropped 12% after the earning report. No matter how hard it fell on the earning date it didn't go below the 20-week EMA. With the 20-week EMA is sitting at about $80 and the 200-week EMA sitting at around $50, I think this 20/200 ratio is still reasonable, so give AMZN about a week or two and if it didn't go below the 20-week EMA, I think price near the 20-week EMA is a good entry point for a longer term ride.
Just my guess.
Using the 4 weekly EMAs (20, 50, 100 and 200) as my new tool, let's went back to mid-April 2007. AMZN reported earnings there, it broke out significant from somewhere around $45 to over $60 in that week with a weekly volume of about 250 million shares traded, significantly higher than the usual volume of around 30 million shares a week.
Note that before that break out, the 4 EMAs were so tied up, after that break out the 4 EMAs of course started to diverge, with the shorter-time-EMA moved up faster. The next 2 to 3 weeks AMZN traded with volume closer to usual level, as well, less volatile, it traded within $60 to $65, a pretty small range of a famous technology stock.
AMZN by that time fulfilled many criteria that I would look for:
1. price break out with good earning expectation and much larger volume than usual
2. the price in the following week or so did not come back down to pre-break out level
3. volume went back to close to usual level and traded within much narrower range
4. all 4 EMAs became one higher than each other, while the 20-week EMA was not significantly higher than the 100 or 200-week EMAs
Point 1 is important because that means the price break out was appreciated by majority of investors. Point 2 is important because that means majority investors did not believe AMZN has much chance to go lower, so if they didn't get in now they probably would miss the boat. Point 3 is important because it means even after daytraders left the stock price did not fall, meaning there were really some serious longer term investors buying, the price appreciation was not just a hype. Point 4 is important because it means the stock still has a way before it becomes overbought.
With all these qualified criteria the stock continued to march up from around $63 all the way to a touch of $100. Note that along the way a significant weekly upward movement usually came with a higher than usual volume. A somewhat 50% return over about 5 months is not bad.
Okay now we turned the clock to last week, AMZN reported good earnings again but some experts said they worried a bit about AMZN's profit margin may shrink. It went up quite a lot before the earnings but then it dropped 12% after the earning report. No matter how hard it fell on the earning date it didn't go below the 20-week EMA. With the 20-week EMA is sitting at about $80 and the 200-week EMA sitting at around $50, I think this 20/200 ratio is still reasonable, so give AMZN about a week or two and if it didn't go below the 20-week EMA, I think price near the 20-week EMA is a good entry point for a longer term ride.
Just my guess.
TASR sold
TASR did not expose to the up side after upbeating earnings, as well, it went down after they announced some follow up orders on Thursday. The action didn't look very good, since I said I should try to change my strategy from using daily graph to weekly graph, it's a good time to sell and keep some cash for further use. I sold at $16.92, right at the opening of Friday, as given the action on Wed and Thurs and Friday pre-market, I had the feeling that TASR would again open up a bit in the morning and then would started to decline in 15 minutes. It's a total of 9%, not as good as I expected.
The other 3 positions varied. CEDC got to as low as $43ish, went back up to $49 for now, since again I didn't get in at a good price if I change to use weekly graph, I probably will sell on Monday to limit my loss (I bought at $50.05).
I have a feeling that EFUT may blast later, but there's no guarantee. It filled the gap from about a month ago and it stayed above the 20-week EMA, I want to hold a bit longer and see.
LOCM is in fact disappointing. It didn't move up with the market on Friday, pretty weak. As well I used the daily graph to time the entry but not weekly. Otherwise I may only buy around $6 instead of $6.92. I'll give it a few more days, whenever it stays under the 20-week EMA for the whole day and doesn't come back up, I'll cut it.
Finally a longer term position BIDU. Moving up on Friday. Although I said I'll keep it for long term, but if it moves up too quickly I'll still move out and wait for opportunity to move back in. After all, long term doesn't just mean buy and hold and do nothing to me.
The other 3 positions varied. CEDC got to as low as $43ish, went back up to $49 for now, since again I didn't get in at a good price if I change to use weekly graph, I probably will sell on Monday to limit my loss (I bought at $50.05).
I have a feeling that EFUT may blast later, but there's no guarantee. It filled the gap from about a month ago and it stayed above the 20-week EMA, I want to hold a bit longer and see.
LOCM is in fact disappointing. It didn't move up with the market on Friday, pretty weak. As well I used the daily graph to time the entry but not weekly. Otherwise I may only buy around $6 instead of $6.92. I'll give it a few more days, whenever it stays under the 20-week EMA for the whole day and doesn't come back up, I'll cut it.
Finally a longer term position BIDU. Moving up on Friday. Although I said I'll keep it for long term, but if it moves up too quickly I'll still move out and wait for opportunity to move back in. After all, long term doesn't just mean buy and hold and do nothing to me.
Wednesday, October 24, 2007
TASR and BIDU
TASR reported good earnings today but fluctuated roughly with the market. It started with an upward movement, then during the middle of the conference it started to drop with the market, eventually it recovered most of the loss, what a day.
The market is volatile as well. Dropped by a lot due to bad earnings reports from AMZN and MER. All financial stocks dropped by a lot, many made yearly new lows. In the meantime I'll avoid any financial stocks for now, as I'm holding closed-end funds and mutual funds that hold financial stocks already.
I started a position in BIDU at $337. BIDU is going to report earnings tomorrow, good or bad, I'm keeping BIDU if it drops. Yes, I already anticipated even if it drops, I'll hold onto it. If I have more reserve later and if it drops after earnings report, I may add more to the position. But I think the probability of up or down from here is like 50/50 to me, so I think it's okay to use some money to start a small position. After all, if I give BIDU a few years and if it can continue to lead in market share in China, I don't see a reason why it cannot grow to as big as half of a Google (which will mean $100 billion, 10 times from now) in let's say 5 years. So yes, I'm anticipating to invest in BIDU for long term.
If anyone reads one of the Chinese newspaper here you'll see someone shows a paper portfolio once every Sunday. Currently in that portfolio the columnist is shorted BIDU since $180. I don't know when did he short in his paper portfolio, but holding the short position of BIDU all the way to as high as $359 is kind of silly. Assuming shorting 100 shares it is now sitting at a loss of $15,600, or percentage-wise, a loss of 87%. I don't know how professional this columnist is, but no way a trader would like to keep a losing position for so long to see a 87% loss.
Going back to my long term idea. China definitely is a hot spot, it may encounter stock and real estate bubble and the burst. But if the market is that big it is that big. For example, for longer term hold I'll pick LFC rather than CHL, as CHL is already sitting at a market cap of close to $400 billion, how fast can it go from here? On the other hand, LFC is still below $100 billion, and it is the biggest insurance company in China. With the assistance of the government (as no government would like to see insurance companies collapse), LFC can have a long way to go from here. A triple to worth $300 billion in 7 years will not surprise me.
So I think the strategy to China should be, hold a few bigger names (but still not very big) and bet a smaller amount on upcoming mid-cap as "satellite" portfolio. Let me think of some names first.
The market is volatile as well. Dropped by a lot due to bad earnings reports from AMZN and MER. All financial stocks dropped by a lot, many made yearly new lows. In the meantime I'll avoid any financial stocks for now, as I'm holding closed-end funds and mutual funds that hold financial stocks already.
I started a position in BIDU at $337. BIDU is going to report earnings tomorrow, good or bad, I'm keeping BIDU if it drops. Yes, I already anticipated even if it drops, I'll hold onto it. If I have more reserve later and if it drops after earnings report, I may add more to the position. But I think the probability of up or down from here is like 50/50 to me, so I think it's okay to use some money to start a small position. After all, if I give BIDU a few years and if it can continue to lead in market share in China, I don't see a reason why it cannot grow to as big as half of a Google (which will mean $100 billion, 10 times from now) in let's say 5 years. So yes, I'm anticipating to invest in BIDU for long term.
If anyone reads one of the Chinese newspaper here you'll see someone shows a paper portfolio once every Sunday. Currently in that portfolio the columnist is shorted BIDU since $180. I don't know when did he short in his paper portfolio, but holding the short position of BIDU all the way to as high as $359 is kind of silly. Assuming shorting 100 shares it is now sitting at a loss of $15,600, or percentage-wise, a loss of 87%. I don't know how professional this columnist is, but no way a trader would like to keep a losing position for so long to see a 87% loss.
Going back to my long term idea. China definitely is a hot spot, it may encounter stock and real estate bubble and the burst. But if the market is that big it is that big. For example, for longer term hold I'll pick LFC rather than CHL, as CHL is already sitting at a market cap of close to $400 billion, how fast can it go from here? On the other hand, LFC is still below $100 billion, and it is the biggest insurance company in China. With the assistance of the government (as no government would like to see insurance companies collapse), LFC can have a long way to go from here. A triple to worth $300 billion in 7 years will not surprise me.
So I think the strategy to China should be, hold a few bigger names (but still not very big) and bet a smaller amount on upcoming mid-cap as "satellite" portfolio. Let me think of some names first.
Tuesday, October 23, 2007
TASR reporting tomorrow morning
Okay, TASR is reporting tomorrow morning, let me pull out the chart and study again.
Using weekly chart, the weekly closing price never dipped below $14 since it surpassed $14 back in July. It actually tested $14 several times (that is, several weeks). Even last time they reported earnings and it headed back down all the way from $19 it stopped going down below $14. After the consecutive dips last week, it headed back up from as low as $15 to $17.24 in two days. After hour is up a bit as well but since volume is not high so I don't pay attention to it.
One thing worths notice is AMZN reported as well and it dropped $10 after hours with very high volume. The market may sell-off a bit due to AMZN, I hope it does not affect TASR by much.
Since TASR is still a small firm so earnings is not easy to predict and trading must be volatile. Anyway only by knowing what happens tomorrow can I have a better idea of what is next.
Using weekly chart, the weekly closing price never dipped below $14 since it surpassed $14 back in July. It actually tested $14 several times (that is, several weeks). Even last time they reported earnings and it headed back down all the way from $19 it stopped going down below $14. After the consecutive dips last week, it headed back up from as low as $15 to $17.24 in two days. After hour is up a bit as well but since volume is not high so I don't pay attention to it.
One thing worths notice is AMZN reported as well and it dropped $10 after hours with very high volume. The market may sell-off a bit due to AMZN, I hope it does not affect TASR by much.
Since TASR is still a small firm so earnings is not easy to predict and trading must be volatile. Anyway only by knowing what happens tomorrow can I have a better idea of what is next.
Monday, October 22, 2007
EMA statistics - I invent it myself
I used S&P 500 in my analysis of exponential moving average. I took all the history of the S&P 500 daily index numbers (adjusted closing price from Oct 15, 1950 up to Dec 15, 2006) as my data and calculated the 20-day EMA and 200-day EMA.
I found that about 83% of the time, the ratio of the 2 EMAs is between -5% to +10% (ratio is 20-day EMA divided by 200-day EMA, calculated everyday). Over these 56 years of data, there were definitely some bull and bear markets including the boom and bust of tech bubble.
But even included those crazy trading days the ratio is rarely in the range of above 10% or below -5%. In fact, the time that the ratio is above 15% is merely 0.01%. On the other hand, the time that the ratio is below -15% is 2.73%.
You may think I want to tell you the conclusion is: when the 2 EMAs diverge for more than 15% the index should reverse the trend so the 2 EMAs will get close to each other again. If you think so you are only half right.
Base on the statistics definitely the 2 EMAs cannot sustain being far away for too long, but it does not necessarily mean the trend has to reverse from up to down or vice versa. The index just needs to stay flat for enough time, such that the 200-day EMA will catch up with the flat 20-day EMA. After the 200-day catches up with the 20-day, the same trend actually can continue.
Let me try using this idea on China and Hong Kong markets these days. Many people think they went up too fast and too much that they should drop. So, their 2 EMAs maybe diverging too much and not sustainable, but they may not drop back much as some people expect.
But at least I think this EMA statistics still give people some good idea that how fast can an index go. If I see S&P 500's EMAs ratio is sitting at above 15%, I can hardly believe it is not overbought.
I found that about 83% of the time, the ratio of the 2 EMAs is between -5% to +10% (ratio is 20-day EMA divided by 200-day EMA, calculated everyday). Over these 56 years of data, there were definitely some bull and bear markets including the boom and bust of tech bubble.
But even included those crazy trading days the ratio is rarely in the range of above 10% or below -5%. In fact, the time that the ratio is above 15% is merely 0.01%. On the other hand, the time that the ratio is below -15% is 2.73%.
You may think I want to tell you the conclusion is: when the 2 EMAs diverge for more than 15% the index should reverse the trend so the 2 EMAs will get close to each other again. If you think so you are only half right.
Base on the statistics definitely the 2 EMAs cannot sustain being far away for too long, but it does not necessarily mean the trend has to reverse from up to down or vice versa. The index just needs to stay flat for enough time, such that the 200-day EMA will catch up with the flat 20-day EMA. After the 200-day catches up with the 20-day, the same trend actually can continue.
Let me try using this idea on China and Hong Kong markets these days. Many people think they went up too fast and too much that they should drop. So, their 2 EMAs maybe diverging too much and not sustainable, but they may not drop back much as some people expect.
But at least I think this EMA statistics still give people some good idea that how fast can an index go. If I see S&P 500's EMAs ratio is sitting at above 15%, I can hardly believe it is not overbought.
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