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| deanengle 33 posts msg #59890 - Ignore deanengle |
2/23/2008 12:16:02 PM maxreturn, I have been an active investor for about 40 years and about 10 years ago I finally obtained a sufficient degree of intelligence to stop buying and selling stocks which was contributing to all the fat stock brokers who just want to see trades so they can make a commission from you . I deal more exclusively in commodities but my great passion is options. Over some period of time I have found many stocks which decline 25 % or more on a specific day may have a tendency to bounce back up ( dead cat bounce ) a bit if the reason for the decline was some benign issue such as earnings, or some behind the scenes news event which might have analyst downgrade the stock but nothing like legal issues or accounting fraud. So if a stock drops greater than 25 % and has a daily trade volume greater than 50,000, and there is sufficient option volume to show some interest, and the bid and ask spread are reasonable, there might be reason to think that the stock might bounce back up. This assessment must be made within a few hours of the down event, you cannot just wait too long and the window o f opportunity will pass. Start reviewing some "FREE" sites to educate yourself such as OPTIONETICS, find some stocks that have options and perhaps stock patterns ( candlesticks ) that may support a potential up move. Paper trade for awhile until you find out what information is not TOXIC to the stock from it bouncing back up. I do not know what your level of training and market exposure might be, but I will tell you that most investors tend to complicate things by wanting to know every last detail of what may or may not take place. KISS IT or keep it simple stupid and by utilization of some very basic systems you will find that you can make a very nice return on a consistent basis. As always remember " A FOOL AND HIS MONEY ARE SOON PARTED." Trade your own account, do not allow any one else the discretion of making decisions about your trading account. Be the master of your own destiny.....CARPE DIEM should you desire a more direct contact you may use my email ( deanengle@sbcglobal.net ) I will be pleased to help you but I will not provide all the answers...you need to learn by your own experience. |
| maxreturn 745 posts msg #59891 - Ignore maxreturn |
2/23/2008 2:11:49 PM Thanks Dean. No need to spoon feed me. Been around for a while. Not as long as you :). That's more than enough to get me off on my own do to some research. Thanks again for sharing. Max |
| deanengle 33 posts msg #59892 - Ignore deanengle |
2/23/2008 6:58:39 PM Maxreturn just a little crumb for Monday, it may or may not work, check it out I have selected LNET as it appears to have a high probability to bounce up this next week. This stock lost just over $6.00 in 3 days over some bad earnings and of some note is that the analysts following this stock did not down grade it at this time. The Black Schoals value of the option is $1.20 and the ask price is $1.25 so we are in the ball park for valuation. This stock has a 20 % move to double the option price so it must move up by $2.50 for a 100 % increase in the option value. The implied volatility is 61 % I generally prefer a 10 % to double factor but I feel this stock will have a dynamic move the first of the week. WE SHALL SEE |
| EWZuber 1,373 posts msg #59893 - Ignore EWZuber modified |
2/24/2008 12:14:26 AM deanengle, I think there is a more disciplined way. Possibly not as simple but I suspect more effective. First there must be some kind of support at the point on entry. If the stock has dropped ~25% then it will very likely need to be long term support, like a long term supporting trendline or a moving average on the Weekly or Monthly Chart. Daily and Weekly Chart Stochastics & Williams %R will need to be oversold (at a minimum). If the technical damage has spread to the Monthly Chart then I wouldn't even bother until some support area has been reached within that time frame. Next look for the Hourly Chart to also become oversold. From this point there are two methods of entry. 1) Wait for the 5 minute or Hourly Chart 10 periood MA to flatten out. Then wait for the stock to rise above the 10 period MA and bounce up off this moving average. This bounce must be accompanied with a stochastic +Xover in that time frame. 2) Wait for a consolidation pattern to form (within one of those two time frames) and enter the stock when that pattern is resolved. This is probably the safer of the two methods as you're not trying to catch a falling knife. That is to say, find the exact bottom. Using this system you are supplied with a very disciplined sell stop when the pattern support within that time frame is violated. If the entry point fails quickly then typically the position can be closed at a small profit or at a loss of <1%. Wait for the buy signals to set up again and try the next buy signal. IMO |
| deanengle 33 posts msg #59905 - Ignore deanengle modified |
2/24/2008 8:03:34 PM EWZuber, you make some very good points which I am sure are going to help make more consistent winners. Just being fat, dumb and happy, I have always taken the large drop, confirmed the technicals had hit bottom and then I would buy. I have has substantial success with this simplistic method, however, I hope to experiment with the information you have provided and hope it may polish up my little dead cat bounce system. Thanks a lot for your input, I have been doing this for a while and there are times when I can not see the trees for the bushes.......CARPE DIEM.......Dean |
| johnpaulca 12,036 posts msg #59917 - Ignore johnpaulca |
2/25/2008 10:49:10 AM Niko...remember CRM ....take a look see ....LOL |
| mimi 63 posts msg #59918 - Ignore mimi modified |
2/25/2008 11:13:49 AM 1day swing LONG DIA 123-124.5 DIA 123-124.9 DIA 123-125.7 
WOW, I could post chart! |
| nikoschopen 2,824 posts msg #59919 - Ignore nikoschopen |
2/25/2008 11:23:07 AM Niko...remember CRM ....take a look see ....LOL Who would have known? LOL The market looks somewhat tipsy here. With the lunchtime doldrum unaccounted for, it could possibly be topping out (or simply revisit yawnville as it did on Friday). |
| nikoschopen 2,824 posts msg #59920 - Ignore nikoschopen |
2/25/2008 11:30:24 AM Short ESH8 @ 1360.75 |
| johnpaulca 12,036 posts msg #59921 - Ignore johnpaulca |
2/25/2008 11:32:51 AM HES...out@96.75...(+4%) MUR...out@78.75...(+5.1%) Ya gotta love this market... what's funny is my filter consists of 5 lines and that includes liquidity. As TRO said it's how you trade that will make you money. -cheers |
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