Text Box: Wiser Trader Stocks and Options Newsletter
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Issue No. 20 – April 4, 2005                            Prescott, Arizona                            Systems@WiserTrader.com

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1.0   Trading

 

      This week the emphasis returns to stocks.  Our seven watch lists, including the experimental down-market list, are currently all profitable, ranging from +1.1% for the modified Growth Momentum stock candidates to +9.8% for the Cooper option candidates.  By contrast the major averages are down for the year ranging from -3.2% for the S&P 500 to -8.8% for the NASDAQ. 

 

      The past week has been a good time, for example, to find a host of short term energy trades.  The picture now presented by the market is characterized by a sideways motion of the major averages.  Since their sizeable rally from August through December, the major averages are within 1 to 4% of where they were a year ago.  They are all below their 100 day moving averages, approaching their 200 day moving averages, in a rising interest rate environment.  The S&P500 has an average PE ratio of more than 20, making stocks expensive. These conditions call for a bit of caution.

 

      Stocks that have compelling long term value are not found with the same frequency that short term growth stocks have been found in the past.  Longer term stock selections require a great deal more research.  If you decide that this kind of research is right for you, consider joining the Wiser Trader Stock Advisory.  This gives you the choice of longer term value investing, in addition to, short term trades from the weekly Options Advisory.  As always, the first month is free.

 

      Whatever your decision, watch your stops carefully and take losses early to protect your capital and profits.  Establish a level below which stocks are not allowed to fall without closing out the position.  The markets are poised to react to the coming earnings season without much having been resolved by the recent flurry of economic data.  I’m slightly bearish.

 

 

 

© 2005 WiserTrader.com, LLC.  Members of wisertrader.com are neither licensed brokers nor licensed advisors.   Trades discussed represent recommendations made by the editor for the wisertrader.com portfolio.  The newsletter and web site are for information only and should not be considered as personal advice.   While it is believed that the posted information is factual, mistakes can be made in transcription.  Investors should trade stocks only after verifying all information and consulting with a licensed broker or adviser

 

 

2.0 Market Analysis

 

      Industry leadership is in Table 1 below where leading industries are ranked from highest to lowest.  

 

Table 1


Market Summary


Week Ending 04/02/05
 

 Major Indices:
 Dow Jones     -0.4%
 NASDAQ        -0.3%
 S&P500 Index  +0.1%
 Russell 2000  -0.6%
 
 30 Year Bond 4.729%
 10 Year Note 4.451%
 
 Industry Leaders
 For the Past Week:
 Internet 
 Apparel Retailers 
 Distillers & Vintners 
 Health Care Providers 
 Water 
 Oil Equipment & Services 
 Hotels 
 Food Retailers & Wholesalers 
 Specialized Consumer Services
 Aerospace & Defense 
 
 Industry Leaders
 For the Past Month:
 Railroads 
 Health Care Providers 
 Exploration & Production 
 Apparel Retailers 
 Hotels 
 Internet 
 Specialty Chemicals 
 Airlines 
 Aerospace & Defense 
 Defense 
 
 Crude Oil $57.27
 
 Gold for the past 30 days:
 USD    -1.41%
 CAD    -3.56%
 CHF    +1.90%
 GBP    +0.73%
 EUR    +0.85%
 JPY    +1.69%

 

 

 

      Indices were more mixed this week as the market's focus remained on oil prices, inflation and interest rates.  Oil ended last week at $54.84 a barrel and this week at $57.27.  There were lots of economic data this week that have not been fully assimilated by the markets.  So the markets remain directionless until earnings get into full swing in a couple of weeks.  Many analysts have criticized Goldman Sachs’ analysis that it will take a large oil spike to $105 a barrel in order to quell demand.  Are these the same analysts that discounted the idea that oil would approach $60 a barrel? 

 

      The 5 day RSI for the DOW, S&P500 and the NASDAQ are neutral.  The 5 week RSI for the DOW, S&P500 and NASDAQ are oversold, neutral and very-oversold, respectively. Other sentiment indicators are given in Table 2 that shows traders are becoming more cautious.

 

 

Table 2

VTO Report on Market Sentiment Indicators

Sentiment Indicator

Value

Last Week

2 Weeks Ago

Complacent

Cautious

VIX

14.09

13.42

13.14

< 20

> 50

VXN

17.61

17.15

17.88

< 30

> 70

Put/Call Ratio

0.813

0.500

0.721

< 0.6

> 0.7

 

 

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3.0 Procedure

 

      It was decided not to change any of the screening criteria simply to add more stock picks in a directionless market.  Such a move could give undesirable results.  When no new picks are screened by our filters it’s the market’s way of telling us to be cautious and perhaps even to stay out. 

 

      With a greater newsletter emphasis on stocks, it was also decided to treat each watch list more as if it were a portfolio by adding trailing stop information in place of options information that was relegated to the options advisory service.  The last column on the right of each watch list gives the current price as a percentage relative to the maximum value the stock reached after it was listed in the watch list.   Those selections that have declined by 15% or more from their maximums after being listed are highlighted with a red.

 

      The following stock screens were generated with tools from AAII.   The short term trading filter used for Table 3A looks for optionable stocks whose percentage relative strength over the past 6 months is greater than 90%, EPS Growth over the past 12 months is greater than 80% and are within 5% of their 52 week  high  with  a  minimum  price  of  $50.   

 

 

Key

Open Trade

Passed Recent Filter

 

 

      TXI was removed because its price declined too far below its 52 week high and its relative strength no longer met requirements of the filter.  CRS and X were removed low relative strength and price declines

 

Table 3A

Stephen Cooper Stock Candidate Watch List   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

AAPL

01/10/05

18.6%

Apple Computer, Inc.

Technology

Computer Hardware

90.7%

AEOS

02/07/05

6.9%

American Eagle Outfitters

Services

Retail (Apparel)

97.3%

AET

01/03/05

20.2%

Aetna Inc.

Financial

Insurance (Accident & Health)

95.9%

APA

03/10/05

3.2%

Apache Corporation

Energy

Oil & Gas Operations

99.4%

BHP

02/24/05

-3.2%

BHP Billiton Limited (ADR)

Basic Materials

Metal Mining

92.3%

BTU

11/22/04

20.4%

Peabody Energy Corporation

Energy

Coal

95.1%

BYD

02/21/05

6.9%

Boyd Gaming Corporation

Services

Casinos & Gaming

92.9%

DO

03/04/05

2.1%

Diamond Offshore Drilling Inc.

Energy

Oil Well Services & Equipment

100.0%

FFIV

02/14/05

-7.9%

F5 Networks Inc.

Technology

Computer Networks

86.9%

GMR

02/25/05

-6.2%

General Maritime Corp.

Transportation

Water Transportation

93.8%

MGG

12/27/04

1.5%

MGM MIRAGE

Services

Casinos & Gaming

88.9%

MON

12/20/04

23.2%

Monsanto Company

Basic Materials

Chemical Manufacturing

100.0%

PCO

02/14/05

19.6%

Premcor Inc.

Energy

Oil & Gas Operations

100.0%

PCU

03/10/05

-3.3%

Southern Peru Copper Corp (USA)

Basic Materials

Metal Mining

91.3%

POT

12/20/04

5.4%

Potash Corp./Saskatchewan (USA)

Basic Materials

Non-Metallic Mining

94.8%

SIE

02/14/05

9.1%

Sierra Health Services, Inc.

Financial

Insurance (Accident & Health)

98.3%

SM

03/10/05

1.0%

St. Mary Land & Exploration Co.

Energy

Oil & Gas Operations

97.5%

SUN

03/04/05

3.3%

Sunoco, Inc.

Energy

Oil & Gas Operations

100.0%

SWN

11/22/04

18.0%

Southwestern Energy Company

Energy

Oil & Gas Operations

96.4%

TS

01/10/05

33.1%

Tenaris S.A.  (ADR)

Capital Goods

Construction - Supplies and Fixtures

92.7%

TXU

11/22/04

25.2%

TXU Corporation

Utilities

Electric Utilities

100.0%

VLO

02/07/05

33.3%

Valero Energy Corp.

Energy

Oil & Gas Operations

100.0%

YELL

03/10/05

-4.5%

Yellow Roadway Corp.

Transportation

Trucking

95.0%

 

Average change for this watch list = 9.8%

 

 

 

 

 

      Stocks selected by the put option filter are listed in Table 3B.  This filter looks for stocks having the potential to decline in a down market.  They are optionable stocks priced above $30 having less than 20% year over year EPS growth, a 26 week %Rank Relative Strength of less than 20% and are within 5% of their 52 week lows.  The status of this experimental filter is discussed in Section 4.  It is observed that these stocks do not necessarily deteriorate quickly when the market turns down.  Their declines seem to be consistently gradual.  NYT was removed due to its relative strength increasing beyond filter requirements.

 

 

 

 

 

 

Table 3B

Put Option Candidate Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

BMET

03/25/05

-5.4%

Biomet, Inc.

Health Care

Medical Equipment & Supplies

91.6%

CPS

03/04/05

5.4%

ChoicePoint Inc.

Services

Business Services

98.5%

DJ

02/24/05

-2.7%

Dow Jones & Co.

Services

Printing & Publishing

95.9%

FITB

02/21/05

-6.2%

Fifth Third Bancorp

Financial

Regional Banks

92.4%

FRX

03/18/05

-1.2%

Forest Laboratories, Inc.

Health Care

Biotechnology & Drugs

96.9%

GM

02/07/05

-22.3%

General Motors Corporation

Consumer Cyclical

Auto & Truck Manufacturers

77.7%

LLY

03/18/05

-2.5%

Eli Lilly & Co.

Health Care

Major Drugs

96.8%

NBIX

04/01/05

0.0%

Neurocrine Biosciences, Inc.

Health Care

Biotechnology & Drugs

100.0%

MIL

02/07/05

-3.9%

Millipore Corporation

Technology

Scientific & Technical Instruments

93.6%

WL

02/24/05

3.1%

Wilmington Trust Corp.

Financial

Regional Banks

97.3%

 

Average change for this watch list = -3.6%

 

 

      The stock filter resulting in Table 3C is for the potential to write covered call options.  The filter looks for optionable stocks whose percentage relative strength over the past 6 months is greater than 90%, EPS Growth over the past 12 months is greater than 80% and are within 5% of their 52 week highs with a maximum stock price of $20.

 

 

Table 3C

Stephen Cooper Covered Call Writing Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

AES

02/24/05

0.3%

The AES Corporation

Utilities

Electric Utilities

93.7%

CCK

03/18/05

-9.5%

Crown Holdings Inc

Basic Materials

Containters & Packaging

90.5%

GLBL

02/24/05

-3.9%

Global Industries, Ltd.

Energy

Oil Well Services & Equipment

92.9%

MDR

03/18/05

-4.5%

McDermott International

Energy

Oil Well Services & Equipment

95.5%

MDRX

02/07/05

24.0%

Allscripts Healthcare Solutions, Inc.

Technology

Software & Programming

93.2%

RETK

03/04/05

32.3%

Retek Inc.

Technology

Software & Programming

96.4%

SGR

02/07/05

24.8%

The Shaw Group Inc.

Basic Materials

Misc. Fabricated Products

96.3%

SID

12/20/04

31.7%

Companhia Siderurgica Nacional (ADR)

Basic Materials

Iron & Steel

92.6%

SYXI

04/01/05

0.0%

IXYS Corporation

Technology

Semiconductors

100.0%

TIWI

02/14/05

0.1%

Telesystem International Wireless (USA)

Services

Communications Services

97.1%

USU

03/18/05

-7.8%

USEC Inc.

Basic Materials

Non-Metallic Mining

88.7%

WFR

03/04/05

-7.3%

MEMC Electronic Materials

Technology

Semiconductors

91.0%

XXIA

01/02/05

5.4%

Ixia

Technology

Electronic Instruments & Controls

91.5%

 

Average change for this watch list = 6.6%

 

      For the screen in Table 3D, the number of selections is reduced by eliminating stocks having P/E’s greater than 30.  PTRY was removed due to week price and relative strength.

 

 

Table 3D

Growth Momentum Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

CRAI

03/18/05

-2.1%

Charles River Associates Incorporated

Services

Business Services

96.3%

ELK

02/24/05

-0.8%

ElkCorp

Capital Goods

Construction – Supplies and Fixtures

92.2%

KBH

01/10/05

15.5%

KB Home

Capital Goods

Construction Services

94.2%

OSK

03/12/05

3.3%

Oshkosh Truck Corporation

Consumer Cyclical

Auto & Truck Manufacturers

98.6%

SFY

03/18/05

-2.2%

Swift Energy Company

Energy

Oil & Gas Operations

97.8%

SPF

02/14/05

-0.1%

Standard Pacific Corp.

Capital Goods

Construction Services

90.3%

TDY

03/18/05

-3.9%

Teledyne Technologies Incorporated

Services

Business Services

95.2%

USNA

02/21/05

5.8%

USANA Health Sciences, Inc.

Consumer Non-Cyclical

Personal & Household Products

88.7%

WFR

03/18/05

-4.6%

MEMC Electronic Materials

Technology

Semiconductors

95.4%

WOS

04/01/05

0.0%

Wolseley plc (ADR)

Capital Goods

Misc. Capital Goods

100.0%

 

Average change for this watch list = 1.1%

 

      For the Peter Lynch screen in Table 3E, again the number of selections for this screen is reduced by eliminating stocks having P/E’s greater than 30.   Toyota appears to be in a decidedly down trend.

 

Table 3E

Peter Lynch Value Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

BLSC

12/13/04

6.0%

Bio-Logic Systems Corp.

Health Care

Medical Equipment & Supplies

83.9%

CAJ

01/31/05

1.1%

Canon Inc. (ADR)

Technology

Peripherals

98.5%

CHL

03/18/05

-3.6%

China Mobile (Hong Kong)

Services

Communications

95.4%

CSLMF

12/13/04

-2.9%

Consolidated Mercantile (USA)

Basic Materials

Containters & Pkg

92.5%

GMK

04/01/05

0.0%

Gruma S.A. de C.V. (ADR)

Cons Non-Cyc

Food Processing

100.0%

IMY

03/25/05

-4.1%

Grupo IMSA S.A. de C.V. (ADR)

Basic Materials

Iron & Steel

95.9%

KEP

12/13/04

0.2%

Korea Electric Power

Utilities

Electric Utilities

90.5%

LFL

12/13/04

19.6%

Lan Airlines S.A. (ADR)

Transportation

Airline

99.2%

MBT

01/10/05

2.1%

Mobile TeleSystems OJSC

Services

Communications

86.3%

MKTAY

02/07/05

0.5%

Makita Corporation (ADR)

Consumer Cyc

Appliances & Tools

91.1%

NOLD

12/13/04

5.3%

Noland Company

Capital Goods

Misc. Capital Goods

92.1%

PCU

12/13/04

22.4%

Southern Peru Copper Corp

Basic Materials

Metal Mining

87.1%

SHI

12/13/04

18.8%

Sinopec Shanghai Petrochem

Energy

Oil & Gas Operations

91.3%

SKM

02/07/05

-2.8%

SK Telecom Co., Ltd. (ADR)

Services

Communications

90.7%

TM

12/13/04

-1.0%

Toyota Motor Corporation (ADR)

Consumer Cyc

Auto & Truck

90.7%

TMIC

03/25/05

-0.2%

Trend Micro Incorporated (ADR)

Technology

Software & Prog

99.8%

VCP

03/25/05

0.5%

Votorantim Celulose e Papel S.A

Basic Materials

Forestry & Wood

100.0%

VLCCF

12/13/04

10.9%

Knightsbridge Tankers Limited

Transportation

Water Transportation

97.1%

 

Average change for this watch list = 4.1%

 

 

 

      The filter for Warren Buffet style stock picking in Table 3F is for the intermediate to long term.  Two requirements were added.  One was to include only optionable stocks in order to find LEAPS opportunities.  The other requirement was to include only those stocks having a PE of 17 or less. ABFS was removed due to weak price action.

 

 

 

 

Table 3F

Warren Buffett Value Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

COLM

01/10/05

-5.0%

Columbia Sportswear Company

Consumer Cyclical

Apparel/Accessories

92.6%

DHI

12/27/04

2.6%

D.R. Horton Inc.

Capital Goods

Construction Services

88.3%

DSPG

02/07/05

0.4%

DSP Group, Inc.

Technology

Communications Equipment

96.0%

ELBO

01/31/05

19.9%

Electronics Boutique Holdings Corp.

Services

Retail (Technology)

89.5%

HOV

12/27/04

9.1%

Hovnanian Enterprises

Capital Goods

Construction Services

87.3%

LNCR

12/27/04

4.8%

Lincare Holdings Inc.

Health Care

Healthcare Facilities

99.6%

PGR

12/27/04

7.3%

The Progressive Corp.

Financial

Insurance (Property & Casualty)

98.5%

RS

12/27/04

2.8%

Reliance Steel & Aluminum

Basic Materials

Misc. Fabricated Products

84.4%

VLCCF

02/21/05

-1.4%

Knightsbridge Tankers Limited

Transportation

Water Transportation

97.1%

 

Average change for this watch list = 4.5%

 

 

      The stocks from Benjamin Graham’s style of utility investing are listed in Table 3G.  A requirement was added to include only those stocks having a PE of 17 or less.   It should be noted that all of these stocks are expected to pull back about 20% or so as interest rates increase. 

 

 

Table 3G

Benjamin Graham Value Watch List as of   04/02/05

Stock

Reference

% Chg

Company

Sector

Industry

% of High

ATO

04/01/05

0.0%

Atmos Energy Corporation

Utilities

Natural Gas Utilities

100.0%

KEP

01/10/05

8.2%

Korea Electric Power Corporation (ADR)

Utilities

Electric Utilities

90.5%

PGN

01/10/05

-4.4%

Progress Energy, Inc.

Utilities

Electric Utilities

93.7%

PNW

01/10/05

-1.3%

Pinnacle West Capital

Utilities

Electric Utilities

98.6%

SRE

01/10/05

10.8%

Sempra Energy

Utilities

Natural Gas Utilities

94.9%

WPS

02/07/05

2.5%

WPS Resources Corp

Utilities

Electric Utilities

96.4%

 

Average change for this watch list = 2.6%

 

4.0           Results

4.1 Trades This Week

 

      Alert number 9 is the TNX DEC 45.00 CALL with the symbol TNX LI.  This trade is down a -19.1% and remains open.  I think the right thing to do is to wait until the April CPI data on inflation is reported unless the trade is stopped out before then.  Alert number 10 is the QQQQ JUN 36.00 PUT with the symbol QQQ RJ.  This trade was stopped out with a 19% loss.  Alert number 11 is the NYT July 40.00 PUT with the symbol NYT SH.  This trade was cancelled due to the stock showing improved relative strength.  A PCO September 60.00 CALL with the symbol PCO IL remains open.  This trade is currently up 74%.

 

4.2 Trading History

 

Table 4A

Option Portfolio Trading History as of 04/02/05
 

Stock

Buy Date

Buy Price

Last

Action

P/L(%)

Option

URBN

11/23

11.50

$9.00

Sold 11/30

-21.7%

URQ FG JUN 35.00 CALL

TXU

11/23

11.30

$6.30

Sold 12/2

-44.2%

TXU DK APR 55.00 CALL

USG

11/23

8.40

$12.80

Sold 12/15

52.4%

MAY 25.00 CALL

ADSK

12/20

8.20

$9.20

Sold 12/23

12.2%

ADQ GN JUL 70.00 CALL

MON

12/20

3.80

$4.80

Sold 12/23

26.3%

MON GJ JUL 50.00 CALL

POT

12/20

7.00

$8.00

Sold 12/23

14.3%

POT FP JUN 80.00 CALL

TXI

12/20

5.50

$9.00

Sold 12/23

63.6%

TXI GL JUL 60.00 CALL

AET

1/7

5.70

$7.10

Sold 01/19

24.6%

AET GX JUL 135.00 CALL

CLF

1/7

7.30

$9.20

Sold 01/19

26.0%

CLF GJ JUL 50.00 CALL  

MTH

1/21

6.80

$9.20

Sold 02/01

35.3%

MTH FZ JUN 62.50 CALL  

BZH

1/31

13.70

$17.30

Sold 02/01

26.3%

BZH HJ AUG 150.00 CALL

KBH

1/31

9.20

$11.10

Sold 02/01

20.7%

KBH GU JUL 110.00 CALL

BHP

1/28

2.25

$2.70

Sold 02/01

20.0%

BHP HE AUG 25.00 CALL

X

1/25

5.30

$4.90

Sold 02/02

-7.5%

X GK JUL 55.00 CALL

SFI

1/24

0.75

$0.30

Sold 02/04

-60.0%

SFI PH APR 40.00 PUT

EBAY

2/7

6.80

$5.60

Sold 02/08

-17.6%

XBA SO JUL 75.00 PUT

CCJ

2/4

6.60

$10.20

Sold 02/11

54.5%

CCJ IG SEP 35.00 CALL

MON

2/4

8.00

$8.20

Sold  02/15

2.5%

MON GJ JUL 50.00 CALL

TOL

1/2

7.10

$7.30

Sold 02/17

2.8%

TOL IR SEP 90.00 CALL

BZH

2/9

14.60

$16.90

Sold 02/17

15.8%

BZH HN AUG 170.00 CALL

KBH

2/7

11.10

$10.40

Sold 02/18

-6.3%

KBH GC JUL 115.00 CALL

VLO

2/24

6.98

$8.70

Sold 03/02

24.6%

VLO IN SEP 70.00 CALL

TXU

2/25

3.55

$4.70

Sold 03/04

32.4%

TXU GP JUL 80.00 CALL

SWN

3/3

6.50

$5.00

Sold 03/11

-23.1%

SWN IL SEP 60.00 CALL

GM

3/9

2.20

$5.80

Sold 03/17

163.6%

GM UZ SEP 32.50 PUT

VLO

3/17

6.60

$7.50

Sold 03/18

13.6%

YGY AP JAN 80.00 CALL

BHP

2/24

2.25

$2.40

Sold 03/22

6.7%

BHP HF AUG 30.00 CALL

QQQQ

3/29

1.05

$0.85

Sold  03/31

-19.0%

QQQ RJ JUN 36.00 PUT

PCO

3/17

5.00

$8.70

Long

74.0%

PCO IL SEP 60.00 CALL

TNX

3/14

6.80

$5.50

Long

-19.1%

TNX LI DEC 45.00 CALL

 

Overall Average Profit = 16.4% per trade.

 

 

4.3       Experimental Filter Results

 

      The goal of the filter tracking experiment is to observe the use of stock candidate filters to buy call options and write covered calls in rising and sideways markets and the down-market filter for use in buying put options in declining and sideways markets.  So far we have not had a significant sustained down market environment in which to test the down-market filter.  Essential features of the 3 filters are described in Table 4B.

 

Table 4B

Filter Criteria

Description

(1) Stock Candidate

(2) Down-market

(3) Stock Candidate

Purpose

Buy Call Options

Buy Put Options

Write Covered Calls

Market direction

Up, Sideways

Down, Sideways

Up, Sideways

Price

> $50

> $30

< $20

12 m EPS growth

> 80%

< 20%

> 80%

Relative Strength

26 wk >90%

26 wk < 20%

26 wk >90%

Price within

5% of 52wk high

5% of 52 wk low

5% of 52wk high

Exchanges

NASDAQ, NYSE

NASDAQ, NYSE

NASDAQ, NYSE

 

      The relative average filter performance for the three groups of filtered stocks is compared with proxies for the major averages in Table 4C.  Filter 1 stocks are those listed in Table 3A and filter 2 stocks, for the experimental filter, are listed in Table 3B.  Filter 3 stocks are listed in Table 3C.  Filter 2 stocks decline more than filter 1 and 3 stocks for the past week and for the past month.  

 

Table 4C

Average Filter Performance as of 04/02/05

 

Instrument

Past month

1 Week ago

2 weeks ago

3 weeks ago

4 weeks ago

SPY (S&P500)

-4.3%

0.2%

-1.2%

-1.5%

-1.9%

DIA (DOW)

-5.0%

-0.4%

-1.4%

-1.7%

-1.6%

QQQQ (NASDAQ)

-3.5%

-0.2%

-0.7%

-1.8%

-0.9%

IWN (Russell 2000)

-5.5%

-0.4%

-1.4%

-1.0%

-2.8%

Filter 1 > $50

-3.6%

1.3%

-2.5%

1.3%

-3.7%

Filter 2 > $30

-6.9%

-1.3%

-0.2%

-3.3%

-2.3%

Filter 3 < $20

-0.4%

0.0%

-2.6%

2.1%

0.2%

 

 

5.0 Conclusion

     

      It is significant that the major averages are within 1 to 4% of their values one year ago.  Profits are likely to be found in either longer term investments such as stocks that have compelling value or in very short term trades that take advantage of small market fluctuations.  The jury is still out on the future demand for oil.  But it is unlikely that a glut in gasoline will emerge in the foreseeable future making refineries a solid bet.

 

      Average fractional profit for 30 trades, FP = 16.45% per trade.

      Fraction of trades chosen in the correct direction, FC = 70.0%

      Average fractional gain for 21 winning trades, FG = 33.92% per trade.

      Average fractional loss for 9 losing trades, FL = -24.30% per trade.

     

      The dollar profit goal DG is set equal to the average capital used per trade C such that
      N = 1 / FP = 6.1 becomes the average number of trades to earn the average traded amount.

 

      The Profit Factor for the trading system, FG FC / [FL (1 - FC)] = 2.74
      Gross Profits divided by Gross Losses (includes 1% commission)

 

Appendix

Investment Conference Schedule

      Below are links to conference registration sites where you can sign up.  

 

Conference Search