I Got It
I know that the majority of
the readers of this column have read William O’Neil’s book "How
to Make Money In Stocks" as the book appears to be the bible of
the I-T trader. I am wondering how many of you have read Mark
Boucher’s book "The Hedge Fund Edge?"
If you haven’t,
I would highly recommend you get Mark’s book. In his book, Mark
teaches us the benefits of being cognizant of all the underlying
factors which move markets to help alleviate risk,
while
still producing substantial gains.
As a member of
Tradingmarkets, you are privileged to some of the best traders in the
industry. One of the strategies which I like to use in my trading is a
pattern that Mark Boucher wrote about in his book and as a lesson on
the web page called Daytrade
Risk, Big-Trade Reward.
I have found this pattern to be an asset in my trading, as it allows
me to enter trades with a low risk to reward ratio. It also has
allowed me to enter trades which have broken out of Cup with Handles
or W-shape with handle patterns to participate in a stocks‘
next move up. If you have not read this lesson,
I would recommend you do so as it will enable you to add another arrow
to your quiver.
With
this strategy I still look for good fundamentals, but enter this trade
on the assumption that it will be a swing trade as opposed to am
I-T trade. I use a trailing open protective stop when price moves in
my favor. The beauty of Boucher’s strategy is you can use it
in
any time frame.
Turning to some
stocks that look poised to move:
Pharmaceutical Product Development (PPDI)
looks poised to take out its old high as it gapped past the pivot
point of a mini W shaped pattern. Notice the William Acc-Dis indicator
broke out to a new high before price did (volume precedes price).
Copart (CPRT)
closed strong and looks like it could break
out
of an ascending symmetrical triangle.
Healthsouth (HRC)
is constructing a high handle for its multi-week cup.
Cyptologic (CRYP,)
which I mentioned on Tuesday, broke out of a multi-day symmetrical
triangle on good volume today. The stock looks poised to take out the
high on the handle soon.
Leading the ETFs
in the session were the Wireless Holdrs (WMH),
which tacked on 5.2%.
The Semiconductor
HOLDRs
(SMH)
gained 5.0% as the tech–laden
Nasdaq pushed higher for the session. And the Broadband HoOLDRs
(BDH)
did the same as it tacked on 5.0% also.
On the opposite
end of the spectrum, the Morgan Stanley Internet Street Tracks (MII)
got slapped and
lost
3.2%.
Losing ground in
the same group was the Internet Infrastructure fund (IIH)
which closed lower 2.5% and a distant third on the losing end was the
DJ. Financial Services Sector Fund (IYG)
which lost1.4%.
Remember that all securities
are risky. In any trade, you should always reduce your risk by
adjusting position size and placing open protective stops where
you will sell your long or cover your short in case the market turns
against you. For an introduction to combining price stops with
position sizing, see Loren’s lesson, Risky
Business.
I finally found the link to
Loren’s article….I think.
Greg