Looking Back In The Rear View Mirror
Thanks to a friend of mine (ironically
named Greg also), over the holiday I took some time out to re-read the
interviews with Gil Morales, Dr. Christian Kacher and Cedd Moses in the book
"The Best" by Kevin Marder and Marc Dupee, as well as the William
O’Neil and David Ryan interviews in "Market Wizards" by Jack Schwager.
My buddy had called me and expressed an interest in trading and asked which
books I would recommend he read. Among the list were the two named above.
I actually like to re-read books every
so often, because I find that each time I re-read a book,
I always come up with new ideas or catch something I may have missed earlier. By
doing this,
I find it helps in my trading and market research.
As a trader,
I always look for ideas which I can synchronize with my current trading
strategy. What I mean by this is I like to take ideas from strategies that work
and combine them with other strategies that work to see if the results produced
are more robust. In essence,
I like to see if the whole
is greater than
the sum of
its parts.
That is why in my commentary
you
may see daily and weekly charts, candlestick charts, volume indicators etc. I
have found these tools when combined, are very useful in my research and feel
they could be of value to you the reader.
The earnings this quarter have really
been detrimental to the markets, however we all should remember that the
earnings coming out are "rear view mirror" earnings. The
company earnings which are affecting
the markets are from the last quarter. The test for the markets will be
the next one to two quarters of earnings to see if the Fed rate
cuts
have
taken effect and whether they have strengthened the economic environment.
Until that time,
we will continue to trade accordingly by adjusting position size and tightening
stops on our trades.
Compuware (CPWR)
is pulling back and forming a handle. Ideally, I would like to see the handle
hold support at around the 20 period moving average.
Jack Henry & Associates (JHKY)
earnings have increased on
a quarter–to–quarter
basis 3.1% to 21.43%;
sales
have a 1 year growth rate of 16.42%. On a year–over–year
basis JKHY has showed a 49% and 59% increase in sales. Volume has been drying up
on a weekly basis and notice the positive divergence between price and the
Relative Strength line. The company is trading approximately 8% off its high.
Retailer, Bed, Bath, Beyond (BBBY)
is trading in a narrow range. It held up relatively well in the session even
with the Retail index getting hit during the session. Continue to watch if price
is going to test the high end of the trading range. The stock is about 6% off
its high.
Turning to the Exchange Traded Funds,
among the leaders were the WEBS-Malaysia Benchmark (EWM)
which gained 4.6%. The Utilities Holdrs (UTH)
tacked on 1.7%.
The Ishares DJ U.S. Utilities Sector (IDU)
gained 1.4%.
Funds which traded down in the session
were the Internet Infrastructure Holdrs (IIH)
which was down 8.2%.
The Telecom Brasileiras Fund (TBH)
closed lower by 6.8%. Price found support just above the 4/23/2001 low of 42.55.
The fund looks poised to take out that low.
Broadband Holdrs (BDH)
slid 5.2% for the session.
Remember that all securities are
risky. In any new trade, reduce your risk by adjusting position size and
placing open protective stops where you will sell your new buy 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.
Greg