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Forgot one other thing that facilitates doing the "smoking jacket" browsing
of stock charts looking for tops:
- Erase the Master file directory under the directory you have securities
in so that when you open the security file it will use the default template.
- Create a default template that includes moving averages and other
indicators you like to work with and make sure the bars are candlevolume
bars.
- When you browse the securities in the directory (arrows in the lower
right corner of the screen), look for topping patterns (double, head and
shoulders, triple, etc.). The ones that I've found work best are those with
big black candlevolume bars. I've spent a little time trying to find a
significant case where there were big black candlevolume bars down from a
top that didn't lend themselves later for going short. There aren't many
exceptions. (I haven't had time to write an exploration that would look for
this. I'll trade details of industry/sector groupings for a exploration
that'll do this.)
- One of the best examples I can think of off hand is Miller Herman (MLHR)
a month or so back. I was long puts in MLHR "gray Monday" because I noticed
the candlevolume bars.
Steven Buss
Walnut Creek, CA
sbuss@xxxxxxxxxxx
-----Original Message-----
From: Steven Buss <sbuss@xxxxxxxxxxx>
To: Metastock-list <metastock-list@xxxxxxxxxxxxx>; Ed Schwab
<edschwab@xxxxxxxxxxxxxxxxxx>
Date: Friday, November 14, 1997 7:32 PM
Subject: Re: Industry Index Topping Pattern Update
>The reason I'm VERY reluctant to talk about what I'm doing is because I
>don't want to be responsible for what other people may do. I don't want to
>have any kind of ethical responsibility to inform the list if I see that
I'm
>wrong on the industry and stock trend and get out of my position.
>
>I also think that the specific trades that I'm up to are not of interest to
>most members of the list. (That's why I've mostly only talked generally
>about what I'm doing.) I already feel like I talk too much on this list.
>But I've found that, like Jim Greening, I understand what I'm doing better
>if I write about it.
>
>Caveat emptor.
>
>I've made a couple other commitments to the list for over the weekend. But
>I'll try to make time to put on my smoking jacket <g> to list out the S&P
>industry topping patterns that appear to be relatively new tops or are (as
>yet) unrepentantly bullish. A stock that I've bought puts on today is
Molex
>(MOLX). It's in the Electrical Components industry (SPTKCD). My thought
is
>that Molex has just begun to break again. (Compare SPTKCD with SPFURN and
>MOLX with MLHR.)
>
>I'm not completely bearish. It was in the process of browsing the S&P
>industry indices that I noticed the Biotechnology industry pattern and
>looked for what was causing the recent strength in it. I'm long Amgen
>(AMGN) calls today.
>
>Now what will happen is that by writing about what I'm doing I've jinxed it
>and the market will say that "Steve thinks he knows what he's doing and
>needs to be taken care of today..." <g>
>
>Steven Buss
>Walnut Creek, CA
>sbuss@xxxxxxxxxxx
>
>-----Original Message-----
>From: Ed Schwab <edschwab@xxxxxxxxxxxxxxxxxx>
>To: Steven Buss <sbuss@xxxxxxxxxxx>
>Date: Friday, November 14, 1997 5:21 PM
>Subject: Re: Industry Index Topping Pattern Update
>
>
>>Hi Steven,
>>
>> Your idea sounds like a good one. Would you be willing to disclose
the
>10
>>industry patters to which you are referring? I'd like to check them out.
>I'll
>>be glad to share my opinion if you wish.
>>
>>Later,
>>
>>Ed
>>
>>----------------------------------------
>>
>>Steven Buss wrote:
>>
>>> I'm a newbie, but I've been buying (and quickly selling) puts according
>to
>>> the strategy I laid out in the note below. It has worked out for me
>>> incredibly well (only because I've read the basic T/A texts and
>understand
>>> how option premium can change with daily stock price volatility; if you
>>> haven't and/or don't, don't try it).
>>>
>>> A few times I've gotten depressed by the thought that there can't
>possibly
>>> be more stocks left that are a part of S&P industry indices that still
>show
>>> unrepentant or only recently confirmed tops that can be traded (i.e.,
>>> shorted with long puts) for significant gain.
>>>
>>> I browsed the S&P industry indices again tonight. Amazing. There must
>>> still be 10 industry patterns (i.e., about 10% of the total number of
S&P
>>> industry patterns) that are unrepentant (i.e., still bullish) or only
>>> recently confirmed topping patterns.
>>>
>>> If you aren't making money some other way and if you haven't browsed
>these
>>> indices to discover the power of "turning to the short side" then you
>>> should...<G>
>>>
>>> Steven Buss
>>> Walnut Creek, CA
>>> sbuss@xxxxxxxxxxx
>>>
>>> -----Original Message-----
>>> From: Steven Buss <sbuss@xxxxxxxxxxx>
>>> To: Metastock-list <metastock-list@xxxxxxxxxxxxx>
>>> Date: Sunday, October 26, 1997 4:31 PM
>>> Subject: Re: Weekly Stock Watch and Topping Patterns
>>>
>>> >Jim,
>>> >
>>> >I've appreciated your sharing with all of us your thoughts. Thought
I'd
>>> try
>>> >to summarize my view of an alternative approach.
>>> >
>>> >In the last two weeks there was a brief discussion on the metastock
list
>>> >about the relative value of "charting" vs. "harder indicator" based
>>> >approaches. I'm sure both are valuable.
>>> >
>>> >But I think one of the values of charting has been illustrated recently
>in
>>> >market action. As you note, many major indices have broken trend
>support
>>> >levels of one kind or another. But there may well be something more
>going
>>> >on. When you look at the major indices they all, to one degree or
>another,
>>> >look very much like the tops depicted and described in all the classic
>>> >technical analysis texts.
>>> >
>>> >I performed an interesting exercise over the weekend. I loaded and
>printed
>>> >all the S&P industry indices and have gone over them one by one. Many,
>>> >maybe even more than 50% (I didn't count), show the same kind of
>potential
>>> >topping patterns, albeit at varying stages. This is a multi-hour
>exercise
>>> >but one of, if not the, most valuable exercises I've performed in a
many
>>> >months. To get a quick sense of how valuable this might be, look at
the
>>> >Philadelphia Semiconductor Index chart (SOX). If that wasn't a train
>wreck
>>> >waiting to happen I don't know what was.
>>> >
>>> >Now, it's also clear that this could be a bear trap. (Does anyone know
>the
>>> >stats on this. My sense is that when you see a clear topping pattern
in
>so
>>> >many major and industry indices as well as individual equities that the
>>> odds
>>> >are heavily weighted toward the topping patterns being important
>>> indicators.
>>> >Is this true? Thoughts?) There are certainly things the market could
>do
>>> >that would convince me that we weren't at the beginnings of a major
>>> downturn
>>> >at least for many individual equities. (Classic stuff like higher
highs
>>> and
>>> >higher lows.)
>>> >
>>> >But if we assume that the dominance of topping patterns is very likely
>to
>>> >result in continued drops in prices, it seems to me that one has to be
>>> >especially careful being long anything as you suggest. Early last
week,
>I
>>> >bought puts on stocks with topping patterns within industries with
>topping
>>> >patterns. I'm even for the week. Mine didn't drop (yet I hope).
>>> >
>>> >
>>> >Steven Buss
>>> >Walnut Creek, CA
>>> >sbuss@xxxxxxxxxxx
>>> >
>>> >-----Original Message-----
>>> >From: Jim Greening <JimGinVA@xxxxxxxxxxxxx>
>>> >To: wayne walusiak <waynewal@xxxxxxxxxxxxxxx>; Vitaly Larichev
>>> ><vitaly@xxxxxxxxxxxxx>; Vincent <vmw.sr@xxxxxxxxxxxxxxxx>; Vilas Boas
>>> ><vilasboa@xxxxxxxxxxxx>; Tom Barry <tombarry@xxxxxxx>; Tom
>>> ><TOM9641@xxxxxxx>; Thurl C. Van Kirk <tvk2@xxxxxxxx>; Steven Buss
>>> ><sbuss@xxxxxxxxxxx>; spaman <spaman@xxxxxxxxx>; Shag Johnson
>>> ><John.Ben@xxxxxxxxxxxxxxx>; Sam Crowe <ASAMCROWE@xxxxxxxxxx>; Robert
>Hughes
>>> ><magick@xxxxxxxxxxxxxxx>; Robert C. Richmond <rcrich@xxxxxxxxxxxx>;
>Richard
>>> >Linxwiler <rlinx@xxxxxxxxxxxxxx>; Raymond Hodge <RPHODGE@xxxxxxxxxxx>;
>>> ramon
>>> >P slupsky <zzorro@xxxxxxxxxxxxx>; Quinton E. Collins
><quint@xxxxxxxxxxxxx>;
>>> >Privite Investor <private-investor@xxxxxxx>; Peter Rodriguez
>>> ><peter.rodriguez@xxxxxxxxxxxxxxx>; PDEE <PDEE@xxxxxxx>; Ned
>>> ><ned@xxxxxxxxxxxxxx>; MR PAUL R CAMILLERI <FVNG78A@xxxxxxxxxxx>; Monika
>&
>>> >Michael Liew <mliew@xxxxxxxxxxxxxxxxxxx>; Michael Smith
>>> ><msmith.brightnotes@xxxxxxxxxxx>; Michael Liew <MAL2@xxxxxxxxxxxx>;
>Michael
>>> >Hall <epitrope@xxxxxxxxxxx>; Michael Arnoldi <marnoldi@xxxxxxxxxx>;
Mark
>>> >Johnson <johnson_m@xxxxxxxxxxxxx>; Mark Fauber <MFauber@xxxxxxx>; Marc
>>> >Saegesser <mas@xxxxxxx>; Louis Phillips <KISBAR@xxxxxxxxxxxxxx>; L.
>>> Peterson
>>> ><lpeter@xxxxxxxxxx>; L. A. Baker <louab@xxxxxxxxxxxxx>; Kevin Sturgeon
>>> ><sturgman@xxxxxxxxxxxxx>; Kenneth R. Lehr <kenlehr@xxxxxxxxxxxx>; John
>>> Wargo
>>> ><jwargo@xxxxxxx>; John Manasco <manasco@xxxxxxxxxxxx>; John Cuomo
>>> ><jcuomo@xxxxxxxxxxxxxxxxxxxxxxxxxxx>; John Bois <JBois@xxxxxxx>; John &
>>> >Paula <jhl3@xxxxxxxxx>; Jim DeWilder <jdewilder10151@xxxxxxxxxxxxxx>;
>Jim
>>> >Barone <Wooglinx@xxxxxxx>; Jerry Medlin <jmedlin@xxxxxxxxxxxxx>; Jeff
>>> >Heebner <JWHnHotlanta@xxxxxxxxxxxxxxxx>; Jeff F. Brady
>>> ><surfingrincon@xxxxxxxx>; James H. Shaddy <jshaddy@xxxxxxxxxx>; James
A.
>>> >Deni <JDENI@xxxxxxxxxxxxxxxx>; jack velte <jackv@xxxxxxxxxxx>; J.
>Stephen
>>> >Jones <jsjones@xxxxxxxx>; J. Carlos <areia@xxxxxxxxxxxxxxx>; Iris Brown
>>> ><irisb@xxxxxxxxxxx>; Hugo Noomen <100413.2325@xxxxxxxxxxxxxx>; Herb
>>> >Jorgensen <HJORGENSEN@xxxxxxxxxx>; Herb Carter
><carterh@xxxxxxxxxxxxxxxx>;
>>> >Harlin A. Friedman <hafstrat@xxxxxxxxxxxxxxx>; Guy Gordon
>>> ><gordon@xxxxxxxxxxx>; Gunter <GUNTERE@xxxxxxxxxx>; Gitanshu Buch
>>> ><OnWingsofEagles@xxxxxxx>; GARY MONTGOMERY
<Efficiency@xxxxxxxxxxxxxxx>;
>>> >Frank B. Gaylord <fbg@xxxxxxxxxxxxxx>; Francois Martin
>>> ><francoisma@xxxxxxxxx>; fletch <fletchmo@xxxxxxx>; Ed Schwab
>>> ><edschwab@xxxxxxxxxxxxxxxxxx>; Ed Hancock <ehancock@xxxxxxxxxx>; Drew
>>> >Hawkins <dhawkins@xxxxxxxxxxxx>; Don Hodges <dhodges@xxxxxxxxxxxxxxxx>;
>Doc
>>> >Amin <amin@xxxxxxxxxxxxx>; Dick Jurgens <dickj@xxxxxxxx>; Denis Trover
>>> ><dtrover@xxxxxxxxxxxxx>; David Kohn <dnkohn@xxxxxxxxx>; David Castley
>>> ><David.Castley@xxxxxxxxxxxxxx>; Dave Zawicki
><JohnZGalt@xxxxxxxxxxxxxxxx>;
>>> D
>>> >J Hadley <animal@xxxxxxxxx>; Craig Camp <CCAMP@xxxxxxx>; Cliff Frish
>>> ><cbfrish@xxxxxxxxxxxxxxxx>; Claude Baruch <ClaudB@xxxxxxx>; Christopher
>J.
>>> >Lewis <katlewis@xxxxxxxxxx>; Chip Anderson <chipa@xxxxxxxxxxxxxxx>;
>Carole
>>> >Frohardt <cfro@xxxxxxxxxxxxxxxxxxx>; Carlos D. Thomason
>>> <deant@xxxxxxxxxxx>;
>>> >Bob Fulks <bfulks@xxxxxxxxxxx>; bill bolumen
<bolumen@xxxxxxxxxxxxxxxx>;
>>> >Bill <WPhill9611@xxxxxxx>; Bart Waller <bartco95@xxxxxxxx>; Al Dharsee
>>> ><Dharsee@xxxxxxx>; Harley D. Meyer <Harley.D.Meyer-2@xxxxxxxxxx>
>>> >Date: Saturday, October 25, 1997 9:26 PM
>>> >Subject: Weekly Stock Watch
>>> >
>>> >
>>> >>All,
>>> >> I'm sure you've noticed that I'm sticking with stock watch, not
>stock
>>> >>pick <G>. It looks like I was wrong on switching back toward larger
>cap
>>> >>stocks. Friday, both CUBE and CPQ closed below my stop and I'll close
>>> >those
>>> >>positions Monday. I don't mind taking the profits in CUBE, but don't
>like
>>> >>the quick loss in CPQ. However, it now looks like CPQ will head back
>to
>>> >the
>>> >>bottom of its intermediate term up trend channel at 56. I still like
>CPQ
>>> >>and want to get back in, but will wait for it to test the bottom of
the
>>> >>intermediate term channel.
>>> >> Looking at the indices, both the DJIA and the OEX broke through
>the
>>> >>bottom of my up trend channels, while the NYA, SPX, RUT, and NASD are
>>> still
>>> >>in their up trend channels. That indicates to me that my move back to
>the
>>> >>larger caps was premature and also we are still in danger of an
overall
>>> >down
>>> >>trend. I don't think that will happen but I've been wrong before and
>will
>>> >>be wrong again <G>. Anyhow, the prudent thing to do here is to build
>up
>>> >>some buying power and watch for a few days at least.
>>> >> I did want to identify a strong stock in a strong group to test
>the
>>> >>waters with if it looks like the up trend is going to continue. After
>>> >>looking for strong industry groups, I finally decided on the oil
>drilling
>>> >>group which has done good for quite a while and shows no sign of
>slowing
>>> >>down. I then looked at some analyst stories and liked what I saw
about
>>> >>Rowan Companies (RDC). While RDC is in both offshore and land
drilling
>as
>>> >>well as heavy equipment manufacturing and transportation, the real
>story
>>> is
>>> >>deep water drilling. The rates for deep water drilling are exploding
>and
>>> >>RDC has most of the new capacity coming on line in the next few years.
>>> >>Their earnings are already turning up with last quarters earnings
being
>>> >over
>>> >>50% of the previous quarters and more than double the quarterly
>earnings a
>>> >>year ago. With a lock on deep water drilling, the earnings should
>>> >>accelerate even more from here.
>>> >> RDC at 39.312 is slightly below mid channel of an Intermediate
>Term
>>> Up
>>> >>Trend Channel (ITUTC) with the top at 45 and the bottom at 35 1/2.
>There
>>> >>was a MetaStock RSquared, S/C,MFI system test buy signal in late May
>and
>>> >>the stock has been moving up strongly ever since with only one
sideways
>>> >move
>>> >>to the bottom of the channel in July and August followed by another
>strong
>>> >>up move in September and August. In October, RDC did move down and
>>> >sideways
>>> >>to its current mid channel position. RSquared and S/C indicate a
>strong
>>> >>trend in progress, but the money flow did drop in August and September
>and
>>> >>has leveled off in October. The fundamentals are excellent except for
>PSR
>>> >>which is at 5.06 and higher than I would like. However, this is
offset
>by
>>> >>the potential for large earnings gains. The Debt/Equity is 0.48,
there
>is
>>> >>over 30% insider ownership, and revenues have been growing at over 20%
>per
>>> >>year. In a perfect world, I'd like further movement towards the
bottom
>of
>>> >>the channel before entering. However, I'll also enter if it breaks
out
>>> and
>>> >>the market looks like it is resuming its upward move. I'll keep the
>email
>>> >>list posted.
>>> >> RDC.GIF attached.
>>> >>
>>> >>Jim
>>> >>
>>> >>
>>> >>
>>> >
>>
>>
>>
>
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