Wheee!!! I have never figured out what the thrill is - one year passes another starts and everyone gets a holiday. And the only reason for it is to get over a hangover because, for some reason, you are supposed to drink yourself blind on New Year's Eve. Pagan holidays - why not.
I spent the morning trolling for some swing trades and I've come up with two candidates that I will enter on Wednesday morning. They are - AES and BLG. Both of these companies are well-regarded by institutions and both show a premium of implied volatility over historical volatility. And both are moderately distressed at the moment.
I had a third candidate - AGIX but when I looked at the implied volatility (IV) it was 180%+. This is a red-flag to me so I did my due dilligence on the stock and discovered that it is a one-drug small pharma that's been declining all year. It's phase 3 results on its one drug will be released early next year and I'm not waiting for a big hit. And that's why you should look at the IV. It can tell you stories you might want to listen to. Some people might know how to play options with this guy e.g buy stock and OTM puts or whatever - I don't so I won't even suggest it.
I'm going to use Dogwood's method of using the ATR for number of shares to purchase and setting the stop loss. I've tested it and I really like it. I suggest you go over to his site and review the method. It's pretty slick.
I'm working on another method that is pretty complicated and the preliminary results look good. If it works out OK I'll share it with you next week.
These are not recommendations only some thoughts about what I am planning on doing. I do not recommend any stocks nor any trading method.
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Hey Marlyn- I'd like to crawl inside your brain for a minute if you don't mind. As an amateur (at best) chartist I'm having trouble following what you like about the AES chart. It's been drifting lower for a month- what makes you think that it has bottomed? Do you like that it has pulled back to the base from mid Oct to mid Nov and the last level where there was some high volume buying? I like the idea of buying distressed stocks I just haven't developed a great ability to recognize a bottom.
...and the BLG chart is totally over my head! What's with all the massively wide range days of late?
Thanks for the plug Marlyn!
Are you using the 4, 8, 21 EMAs for BLG? If so, I see the 4/8 crossover.
Also, in a recent post you said swing trading is a good fit for your personality, can you share with us what your average holding time is for your trades?
BLG is a simple 4 over 8 under 21 (EMA) pick that meets my other requirements regarding implied volatility and 'tute holdings. This is not a bad pick - the wide ranging days were days when the homies were catching some action so this one fits in the space of "I think the builders are going up." Obviously those wide days were mistakes - but somebody wants this one to move.
I think AES is bottoming because its MACD histogram is negative and approaching 0. (My favorite filter - MACD histogram negative). Couple that with some relatively heavy volume Friday (a low volume day)and some good news from last week along with the implied volatility indicator and institute interest and we might get a little pop out of this guy for a couple of days. I'm looking for about 60 - 90 cents. This is a speculative trade- it's a good company but it might not go anywhere except down.
I looked at my records and my average hold time is about 9.5 trading hours. I'm going to try to extend that a bit this year. Maybe get up to 10 hours.
A nice way of looking at the market.
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