From The You Can't Make This Crap Up Dept - II

My pal Bullish Jim finally sold his GOOG holdings this morning. Apparently the boss man over at the company said they would never split and Jim figured out that they really didn't have the shareholders interests at heart.

But I have to ask - how in the world could anyone possibly sell this wonderful stock with articles such as this being pumped out of Jimmy Crack Corn Pone's rag -

Google Coils for Spring Above $500

Dan Fitzpatrick says that the longer a stock stays at a certain level the more likely it is that it will explode away from that level - someday.

I'm sure we've all experienced that phenomenon - the suddenly exploding stock price. Man, with that level of analysis what more does the average retail investor need? Arsenic and coke come to mind.

Now I don't have a subscription to TheStreet.com nor would I ever get a subscription to that piece of crap nor would I even waste the time reading a free trial version of it. And while it is possible that GOOG hits the stars one day it is also possible that GOOG trades for 100 bucks one day too. In the meantime while waiting for one thing or the other to happen you have a lot of money tied up in a stock that is doing nothing - and you're not even earning interest.

But someday it will do something because it has done nothing for a long time.

Try that one on your statistics professor some time - then watch him explode.

QT Code for BOB and Cross Over

A new reader asked for some code so here it is - once more I make no representations of this information - you use it at your own risk. I provide no guarantees - this is NOT an invitation to speculate in the stock market.

BOB

If bar low[1] < bar low[2] AND volume[1] > volume[2] AND bar open[1] >= bar close[1] AND bar open[2] >= bar close[2] AND bar low >= bar low[1] AND bar close > bar open AND ema(8) < ema(21) set color to “choice”


Cross Over 1 (for signal on the cross over bar)

If bar open < ema(21) AND bar open < ema(8) AND bar open < ema(4) AND bar close > ema(4) AND bar close > ema(8) AND bar close > ema(21) AND bar close > bar open AND bar close[4] < ema(21) set color to “choice”

Cross Over 2 (for signal on the bar after the cross over bar)

If bar open[1] < ema(21) AND bar open[1] < ema(8) AND bar open[1] < ema(4) AND bar close[1] > ema(4) AND bar close[1] > ema(8) AND bar close[1] > ema(21) AND bar close[1] > bar open[1] AND bar close[4] < ema(21) set color to “choice”

I use two cross over indicators - one on the bar and one after the bar. You don't have to do that.

You do have to select your own colors however. That's easy enough.

And, yes, there are differences between this version of cross over and the one I use on the daily charts. Most notably the moving average requirements are missing - I don't always play stocks that are below the EMA(90) and neither should you. I just prefer to filter for them because they have a lot of room to run.

Thursday Wraps

How about that! The ATR < 80 works again. The only question left is will the market continue down tomorrow? And we'll get to that presently - first business.

I went and played golf. But before I left I sold everything but GGB and BGG and in fact I added to both of them and they are now both at 80% of a full position. GGB remains profitable and BGG is currently losing 6 bucks - total - but I own a whole lot of shares so a rebound tomorrow and we are back in the money.

I also bought a quarter position in KNOT. And KNOT, after losing 3 bucks + change on a not-so-bad earnings report, actually went up from where I bought back in. I had forgotten that I had a stop loss actually in place for all of the good it did - when the stock bottomed and bounced it sold off. That's why I seldom use a physical stop loss - I just forgot to take it off yesterday before the close.

I'm going to leave the three Amigos alone tonight - the fact that AAPL actually made money today is amazing - the other two did what they usually do.

The INDU ATR is now back above 80 at 87.94 which is good. The model portfolio lost 2.34% to 17.34 and the benchmark lost 1.05 to 6.55. The VIX remains in neutral but this guy, for the first time in 55 trading days dropped below -0.005%.


The best news though is that the up/down ratio is printing 27% and I'm going with these two indicators plus the ATR and calling for an up day tomorrow.

The coin is also calling for an up day tomorrow.

Once again we both hit it today so the score is now Marlyn 33 - 29 and 13 and the coin is 36 - 25 and 13. The coin is still better by far.

I'll be back early tomorrow with some Quote Tracker code for one of the readers and we'll discuss today in a little more depth.

From The You Can't Make This Crap Up Dept

Yahoo says -

The outlook for consumer spending in the coming months grew dimmer Thursday after big retailers stumbled in April, their sales hurt by rising gasoline prices and the weak housing market.

Oh wait - they did make that up.

What - not the weather? Ahhh - the weather caused the housing slowdown which caused the retail slowdown, stupid, stupid seasonality - it.just.isn't.right.

How about the "early Easter" argument- where is the "early Easter" argument - damn Easter bunny anyway - people just weren't ready to buy chocolate covered marshmallow eggs in March - it.just.isn't.right.

Stupid gasoline prices just suddenly went up in the first quarter - boom - just like that and nobody expected it - it.just.isn't.right.

How about this for a story - there ain't nothin' in the stupid stores that anyone wants to buy - It isn't a lack of money folks - the stock market goes up and up and up every day and the only thing that can possibly make that happen is - money. So maybe, just maybe, now that everybody has four flat screen liquid crystal televisions sets not counting the one in the refrigerator door and or the one in the bathroom over the commode, two cars in every garage and three parked in the driveway and at the curb, all of the electrical appliances they can possibly cram into the McMansion, a couple of razor phones, three ipods, and a robotic partridge in a faux-pear tree - there just isn't anything left to buy. How do I know - Sharper Image can't give away their Ionic Breeze Machines and that, my dear readers, is the absolute bottom of the barrel for useless gadgets.

And that's just about right.

Sara Lee 3Q Profit Nearly Triples

Just one of those days.

This is Just Knot Right

KNOT reported a major loss for Q1 last night and I'm still holding. Well you play earnings roulette and that's what happens - sometimes you get the number and sometimes it gets you. Fortunately it is very few shares so the shock won't be that great to the portfolio. I'll probably keep this one around since the amount isn't that much and maybe over the next few months it will come back.

I should know better than to play an internet crap shoot like this - especially since it was falling falling falling for no apparent reason. Now we know why but we still don't know who.

That will come out eventually I'm sure (yeah - right).

Wednesday Wraps

I had a good day and I hope you did too. Kind of hard not to the way the market is flowing. The Fed announcement caused a little froth not much more than that. I was watching the Forex screens and they told me all I needed to know quickly. I.E. - the market was going to resume its climb.

I added to AKS on a pullback just before the Fed announcement. Apparently the traders liked what they heard and AKS went up again. I added to BGG twice today although I'm sure I'm just being a bit irrational but I like the stock, I like the way it goes up most of the time, and I like making money. I'm still holding KNOT but didn't add to it although if it pulls back a bit tomorrow I may then. Still holding GGB and I should have added to it at least at 10 A.M. today but I didn't - my lost opportunity. Can anyone tell me why I should have added at 10?


Everyone who said - "Cross Over!" wins. However, a careful examination of the chart suggests that the Return to 4 at 11:00 was also a good opportunity to add. It pays to watch your swing trades and to take advantage of the opportunities they provide.

I sold out my AV shares including the part I bought this morning. Made a very nice profit on the transaction - about 5% in 5 days. Is it done? I don't know but I know I am for the time being. Will I play it again? Sure it may set up nice once more - right now it appears to be a bit oversold - the RSI(2) is > 95.

If you recall AV was purchased off a silly filter that I call 12 to 18 and rising - which describes it perfectly. I was looking for some cheap stocks that might have had a bit of interest in them. AV apparently has. If I get a pullback I might get back in. Again, let's try to guess why I bought more AV this morning.


Can't fool you guys can I? How hard is this? And yes, these are the 30-minute charts - it's a good idea on Fed day to use longer term charts because the market generally is moving slowly.

I sold out the MENT shares - I should have held them for another 15 minutes and I would have made a buck or two but as it was I lost $3 including R/T commission.

How quickly the mighty fall. Here is poor DNDN - a stock I made some money on a couple of weeks ago - down 64% today because the FDA wants some more information regarding their prostate cancer drug. Why the market sees that as a major negative is beyond me but it does and now DNDN is just another bio-crappa in the crapper.


The best part - one of the anal-holes covering the stock, upon seeing it drop 64% on the open, changed his rating from "Buy" to "Hold". Isn't that amazing? Like what else are you going to do with this piece of crap now? Do you think anyone who is responsible for any kind of real money actually pays any attention to those morons? No, they don't and neither should you. Analysts still exist for one reason only - to give the Broker help in fleecing the retail trade. And you can quote me. Thank God for the Internet - the only reason I talk to my brokerage is to give 'em hell when the interface fails.

The model portfolio put another 2% on today and is printing 20.15 while the benchmark is up .35 to 7.76. Still a lot of alpha for a rookie - don't you think?

The three Amigos didn't disappoint - AAPL managed another $1.82 and GOOG got some interest and added $2.44 and MSFT, my favorite, returned another 3 cents to its loyal followers. I looked at the charts and I think AAPL has more room to run, GOOG is as range bound as Mr. Softy, and Mr. Softy is drying up and going down.

Speaking of going down - the INDU ATR broke below 80 today, printing 79.24 at the close. I've said over and over that a break below 80 could mean a couple of soft days ahead so don't be surprised if we see the market dropping a bit starting tomorrow or Friday. Usually it just goes down to the 21 EMA which is about 300 points away right now. That wouldn't be too bad.

The VIX remained neutral and the up/down ratio hit 56% which is also neutral. The NewMoMo is also in neutral but it does show a down slope.


I'm calling tomorrow down just because it has to go down eventually.

The coin is calling tomorrow ... tails - also down.

We both hit it again today so the score is now Marlyn 31 - 29 and 13 and the coin is 35 - 25 and 13.

Wednesday Mid Day

Waiting for the Fed to pronounce - pretty sure it will be "still concerned about inflation" as well it should be. They have the keys to that truck - just stop printing money and inflation goes away.

I'm staying busy though - added to AKS and that is turning out to be a smart move. Added to BGG even though it didn't pull back and that is turning out to be a smart move. Added to AV and that is turning out to be a smart move.

Bought KNOT at an introductory level - it went up right after I made the play - dropping back now so I'm not sure if I will hold it or not. It did hit R3 and I should have dropped out then if I were going to. Oh well we'll see - it still owes me some money - not a lot but enough to make it interesting.

And made a substantial play in MENT for a short-term swing trade. MENT and KNOT were both found on the close = high filter.

Good trading and here's hoping for a Fed Rally this afternoon.

More Cross Over Charts

GE printed three cross overs in the past three months - one was profitable, one wasn't and one was a break even.


Cross over 1 (X-over 1) was almost an instant failure. I don't like buying into a gap down that continues down as happened on 2/15. I would have passed this cross over as should you.

Cross over 2 (X-over 2) became profitable but then collapsed. That hanging man on 3/26 indicates an exit. This trade would have been break even at best.

The third cross over returned about 4.7% in 6 days (4/26 - 5/2). This is the kind of cross over that we are looking for constantly.

Finding cross overs is simple - you don't need any fancy software nor do you need any money involved. Just time. I hope that the readers of this BLog are familiar with stockcharts.com . If you are, good - if not - you should remedy that fault immediately.

Select a candle glance group and click on any of the charts in the group. Then click on the top most chart that appears from that entry. This leads you to sharp charts 2. The Stockcharts sharp charts 2 capability permits you to change everything from number of days, weeks, or months to types of moving averages to types of indicators. and then simply run a set of stocks through that chart looking for cross overs. It is tedious but the exercise does your mind a world of good and you might pick up on a lot of other potential entry conditions as well. And if you hit a great cross over such as ATVI you will be well paid for your efforts.


Again there are three cross overs shown on this chart. Number 1 is a gap up and while gap ups sometimes go on to higher and higher places most often they are an overreaction to some news event and sobriety soon hits the market place and they fail. This was that kind of gap up.

Number 2 was a bit better and actually gave you a piece of change before it failed at the end of February. But that failure was not a result of the stock but a result of the market (Feb 27th) so this would have been a good one to watch.

And sure enough number 3 came along and took ATVI to the sky. The tweezer top defines the sky in this instance and suggests a perfect time to take profits and exit the trade.

Really sharp readers will note that Philip's Set up is associated with each of these cross overs. And I just noticed that myself so it might be a good thing to look for as well. It won't occur with every cross over but when it does it might signify something special in the stock.

Our final exhibit is in the class of failed cross overs. Here is MOT


First - it's MOT. MOT is in the news all the time and the words - "failing company", "bad stock", "poor investment" are usually found in the article. But the reason why you shouldn't take this one is the same as discussed above on GE - there is a gap down open. And that cross following the cross over probably suggests caution. But even if you did take it and then had it gap down again on you the next day you could be assured that it would come back a bit because it is MOT and regardless of my feelings about the stock it is beloved by the funds. So your max loss might have been around 30 cents a share and that's not too bad.

The cross over method will yeild a lot of winners but you have to watch the entry and make sure that the stock wants to go up and isn't just fooling around.

Find the code for stockfetcher here.

And again - if anyone finds a consistent method to better this approach please share it with all of us. Thank you.

Some Cross Overs

Here is a double cross -


I have no idea of the significance of this but I don't think it is good. HANS is an extremely volatile stock but this is ridiculous. I'm going to want to watch this for a bit to see which way it goes.

Here is HANS on a 3-day 30-minute version.


I'm showing you this because there is a cross over on the second day of this chart in the 2:30 bar. This crossover follows through into the next hour - but you know my rule - if you buy on the minute charts you should sell on the minute charts and not hold overnight. That would have been a very nice profit even so. You would have purchased at 38.40 and sold around 40.40 and 2 bucks in an hours nets out to a whole bunch annualized. I'm a purist with this indicator - the third bar of the second day is not a cross over because it didn't close above the averages. And if you made a mistake and took it as a cross over with your stop below the open of the that bar you would have been stopped out a bit later in the day.

Another chart I wanted to show you is RIMM.

There's no deep lesson here - just wanted to show you how the cross over works for expensive stocks too.

Still another is AAPL -


The cross over was back on 4/23 - a purchase on 4/24 would have reaped a nice profit over the next 10 days.

And here is MSFT -


The crossover came on 4/12. Note how the stock never dipped below that open and also note that the averages were in correct order (4 over 8 over 21) at this cross over. This too would have been a nice profit - at least as nice as they get with MSFT.

And finally the last of the three amigos, the final stooge - GOOG -


I'm showing GOOG to demonstrate the anti-cross - the reverse cross over. That occurred on 4/30. It was negated on 5/03 by a normal cross and that was negated by yet another anti-cross on 05/07. Stay tuned - which way do you think GOOG is going to go?

Wrapping Tuesday

It was a down day - well for most of the day anyway. The few points off the DOW INDU is nothing to be concerned with - although the bobbleheads on bubblevision will probably try to make it a crisis. Nothing goes down during 401K week. Next week - different story.

You'll have to look it up - but two days after I sell my AKS holdings it pops on a takeover report. It looks valid but you never know. I managed to get a little back (I said I'd buy it over $32) although I missed most of today's move. However, if the report is factual and 40 dollars is the bid then we should see some additional movement over the next couple of weeks.

Still holding AV, GGB, and BGG. I sold about a third of my AV for a small loss and had I held it to close of business it would have been a small profit - but I have no patience for crappy stocks. Even though it went up yesterday it is just bouncing around with no apparent trend in sight. I hate cheap stocks. Speaking of which (cheap stocks) good old CMGI took off for parts unknown (at least not since 1999) today.

BGG is becoming my new darling - I keep looking for a pullback so I can buy more but it won't so I won't. I bought that off a cross over and it has paid super dividends since. The more I look at the cross over stocks the more I like them.


The cross over is on 05/01. This is a simple enough method - just wait for a stock to open below the three primary EMA (4, 8 and 21) and close above them and take a position. Put your stop (physical or mental) below the open. It works on every time frame from minutes to months.

CMGI could have been a cross over play too -


I've published a lot of cross over charts and will put some more up later - a couple of good ones.

The three amigos had a mixed day - AAPL went up a buck and change, GOOG went down change and MSFT made 4 cents for its loyal followers. You have to be so in love with Bill Gates that you'd be willing to have his baby in order to justify your love of this stock. Why did AAPL go up today? Nobody knows including AAPL.

KNOT broke out today - why does that figure - market goes up strong - KNOT drops - market has so so day - KNOT goes up. Not enough for a cross over but enough to keep an eye on.

There is another play which is the non-cross over - this is when a stock just kind of drifts up through its averages but never with a strong up thrust. Watch out for this kind of stock because generally (again a weasel word) they just go sideways from there. They are flattening out and that is never a good situation - at least not for either a swing or day trade.

The model portfolio went up .15 to 17.79% and the benchmark lost .07 to 7.44%.

The INDU ATR is down a bit more to 85.62 - remember 80 is the key - a break of 80 low and we should get a pull back in the averages in the next couple of days.

The VIX remains neutral which is its favorite configuration and the up/down ratio printed a 40% which is also on the edge of neutral and this indicator is also neutral -

But I will say this - the last time it was like this (7 months ago) the market went down for a couple of days before it resumed its every climbing ways.

Bottom line? I don't have a clue - I think we get a good day tomorrow and then a bit of weakness through the rest of the week and maybe through the rest of the month.

The coin says heads ... calling for an up day tomorrow.

Monday was another mixed day tie so the score is now Marlyn 30 - 29 and 13 and the coin is 34 - 25 and 13.

Keeping it Simple Revisited

One of my readers dropped a comment about a neat little filter I wrote a few months back based on something I read over at Larry Connor's site. The filter was simple as can be and the reader said that he was making good use of it.

So, in the interests of fairness - here it is again -

show stocks where close is between 15 and 35
and average volume(90) > 500000
and close reached a new 10 day low
and close > ma(200)
and close < lower donchian band(20,4)

This throws a 64% win percentage in the current period (11/03/2006 - 03/05/2007). The short term ROI isn't bad -> 48% doesn't seem so high but when compared to the benchmark of 1.54% it is simply great.

So all you stockfetcher fans - here is one you may have forgotten - try it - I think you'll like it.

Taking Some Time Off

Taking a few days off - see you again Tuesday with the Wrap.

Sector Rotation

Some folks are trying to suggest that traders should start looking at sector rotation about now because some of the mainstays appear ready to drop. I just spent some quality time with the SPDRs (Standard and Poors Depository Receipts) or the market ETFs. If you don't have a Candle-glance setup with the 9 SPDR charts on it along with some indicator such as slow stochastics you are probably not worried about tomorrow. You're lucky - but I am.

Here are a couple of charts that I've annotated so you can get the drift of the post -



I'll give you a hint - one set of candles indicate a market that is on the way up - the other set indicate a market that is not.

We will be hard pressed to move higher from here without a long overdue correction. The fact of the matter is that all 9 SPDR charts look exactly the same - way overbought in every regard.

StockFetcher Setup

I use a certain configuration in my back testing. It is not unique to the test but closely matches my own trading style and methods.

First when I trade I try not to have more than 4 stocks in play at any one time - I prefer to have a lot of shares of a winner than a few shares of a winner and a few shares of several losers. And realistically - they all can't be winners - you've all seen that I pick my share of losers - I publish them on this site. You've also seen me add to day after day of those that were running.

Second I tend to bail quickly on winners and losers. Although recently with some stocks such as AKS and GGB I stayed with through their run. But again that was a market conditions type of play - I was playing the February 27th correction and now it seems to have been played out.

So, bottom line, when I set up my testing in stockfetcher I attempt to match my hit and run style. Here are my system settings -

Name: First Approach Test
Approach Type: Long
Start Date: 12/05/2006
End Date: 04/03/2007
Benchmark Symbol: ^SPX

Exit Setup
Stop Loss: 8%
Profit Stop: N/A
Trailing Stop Loss: N/A
Minimum Holding Days: 1
Maximum holding days: 4
Exit Trigger #1: close 1 day ago > close 2 days ago
and close > close 1 day ago

Extra Indicators
Entry Columns:
Show Performance After: after 1 day
after 4 days
after 10 days
after 20 days
after 30 days

Advanced Options
Selection Method: select by volume descending
Entry Price: open
Conditional Entry: No
Exit Price: close
Maximum Trades Per Day: 1
Maximum Open Positions: 4

The dates shown are what I call my "current period" - I normally step back and forward by 1 month when I test for my own personal use but only show the current period.

Some additional thoughts on testing while I've got your attention -

While a long term test (greater than 6 months) is interesting its only value is to show long cycle changes. For example - I report on the INDU ATR every day and am convinced that every time it dips below 80 that within the next several days we will have a mini (or maxi) market correction. In order to see that you have to look at years and years worth of data - that is a macro change. I have run tests on this (using my old fashioned Excel laboratory) and it seems to hold true. I also use the NewMoMo indicator in my trading - if it goes above .005 the market goes down (most of the time) if it goes below -.005 the market goes up (most of the time) - once more I use my Excel lab for that testing. These things inform me regarding the condition of the market - NewMoMo is why I say the current rally is "soft" and the ATR seems to be telling the same story as it approaches 80. What would I do with such information? - Well I'll sell all of my long term holdings (I started yesterday) and switch back to an exclusive day trading model in the next week or so. Do I recommend this for you? Oh hell no - each trader has to take responsibility for his or her own actions.

I am a short term trader at heart - day or swing. I am interested in a 4-day window and I am interested in what is working now - not what was working last fall. I can run tests that prove conclusively that certain filters (approaches is maybe a better word) work better during some market conditions and poorly during others. I've discussed this numerous times during my tenure posting here.

The market is fluid and your approach to trading should be fluid. Yes there are certain things that seem to be always ready - things like the RSI(2) (for short term trades) and the ATR moving up and down above and below average and tweezer bottoms and tops. These signals are paramount and should be in your toolbox at all times.

Somethings like cross overs and BOBs only work well during some market conditions and not so well during others. Cross over works best most of the time since it precedes the moving average cross over that also works well most of the time (a moving average cross over is not bad - it's only late).

But most approaches only work some of the time. Yes you can invent a method that will give you super returns with a massive win percentage and that finds 4 stocks a year - would I trust that filter the next time out - not on your life - or as I say - I wouldn't trade those stocks with your money - never mind mine.

So what I am looking for is not nirvana nor the Rosetta stone nor the alchemists magic formula for turning lead into gold - what I am looking for is a reasonable chance to make a buck. And the hardest part of that calculus is finding a stock that hasn't already been found or finding one that is one day away from being discovered.

And that's why I have methods such as the BOB where you find the set-up, set the stop (physical or mental) below the low of the second candle and if it goes up you take your profits graciously and if it goes down you take a small loss and move on to the next one.

Friday Wraps

TGIF - even us retired guys like weekends.

The market was up again but that was expected – today the 401K money started coming into the market and by law it has to be invested. So by cracky they began buying overpriced crap and made it even more overpriced.

I had an uneventful day. I sold off just about everything and am about to sell off the rest. I’m still holding GGB (through earnings which turned out to be a non-event), BGG, and AV. That was a mistake – I hate cheap stocks and have to take profits on them when they present. If I don’t then I will take a loss – it always happens that way because I haven’t got the patience necessary to wait for two weeks while the stock makes a couple of cents a day. I’m always thinking about the money that I could be making whenever I’m trapped in a crappy trade. Live and learn. Anyway I'll be out of town on Monday so AV has one more day to cause me grief but it is either up Tuesday morning or gone.

AKS was behaving as many stocks do post earnings – they go up for a couple of days, hit a ceiling and then start collapsing back on themselves. Watch your stocks when they go through earnings and see if this doesn’t happen. I’ll probably buy it back again the next time the market goes down a bit. If that ever happens again someone wake me up. I'll buy it back again when it closes over 32.00.


It's still a good company with a lot of room to run.

HST turned out to be a disappointment. It just rolled over and blew away. I didn’t like the action so I put the stop up tight under a pivot point and it managed to hit it. I don’t know if it will recover next week or not. I’ll watch it and if it does I'll take another shot.

The model portfolio went up .47% to 16.59% and the benchmark also went up by .38 to 7.50%. The model is still ahead and will probably stay there although I think it will need some maintenance on the next market drop.

The three Amigos are still not really participating in the rally – the MSFT-buys-YHOO story kind of blew the wind out of GOOG’s sails although why I don’t know – do you think the GOOG ownership is getting antsy? I do. MSFT went back down into its range bound muck and AAPL made 40 cents or so. YHOO was up strong and then faded away. Jimmy Crack Corn Pone had a story about YHOO today but he's so full of crap it's sad.

The INDU ATR fell to 87.98 today and that is goodness. We desperately need a correction, everyone knows it but everyone is afraid to stop buying for fear an already oversold stock will become more oversold and they won’t have it in the corral. And when I say everyone I’m not talking about the handful of retail traders – I’m talking about the big guns out there.

The VIX remains in neutral relative to its 10-period MA and the up/down ratio printed 53.40%. That’s neutral too. The NewMoMo remains orbiting 0 and that is also a neutral position.


For Monday I’m looking at another dry day like today – up but not by much.

The coin says tails – calling for a down day on Monday.

We both got another one right and the score is now Marlyn 30 - 29 and 12 and the coin is 34 - 25 and 12.

I'll be back over the weekend with some more posts regarding BOB - I'll show you a couple of charts.

Cross Over Re-Test

I ran several re-tests on the cross over filter (Cross Over v6) and here are the results -


This is a 4-month stepped re-test beginning last October and completing yesterday. You can see that the win percentage remains relatively stable regardless of market conditions and the ROI remains fairly high as does the reward/risk factor. This is also a good long term (30 days) filter.

The charts from the stocks output by this filter look like this


The cross over occurred on 5/01 (I currently own shares in this stock).

Here is the code - it is easily replicated in many different systems.

show stocks where close is between 15 and 35
and average volume(90) > 500000
and open < ema(21)
and open < ema(8)
and open < ema(4)
and close > ema(21)
and close > ema(4)
and close > ema(8)
and close > open
and close 3 days ago < ema(21)
and close 5 days ago < close 3 days ago
and close 5 days ago < ema(90)

Re-Testing BOB

We've been discussing BOB a lot on this site and on Bullish Jim's and Jim has even provided some modifications which we've adopted.

At any rate every so often I re-test my filters against the most recent period and compare them to the previous period tested. This is done to ensure that I’m using the most efficient filters in my toolbox for the current market conditions. Here are the results of that re-testing for the stable of BOB’s we have managed to collect. As you will see and what I often find is that last month's darling is this month's dog.


From a reward/risk standpoint BOB v32x with 1.89 is far and away the best filter for use in the current time period. Here is that code.

show stocks where close is between 15 and 35
and average volume(90) > 500000
and close 2 days ago < ema(8) 2 days ago
and close 1 day ago < open 1 day ago
and close 1 day ago is less than 1% < open 1 day ago
and close 2 days ago is less than .5% < open 2 days ago
and low 1 day ago < low 2 days ago
and volume 1 day ago is more than 20% > volume 2 days ago
and close > open
and low > low 1 day ago
and close 2 days ago < ema(8)
and close 2 days ago < open 2 days ago

You should also note in your trading notebook that a change of date can cause filter results to vary significantly - the important thing to take away from that is if you are using some ready-made screen provided by one or another of the various sites - are you sure it is still working?

You see as much as we want to believe that CANSLIM or the "way of the turtle" or even that "Thursday's have the highest percentage of gap fills" are the solutions to all of our problems because learned books have been written about them - the fact is - nothing works all the time.

As the Gipper said - Trust - but verify.

Disclaimer

Every few months I feel the need to write a brief to introduce myself and say what I'm about.

What I am is the promulgator of Rule 1 and Rule 1 is

- Nobody knows nothing - including me.

I say that frequently - especially after I've had a big win - having a big win does not make you better, nicer, prettier, or even smarter than anyone else - it just makes you a little better off than you were before the big win.

I say that frequently and it causes me to not watch CNBC or any other news that purports to be about the financial markets of the world. By the time you've heard it there it has already been acted on in the pits and you are now chasing the cow. Have you ever chased a cow? Don't - it just tires you out and annoys the cow.

I say that frequently and it causes me to try to learn something new every day. Yesterday I learned about bursitis - a fascinating disease unless you happen to have it in your hips - then it is just excruciatingly painful.

I say that frequently and it causes me not to have ads on my site - why have ads from people who don't know anything trying to sell you anything?

I say that frequently and I say it to you as a warning - if you take anything away from this site what I want you to take away is a thirst for knowledge, a thirst for learning, a burning desire to do something for yourself.

And now to adapt a thought from that old philosopher - Curly Washburn, "the only way you will become successful in the financial markets is to figure out the one thing that will make you a winner and then do that one thing over and over again."

Of course Curly's one thing was "honesty" and that's important too - above all things be true to yourself.

Wrapping Thursday

I don't know where all the liquidity is coming from - it's a day or two too early for the 401K money which usually takes 3 days from the 1st of the month to make the transition (even in the digital age). So I haven't got a clue. Normally I would expect a couple of breather days and then a few boom days but this is somewhat ridiculous. Oh well, whatever - I'm taking advantage of it as you should be and let the devil take the hindmost. Once again - take what the market gives you and don't fight the tape neither up nor down.

I'm still holding a position in AKS, BGG, and GBB. I'm also holding HST and AV. The only one that was a disappointment today was HST but I expect that one to get back on track during the next week or so. Once the 401K money starts coming into the market the funds will start buying it back as it is one of the beloved stocks. How do I know that? - Simple - I just look at how much the 'toot's held in the last quarter and that was 98.8% of the float - that means that they sold a ton of it off when the earnings announcement came out several days ago and now they are in the process of buying it back again. That's how the game is played - supply and demand - good stocks are always in demand and the supply is always small.

The model portfolio went up .73% to 16.04% and the benchmark beat it for the first time ever by going up .81% to 7.09% - go benchmark - The model portfolio still has a bunch of alpha.

The three amigos were all over the map - GOOG made 7+ bucks today and MSFT made another 30 cents or so. Truth be known - if I could bank on MSFT making 30 cents a day from now on I would own a lot of MSFT. AAPL returned all of one penny to its loyal followers - yes - that's one cent - 100 shares gets you to the dollar menu at Mickey D's you lucky dog you. They are still not participating with all of the spirit that I would expect in any kind of stock market rally so I say the rally is soft.

The VIX is still in neutral but the up/down ratio dropped to 53.98% which it can do even in an up market - in other words a lot of stocks went down today even in the face of rising indices. The INDU ATR printed 98.17 and that is down a bit from yesterday but the rally will continue on that good news.

This guy remains split -


but leaning towards an up day. And even though I haven't got a snowball's chance in hell of calling tomorrow correctly - I'm still going with an up day. That's right - 401K money comes in and the market goes up.

The coin says ... heads - also calling for an up day.

Well we both missed again so the score is now Marlyn 29 - 29 and 12 and the coin is 33 - 25 and 12.