What you are going to see below is likened to a computer readout and analysis of my mind based on my picks for the last three months. What I am doing is openly processing them and from them, amending my list of working rules for my trading. I do this every three months in order to fine tune and to tweak and hopefully keep increasing my winning percentage.
8/27- CBK- 3 weeks earnings climb- big numbers quarter/est growth- 30% gain
8/27- FRAN- 3 day drop- numbers light (-20 growthest -5,-7,-4% suprises quarter) in.95 out 1.45 +34%
9/2- shoe carnival- 3 day drop - 3 day drop numbers unknown- pre climb up before earnings-Profit
9/3- INFI- news pick- Phase 3 testing-run up on news..bought put- success
9/11 DRI - 3 day short- waited for last minute push up due to technicals then bought cheap put-
unknown as to the numbers from analysts estimates. Main investor intervened. Got out even money.
9/15 ANVR phase 2 news bounce...stock jumped way up out of current options range so put I bought too far out of the money (strike price) so when stock cranked down next day (6%+) where my put should have made money it did not..too far out of money. Play with at the money or right next to with options strike prices. Underlying philosophy was correct though. Big drop next day on news.
9/18- MTN- got upgrade. Violated 2 week upgrade/downgrade stock earnings rule. 3 day drop combined with news. -5.40% growth earn and only 2 neg quarters of less than neg 2%. Not enough bad numbers to drive down. Then a unicorn case happened. There was huge forward looking news on buying another ski resort that would start making money in a year. This caused Zacks to upgrade it. It raged up for 3 days. Then I bought another put right before it reported a less than lackluster earnings, causing it to blow out back down. +45% profit on the put.
(Note..people LOVE the QQQ direction and outlook for the weeks with watch lists)
9/22- AA -price dilution and downgrade. Yet I attempted to bounce it anyway. What was I smoking? For some reason it worked out at the 11th hour. Took the money and run. Another in depth unicorn situation developed: insiders sold before a big news announcement, the stock went down and was downgraded right after the announcement. Then there was an upgraded price target and then there was a glowing review in the Wall Street Journal with an price target that was 2-3 dollars higher than the current price. So I figured that there was bounce pressure upwards after an insider and house downgrade as it is rare you have downward force immediately met with 2 cases of upward price target force. I played this and won.
( I apparently have an advanced ability to read news situations and the forces underlying them with a contrarian lens)
(I also need to develop more choices while going down the news/or earnings and not take the first one that looks kinda good. Maybe there is more down the list that is better. I owe it to myself and everyone else to fully explore all choices)
9/26- AGIO- news bounce-Phase 1 study. Reconned a short. Success. +8.4% on the short.
9/30 DWA- news bounce- Advanced read on underlying forces and the 2 big personalities behind possible buyout. I read it correctly and profited. 2.00 to 2.25. Not huge, but money., about 12%
10/1-TKM- combination of news and technicals- the news plus the past technical patterns and current RSI and MACD levels. I pull it off...2.45 to 3.00. Also important that I watched the market..the move happened in the first 20 minutes with a small window. Cant sleep in..gotta be there open to close.
10/3-DTRX- bought put on phase 2 results then took it up the ass as suddenly another company bought them out and price jumped way up. Nothing that can be done about that. Having that strange timing was like being in stuck in traffic because a UFO landed on the tollway. Its just a price of the game, and why I have 20 different piles of money in play.
10/6- PBR..news bounce based on campaign election results. Read the situation about the campaign itself. Investors arrogant that thier Romney man will win so I doubled down, even though the news said that the Obama like candidate would win which would suppress this stock. We exit with a profit as the stock does collapse. I doubled down with 2 different strike prices because the public continued to be erroneously enthralled with the wrong candidate that was behind (pro business)
10/6 RXII- stock announces a phase 2 result fast track. I short it and win.
10/9- IXPL- short on news. Made error. Company bought 2 companies already up and running and making profits, expected profits even in 2014. Plus, the technicals show a sudden break out, even though there is a top tail showing a top. I have found out that a breakout overrides that. Seeing that the company already bought existing companies that were generating profit, an analysit upgraded it. -3.5%
10/13- ALNY- News phase 2 study and Ebola panic. Big Gap up with long strong white candle. However RSI was near top, and it was a sector panic. The stock went down over the next three days. No immediate product, RSI maxed. Made a profit.
10/15 IDRA-possible insider action. News bounce- Phase 1 trial. New concept: Better result from a bounce if RSI is already kind of high, not at the bottom ready for a fresh jump up. When grading stocks to bounce, a low RSI is a minus for a put and a positive for a call. Grade accordingly.
10/16 LAKE- Oversold overhyped stock forms a coiled spring at height of Ebola panic. Coiled springs can spring in either direction. Pick the most likely direction. This direction will probably go down. The coil spring explodes to the downside by over 20 percent.
10/15- ESI- 3 day drop mistake...plus did it the day before earnings.
1) I was unclear of why there was a sudden jump in price yesterday. They released some prelim's yesterday but that didn't warrant the price jump. That shows that there was a group of insiders who were in the know what was going to be announced today and they acted on it.
(rewrite rules for 3 days gain/drop as well as news up/down bounces. Also re-calibrate rules on coiled springs. Attempt to make a call one side or the other. Most of the coiled springs could have been called one way or another.) 207159
10/20-EGHT- -16%, -22% last 2 out of 4 quarters, -40% on est earnings, plus 40 on industry bench. Actually got out a day before earnings because a sell off started. Made a profit.
10/22- 3M- 3 day earnings drop- attempt to do this with not even a negative on the growth est and just one negative on last 4 quarters. Not even a negative percent. The bigger the red in the negative, the more the power of the upcoming drop. Dont play with lukewarm. It takes all the explosive power out.
More on my actions of MMM(3M):
1. Through technical analysis I knew that the market was in an upswing. When the market is in an upswing I never do the 3 day drop system. I'm supposed to do my two week climb system. The three day drop system in part relies on the stock market is in a downswing which will further aid in a stocks downward momentum making money on my put. The market this time was in a upswing which made the positive surprise worse, pulling the stock upwards even harder.
2. When I do the 3 day drop system, I usually pick a stock that has numbers hard in the red in its earnings est and the last 2 out of 4 quarter surprises. This time I took a stock that was a bit to the positive, even though the industry benchmark was high. I need more of a discrepancy between the stock estimates and the benchmark...and I need them in the red.
3. One thing that led to such a hard upside explosion with numbers that weren't THAT great was all the positive news items that was coming out in the previous week. That led to a combustive mixture with earnings. From now on, when Im picking a stock to do the 3 day drop with and I see numbers in the red (good) I will then also look at the headlines during the last weeks run-up. I don't want to see a bunch of great news items that will positively shine on the stock, or that will add to its bottom line in the public's mind.
4. The RSI and MACD were in strong buy territory. These technical indicators showed that the stock was in under-bought territory and had a lot of room to jump upward.
FAI OCT 24- I tried to bounce a stock that just reported. Absolutely not. We do not bounce play anything that reported earnings or received an upgrade/downgrade within two weeks.
However, this was an advanced advanced situation. It just announced positive results:
1. There was a climb up to earnings. They announced, and it deflated.
2. However, it was a pretty good announcement then they added on a sweet bonus: a dividend!
3. forward said 20% increase by next year due to acquisition
4. RSI and MACD in position where they could climb 75% in angle and position
Analysis: I dont believe I would have done the 3 day drop with this stock ahead of its earnings because they last 4 quarters and the growth est probably wasn't in the red enough, so this stock would have never been on my radar. Then how would I have seen this if it just reported? I dont look at current day reporting stocks either. How did I see this? This would have been a very complicated find. I suppose I could check all stocks that reported, but I would say finds like this are pretty rare. One thing I could do is check all stocks that reported a dividend, as it was the dividend that really helped the upward force the day after the earnings announcement. I think that is what I will do. It would make sense that a stock reports a dividend right when it reports a decent earnings in order to light a fire under the stock price.
(check dividends reports upgrades downgrades daily)
COILED SPRING 10/30-APL: A true coiled spring with a huge upside with the growth est and two huge downsides and 2 huge upsides in the 4 quarterly surprises. Cant even make a call with this one. So it would be a true coiled spring that I could not call. It seems that in order to truly take advantage of a real coiled spring its just under two weeks then you dump your positions. I tend to get out of coiled springs too early after just a few days and then don't make enough from them.
YRCW- 10/31- News just reported earnings. That was the first violation. Also,
As you can see above, the gap up cancels the top signal. That and addition to the RSI and the MACD being in hungry territory with a lot more room to climb. Plus
I went against the market like a dumbass. The QQQ was trending UP. What was I doing with a put in this situation. Never go against the waves of the beach. I should have been looking for calls. Look at what the QQQ was doing that day:
So this is a learning example of stay with the market trend. Going against the market is a bozo no no.
11/3- CSIQ AAOI- 2 week climb- Nasdaq in climb mode, 4 quarter suprise check and growth est checked out 100-200% over benchmark on growth ests. Both stocks popped Nicely.
11/6- ASEI- 3 day drop. crowd climbed it up to earnings. 3 decent misses on last 3 quarters, -30, -40- -60, and a HUGE discrepancy between the growth est and the benchmark -126% growth est vs benchmark 190,200%. wow. Nasdaq looked like it was topped out so good call. This pick made money. A LOT of money.
COILED SPRING #2 11/16- BRKS real coiled spring. Contrasting last 4 quarters (big up) with -50% growth expectation. So didn't know which way would go. Did a spread and it blew to the upside. However instead of average 2 week coil growth, it was for two days only. Why? Look at the RSI and MACD, over bought, even in the spring bounce.
(When coiled springs blow, pay attention and follow the RSI and MACD to determine how long. They follow it.)
Coiled Spring #3 11/16 VLCCF...Terrible -200% red growth est compared to way high industry expectation. 2 out of 4 in the red for last 4 quarters. This coiled spring should have been called. If you can call the coiled spring, make the call. This one should have been a put. And if I had watched the RSI and the MACD I would have noticed I could have rode it down for three weeks.
(Again, watch the RSI and MACD for Coiled spring timing to determine how long to hold the spring)
11/14- NBS- news bounce/3 day drop hybrid. Announced news on phase 2 results 2-3 days before earnings. Should have shorted it, but huge white candle no tails. Rsi near top, Macd had some room up to run...lots of room. Decided that there would be a bit more run up before the actual earnings,maybe one more day. Call only goes up 6% the next day then bailed on the put because they announced conferences for the following month all month...and that means hype. I was correct on the next day jump. (The stock actually did collapse though, I was right about that as well, though I got out early.)
11/17- SNSS- News bounce. Phase 3 results. So what. I bought a put. Did drop the next day, but hardly, though made a bit on the put. In at .30 and out .35. Looking at the rsi and the macd the next day, glad I took the money, there was still a bit to go up, and the MACD was in a strong trend upward.. This begins the period of the market in a runaway configuration and I went against the tide. Perhaps I should have stuck with the opposite, the most down list in a true contrarian fashion. But I don't know where the ceiling is going to be.
(I have decided that the ceiling isn't going to be for about 2 weeks or so by looking at the weekly. The MACD and RSI are strong indicators even when bouncing stocks the next day, so be aware of that if you are going to hold more than one day. News bounce stocks...I prefer to be out the next day.)
11/19- AGIO- News (phase 1 test) plus three day drop hybrid like NBS on the 14th. Did a 1:10 call/put However, why the put? Because of the phase 1 test? Incorrect spread ratio, because this was never based on any analysts expectations. So it wanst a three day drop then, this was just a news bounce. The put was the correct action, not the call. If you felt there was too much action upwards due to Cramer, you never should have bounced the put on this. But it made money.
11/20- CLDX. was the correct move to bounce this the next day after the announcement on the 14 with it showing up on the 17th to purchase put on the 18th. What was I doing with this on the 20th? Thats why I lost. RECENT news events, react to that days uplist/downlist ONLY
(Dont bounce old news. Only bounce new news, ie the stocks on up/downlist..CHECK when that news originally was or else you could be getting after draft which is operating on different principles.
Coiled Spring 11/24 VtNET...bad expectations last 3 out of 4 quarters, -40%, -60%-80% etc. but the growth expectation was only at 2% to the positive. That leans to the way bad side. The correct action on this would have been to issue puts, not a straddle. It then dropped two dollars could have made money. That is while watching the technicals, because thats what we now do with coiled springs. Also a reversal is showing with two inverted handles, by the way.
11/21 ETNA coiled spring. No information on its estimates. Thus stricken from record.
11/25- NES- News bounce. Breakout white candle with long upper tail showing top. RSI and MACD near top however. Did a 90/10 put/call which was correct. Made money. Put went from .50 to .90. Call a loss. Made about 40% after the entire spring.
(news trumps technicals. Unless the technicals are extreame to a breakout. Extreme techs only)
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3 Month Tweak Analysis
*Follow the market. Only contrarian actions on the inverse.
*When doing three day bounce and 2 week gain, only BIG numbers. Big est growth, big minus est growth big or horrible last 4 quarter estimates
*Double check when the actual news was when bouncing news
*If news jumps a stock out of money bounds for strike prices, short/purchase stock directly for the next day bounce. Dont leave the money
*Analyst upgrade/downgrade dont touch 2 week window: UNLESS helps 3 day drop system (helped pump up the stock up to unsustainable high RSI/MACD levels right before a drop) or UNLESS the upgrade is in our direction of purchasing a call. Sort of an "I before E except after C" rule.
*Whipsaw force: Downgrade and RSI and MACD oversold suddenly new 3 dollar higher price target and review in WSJ. Overrides downgrade. Can bounce this news successfully.
*Go down the ENTIRE list and make a rating system. Just dont stumble upon the first one. Better and more thorough to go down the entire list. Might find even better options.
*Advanced reading between the lines on news stories such as Dreamworks and Katz. Good
Dont short/put company that purchases companies already up and running making money. They will provide instant cash.
BREAKOUTS...only if extreame opposite news. Other than that, if breakout to the upside and your RSI and MACD is low and has room to climb, dont do it. If a big breakout, check the technicals for final confirmation. WOuld it have room to go up/go down. MACD has more wieght than rsi. if MACD has room to climb hard, RSI will just smoke the ceiling. Typically, news trumps technicals in ALNY's case, the rsi was at the ceiling, the MACD was in strong climb mode. So, the stock dropped 2 days, then the MACD took over. The jury is still out on this one. Lets just say if the MACD and RSI are wrong against what you are trying to bounce, think twice.
If the next day the stock goes down just slightly after a huge up day and you are doing a put, and the RSI and MACD are in under-bought territories and things can climb, while news DOES trump technicals it will only trump for a day. Bail the next day no matter what.
Coiled Springs- Pick the most likely direction of the coiled spring as they are most likely right before an earnings announcement. Look at analysts expectations to determine likely direction. If there is a contradiction, as in the last 4 quarters of surprises one way, and growth est another, THEN do a straddle. Hold the straddles for a week and a half UNLESS the RSI and MACD say the party is over.
Unclear why price jump? Dont touch it.
3 day drop system only if climbing for week or so before hand. Do NOT do three day drop system if dropping leading up to it then sudden climb the day before. Sudden climb the day before signals not the crowd but INSIDERS.
Dont play with lukewarm numbers to the up or the downside.
Dont go against the market (3M!)
Dividend stock list: overrides recent earnings only if crushed to the downside already from poor earnings and RSI and MACD are in strong climb position.
Conclusion: If I follow the above tweaks, I can generate 75%-80% wins in the long term which means I will always make money in the long term.
Site redesign and relaunch coming soon.
Mark
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