3% Rule

The last minute surge on Friday burn my shorts pretty bad.

If you have been reading my blog for a while, you surely know about the 3% rule.

Basically, support and resistance, IMHO, are not concrete numbers.

Most often there is a rise after broken support or a fall after broken resistance.

Add 3% to the resistance and subtract 3% from the support.

Think of it as squeezing the last drop out of a lemon.

My performance pales in comparison to some bloggers out there with 20%+ return for May. I just wish they have more transparency because I would love to follow.

Some of my picks for May with returns: CLF(9.91%). JASO (14.89%), NG (26.32%), AEM (20.79%).

Weekend Edition and Thank You

Good artists copy great artists steal.



Instead of post links here, I will share them from my Google Reader.

May I suggest that you subscribe to them.

Thanks to those who signed up for the FREE Ino products.

I hope you like it.

There are not enough for me to get a pay out; however, I do appreciate the effort.

Invasion of The Greeks

I am happy to introduce - Maria Louiza Vourou: Greece’s Finest


You know I love to KISS.


But let's be realistic.

Somethings are not as simple as they seem.

I have taken a bath trading leverage ETF because I did not know what I was doing.

I have taken a bath trading options beacause I did not know what I was doing.

Do you like taking baths?

Today, I saw another post simplifying options without The Greeks.

Long, long ago, I did a post on Buy vs Short Stocks and Options here

What's wrong with this picture?


If you cannot tell me what's wrong with the picture, then you should not be trading options.

Any questions?

You're To Blame

Why You Can’t Blame Leveraged ETFs

People who do not know WTF they are talking about should STFU, seriously!

People tell me not to be a hater, and what do they do?

Put the hate on leverage ETF. That's called being a hypocrite.

Takes a deep breath. This should calm me down.

The Greek Prerequisite

I moved slower than a snail today and it was awful !!!

Anyhow, the market was Eva Green today and you can see right through it.


In school there were prerequisite to hopefully ensure you do not fail miserably in a class in which you are not qualified for.

The same is not true for trading and especially options trading.

In order to truly successful in options trading, you need to understand The Greek.

You can learn Greek here.

I traded options from time to time without fully understanding Greek. I was lucky, but did not know what I was really doing. Don't you do the same thing.

Stay away from anyone who tries to throw you in the pool without knowing if you can hold your breath.

Seeing Is Believing?

What do you see?


All the stocks have the same pattern listed by most possible percentage gain descending.

PRGN,TWB,EXM,CSIQ,GIL,TIE,XEC,NYX


ADM,ZRAN,HS,ALXN,CB


DEI,FRT


S&P 500 possible 17 week cycle

RANT TIME

Nah! I am just not going to do it. Too much energy wasted.

Long Weekend Edition

Happy Memorial Day Everyone!

Sit back, relax, enjoy the weekend.



Memorial Weekend Chartfest

Believing is Seeing

Negative Seasonal Patterns

Three Big Reasons Oil Prices Will Rally Back Big Time

CLOSING UGLY

Lots and lots of charts

S&P and Gold

S&P here

Gold here

Stupidity

A follow up to my post from yesterday on FUD here.

Today Tom Lydon wrote: Why Leveraged ETFs Aren’t For Everyone here

I think he hit the nail dead on the head.

So why is this post about stupidity?

Let me tell you a true story.

I came to the states with my family on April 27, 1975, 3 days before the fall of Saigon. A very generous family invited our family to spend Thanksgiving with them. Some how, I had heard the word stupid, but did know know what it means. Well at dinner, I was calling the host's son stupid over and over again. Lucky for me, he was gracious. Looking back, I felt stupid because I was using a word I did not know or understand the meaning.

The moral of the story, don't listen to every thing you hear, but learn for yourself.

FUD

Same sh*t different sector.

The single most common reason for failure is a lack of practical knowledge - Thomas Kyte.

He also coined the phrase FUD (Fear,Uncertainty,Doubt) and how it encourages you not to learn anything. Does this sound familiar?

I wrote about BeWare of Leverage ETF here and Break Even Point here.

You can watch On-Demand Webinar: Getting Leverage, Going Short here

I will be the first to admit that I did not completely understand leveraged ETF and how it is design to track the daily return of an underlying security. Once you understand that, then you will understand why the instrument behaves the way it does and by design.

If you can answer the question, "If you purchase a security and it drops 50%, then how much gain is required to break even?", then you understand the math behind it.

And yes, you can you TA to trade the instrument.
Look at the charts below.




See my trade in SRS and why I decided to jump in at 19.75 with 35 cents stop.


See how I got stopped out at 20.40.


Do you see some resemblance of a double bottom?

Characteristics of Economic Recovery

You know what they say, "Great minds think alike."

What a surprise to find out that Liz Ann Sonders is quoting Newton's Law of Motion.

I am been doing that for ages.

Click here to read

Slay the Dragon Within: And Win

Slay the Dragon Within: And Win

A Special Report

From

Wall Street Sector Selector

------------------------------------------------------------------------------------------

Recent market meltdowns and subsequent rebounds exposed the roles of greed and fear, the herd mentality and human psychology in global stock market action.

Successful investors understand their "humanness" and how to get their emotions to work for them instead of against them.

Greed, Fear and the Herd

Everyone has heard about greed and fear being the two primary driving forces behind investor decisions. And that is true because, while much has been written about markets being rational and investors making rational decisions based on earnings reports, price earnings ratios or technical analysis, the fact is that markets are not rational, as witnessed most recently in 2008's massive selloffs.

Greed and fear were at work.

And this has been seen time and again throughout history.

The Dutch had their tulips, Sir Isaac Newton was wiped out in the South Sea Trading
Company's meltdown in 1720, and we've had our own Black Monday in 1987 and the dot.com boom and bust just a few short years ago.

Greed is simple to understand. People want to make money. But fear is a little more complex in that there are really two types of fear: fear of loss, which we all understand, but also, fear of being left behind.

I believe a key to investment success is learning to control both your greed and your fear, and the solutions are the same for both.

Investors Who Slay the Dragon:

* Don't overtrade. In the search for better results or to limit loss, investors tend to overtrade and so wind up paying too much in commissions or getting whipsawed by short term gyrations of the market.

* Don't take too much risk. Greed causes investors to take too much risk, either through options, leverage or investing in risky companies or by taking positions that are too large to be comfortable.

* Don't go back and look at trades they have sold to see how they "would've done." When a trade is over, it's over. They don't do postmortems to see if they were "right" or 'wrong" about the market.

* Don't sell their winners too soon, unlike most investors who do this and miss out on further gains.

* Don't hang on to their losers too long. Most investors find it's hard to admit they were "wrong" and so lose more than they should or could.
Ego plays a big role here. People want to be right, but "hang on, it'll come back" is not an investment strategy. Just ask anyone who still owns some of the darlings of the dot.com boom and bust.

* Don't do daily mental accounting of how they're doing. They see t heir whole portfolio, not just the rise and fall of individual positions, and they don't keep a score card of their gains/losses. A once per month review is plenty.

* Don't listen to CNBC, CNN, etc. The media are masters of feeding the herd mentality that successful investors avoid.

* Don't log on to their accounts every day or check quotes multiple times per day. They take the long view. They don't talk about their stock picks, winners/losers with friends. They don't follow hot tips. They keep their own counsel.

* Don't put their egos into their trading. Pride in a good trade is as harmful as shame or anger or grief over a bad trade. Some trades will go well. Some trades won't go well. It has nothing to do with the investor's intellect or self worth.

* Find a good plan and stick with it. A great batter in baseball only succeeds four out of ten times at the plate. Investing is a marathon, not a sprint.

Most retail investors lose money in the markets because they let fear and greed, their emotions, interfere with their trading success. In study after study, it has been proven that while average growth funds earn between 11-12% per year, the average investor's returns range from -2.2% to +3% per year, depending on which study you quote.

Why the poor results? Because average investors can't control their emotions and let fear and greed and ego dominate their trading decisions.

While there can never be any guarantee of success, most investors find that understanding fear, greed and the herd mentality and then learning to manage their emotions can lead to better outcomes for their investing activity.

Disclaimer:
All material herein is believed to be correct but its accuracy is not guaranteed. This article represents solely the opinions of John Nyaradi and readers are encouraged to consult their investment advisors prior to making any investment decisions. All information herein is for general informational purposes only. The information is of an impersonal nature and should not be construed as individualized advice or investment recommendations.
----------------------------------------------------------------------------------------
John Nyaradi
Publisher
Wall Street Sector Selector
john@wallstreetsectorselector.com

Trade Reviews

Reviewing my trades and charts.

You can view my trades here or at http://bit.ly/f8trades

Ready?
Here are the charts.

Weekend Edition

Watch: Love Liz Market Snapshot

Read: Schwab Market Perspective: The Next Steps

Ponder: Thoughts Of The Day

If you are trading and have not learned anything, then I think it is time for you to quit.

Learn to identify the good, the bad, and the liar.

Identify the good so you can follow.


Identify the bad so you can fade.


Identify the liar so you can stay away.



The devil made me do it.


Come back soon for more updates.

Updated: 05/16/2009
Bear Market Rally or New Bull Market? Enough Already

Updated: 05/17/2009
Technically Speaking

Saturday's Art Of The Chart 5/16/09

Think About It

Everyone tells you, "Let your winners run and cut your losses quickly."

However, no one tells you, "Easier said that done."

With that said, I could not help but take profit in MTB today.

I did manage to let PSA and AEM ride.

Too many cooks spoil the broth


Last one is is a rotten egg.

Another look at the S&P 500

Apologize for lack of post.
Nothing much to be said that have not already been said.
Click title to see video.

How to use intra-day charts to time low risk entry points

Just a quick post from an advertiser.

Click title to view video.

New Girl and New Feature

Take a look at the right column under Technical Alert Trades.

The trades log are all the trades I have taken from the Technical Alert sent out.

Good as Gold

Just a quick post on gold which had an alert on May06.

Check your alerts, there are other gold plays NEM, ABX, GG.

Weekend Edition

HAPPY MOTHER'S DAY to all the mom.

Guys, go doing something to make here feel special.

I hate doing posts after posts because the original post gets buried.

Here are links to some of the stories I am reading.

I will update this post with more as necessary.

Check back periodically if you are interested in updates.

On Wall Street: Beware of the sucker’s rally

Too little too late. Nothing but stating the obvious.
The sucker is the one who did not participated. I am 1/2 a sucker.
I do apologize about the continuous rant.

The Economic Data Is Better, But...

Here is a view from both sides of the coin.

Bullish Case vs. Bearish Case

Trend Trading For a Living

Quick summary: The moral of the story is to ignore the news, ignore your personal bias, ignore Jim Cramer, ignore CNBC, and just watch the charts.

Updated 05/10/2009

Rallying For Real

Top Stocks Extended from their Moving Average May 9

Remember Newton's Three Laws of Motion.

USO & Crude Oil On The Move?

USO had technical alert on May 06

Click Here to view video and another opinion.

Experience and Education

Just finished watching Slumdog Millionaire.

He knew the answer, not because he was educated, rather he experienced it in life.

Being fortune8 also helped.

How does this apply to trading or investing?

The Bank Stress Test ...Do you Believe It?

Click title for video.

Talk Is Cheap

I keep hearing Bear Market Rally (blah, blah, blah)!
Remember that it's darkest before dawn.

Had I filter out the noise and realize this sooner, then I would have been better off.

SP500 broke 875 to the upside.
Even if there is a market sell off, 875 becomes support.

I still play a few short here and there to protect some long positions, e.g. 401k, IRA. It's like the left hand is giving to the right hand. At the same time, I am starting to scale out 401k proportionally as well.

Alert still shows more bullish than bearish technicals.




As the saying goes, "Action speaks louder than words."

Right now, the market action definitely outweighs cheap talk.

I keep telling myself that I will buy on a pullback, but a pullback from where?

For example: if you see a stock run from 20 to 30 and buy on a pull back, where would you buy it at? Let's say it pulls back to 25 and you are willing to buy it. However, it's still 5 points higher from when you first saw it.

This phenomenon is call opportunity cost.

Read that tat.

Thankful

Even if I am a bear, I am thankful the market has gone up because it has resurrected my wife's portfolio.



Most people have lost 50% of their investment; therefore, nice to be at break even.

Honestly, I should have done a better job.

Continuation Wedge (Bearish)

Short now and cover above 47.50

Here Comes the Sun: The Recession May Be Over

Great analysis which you can read as well as listen to the audio.

The “green shoots” story gains credibility and adherents
The “great recession” may already be over
Leading indicators aplenty are stabilizing and/or rising
Don’t “sell in May and go away”

Learn

Just a little history about me.
My grand parents did not know how to read and write.
My parents were not PhD.
The children, grandchildren, great grandchildren, and great great grandchildren are PhD, Engineers, Doctors, Teachers, Accountants, etc...

I don't want my daughter to be like me, I want her to be better than me.

I will let you make the inference.

I was shown StockFetcher and I am now revisiting again.

http://www3.stockfetcher.com/sfapp/


Here is the screen:

show stocks where close is above 11
and average volume (30) > 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 draw obv(20)
and draw atr(10)
and add column open
and add column close
and add column ema(4)
and add column ema(8)
and add column ema(21)
and add column atr(10)
and add column industry
and add column sector

It's a possible bearish screen or a possible buying opportunity depending on the market and stock.

Low volume pullback?


Sell off?


I want to thank http://disqus.com/people/jmilez/ and http://disqus.com/people/ShortBusTrader/ for showing me this.

Diamond Bottom Friend Foe Titan

Speaking of friends and foes, if the trend is your friend, then who's your enemy? (Hint: click the ?) It was so funny that I had to share it on the blog.



mea krupa or mea culpa? diamond in the crack or diamond in the rough?

Another Beautiful Bottom?