Technical Trading-Periodicals to help you

Candlestick charting as it's know is part of what I attempt to teach you on this site. All Technical trading uses charts. Knowing how to interpret them to guide you through entry and exits points for either short term or long term positions is in my view not a good way to trade. Some of you will pick it up, some will ask questions and others will share their own knowledge.

If you don't understand what I'm showing you in post then by all means post your question in the comment section and I will do my best to explain it in more detail.

It's been suggested to me to produce my own periodicals but until that happens I will make suggestions on reading and Video material that will help you to learn the basics and some beyond that every day. Understand that Technical trading in my opinion is only a guide. It is not a 100% guaranteed and should not be the sole decision making tool for buying or shorting a stock, commodity or future.

Investors Business Daily is considered a Bible in the industry. I've never took the course but know many that have and they have done well with it. There are many others. Bruce Kovner, Jim Rodgers and Geroge Soros are just some of the best examples of swing traders that have been very successful using a variety of Techinical indicators. There is no right way just what works for you and makes money. That's the only reason to invest.

Below are some suggestions for you to start. For others of you who wish to have 1 on 1 tutoring I am available in person and over the phone where we trade together and I show you how to read a chart.  I have found this to work very well with people. You're welcome to email me and we can discuss what your goals are.

Marc Roth

How to follow me

Several people have email me about how to sign up as a follower.

Two ways: At the top left of the page you a search box. Next to that box it says "Follow". Just click on it and choose your email provider through the wizard. It walks you through it.

Or send me an email an I will send an invite for you and any of your friends and family.

I also set up a Google search bar for everyone. Your search results which will open a separate tab.  The Blog is work in process so if you have some idea's on how to improve the site then feel free to post it and I'll see if I can get it up and running for everyone.

Thanks again to everyone and keep checking back. All your comments are great!

Marc

What I did so far today and why

As expected even though the jobs report was a bit better than expected the market sold off and the VIX made a big move. Reality is the whole worry about Europe is overdone to me.

With that in mind and what I saw on the 1, 3 and 6 month charts I'm seeing some buying opportunities on the long side for next week.

I bought the March ARG 60 puts at .95 and $1.65 and bought APD March 75 calls for .80 based on the reasoning I gave about this take over play in my other post today. Sold off my CVX 60, 65 and 70 Feb. puts that I had bought last week for a nice profit. Don't want to be holding too much of those going into the weekend since you lose time value quickly. Have a little left but might sell those too going into the close especially if the selling accelerates. Sold AFL Feb 47 puts, CSCO FEB 23 calls and my F Feb 11 puts that went deep into the money today. Still holding the F March 10 puts and may sell a portion of it going into the close.

Then I bought some GE March 16 calls for .44 and some Ford March 11 calls for .63.

My thinking is this: First the charts on the long side look really good. Run the time frames I gave you along with the RSI and you'll see they look way oversold. Again I always try to dollar cost average so if they go up or down Monday or later today I'll probably add to them. I'm still sitting on the VIX trade but will sell of something before the close. It made a nice move and I'm not a Hog.

Have any moves you made today? Go right ahead and let everyone what it was and why. 

I saw this movie with the little lady last week and it was really good. If you like food, cooking and Julia Child who was one of my favorites to watch as a kid you're gonna love this film. Snow headed this way so it's going to be a movie night.

Speculative Trading idea-Airgas Inc. (ARG)

 

I like to look for opportunities to make small gains quickly if possible. Basically anomalies in the market occur every day, several times a day. Overbought, oversold it really doesn't matter the important factor is simple-Make money. That's how I get paid.

Sometimes I will look for swings in stocks that I perceive to be overbought or sold based on the news that I have at that time. In this case we have a take over play for a company called Airgas (ARG) by Air Products Inc. (APD). Airgas in the countries largest distributor of industrial, medical and specialty gases.

This is a hostile takeover for cash and stock @ $62 per share and may raise it's bid based on reports. Airgas has already said they don't want to be taken over so the two sides have been talking for some time. Both offers by APD we're turned down. We have a situation that allows us to take a look at a short on ARG and/or a long on APD. 

I already had a long position on APD and with the drop will take a further long position. I took a small position on the put side of ARG with the thought in mind that they will put in place a poison pill and this deal will fall apart. Hostile takeovers are pretty tough to do and if they fight it typically the stocks pull off so it's a very speculative play. 

Also of note apparently according to Henry Schwartz President of Trade alert there have been a lot of action in the options in the last week so someone knew something most probably. Heavy option action is the first place regulators look for insider trading activity. Just to give you an idea the Feb. 50 calls which were basically worthless yesterday are now trading at $10.10-$10.40.

With that in mind one of my favorite movies is Wall Street. I own the DVD and have watched it since I was I was kid. The next one is coming into theaters this year. Can't wait to see it. Boiler room is not as good but I own that too and give you some real insight into the mirco cap world and how it works. Vin Diesel is in it and it tells a story based on real people and companies they "brought public."

Enjoy them

Toyota (TM) woes are Ford's dreams

Toyota Motors (TM) head Aiko Toyoda finally addressed the media about the recent problems regarding the acceleration pedal. In this guys opinion he should have hit the airways right way instead of waiting so long and not coming out immediately. People don't like that especially in the U.S. Now we are hearing about a problem with the brake system with the award winning Prius hybrids. We are looking at a recall of 8 million cars and 270,000 Prius's. Also the Lexus 250 Hybrid apparently has the same brake system as the Prius being that Lexus is Toyota's luxury brand.

If that's not enough you have the loss of production and surely civil lawsuits are to follow. Who knows what the U.S. Gov't is going to do. Can you imagine owning one of these right now and for the next year trying to explain all this to a customer. No thanks and who knows what they can do about it legally. When did Toyota know about this and how many people complained before they finally admitted the issue is yet to be seen? Whew! Make me tired just thinking about it.

The Japanese culture is all about "saving Face" and they don't take it lightly at all. It's embedded in every part of their life. That's why Aiko came out today. Too late? I don't know.

This can be said. People in the U.S. love their Toyota's but not at the expense of their families. I've owned several of them and they have always been great cars but it's been some time since I have.

For Ford who is clearly on the rise in terms of quality and design this opens up a major opportunity as well as the other manufacturers. Back in the 80's Audi had major problems with acceleration on their 5000 model. My father owned one of these but the Turbo which had no issue. He sold it anyway and never bought another one. Funny enough he bought a Toyota Supra which he still says was the best car he ever owned. It took many years for Audi to rebound from it especially after the 60 minutes report at that time hit the airways. Can a 60 minutes report soon hit the airways? To be seen but it has been all over the airways. I own puts on TM and believe that it will go down further as the story unfolds.

Anyway, my belief is that this Toyota issue has just started. There will be a major investigation and a Political attempt to get the Japanese to open up their auto market more for U.S. companies. They are tied together.

Surely Alan Mulally the head of Ford is going to carefully start to market this safety issue to the consumer. He can't be brash by throwing it in their face and it's not his style but also must be aggressive. Business is war. I'll be looking to buy some Ford back possibly at the end of close or Monday/Tuesday.

Stay tuned today is going to be interesting that's for sure.

Check out Jim Rodgers book on Investing in China. He's been over their for many years and he is one of the most successful investors/traders in the world. He formed the Quantum fund in 1970 with George Soros and "retired" in 1980 to ride his motorcycle around the world. I can tell you that you'll learn a tremendous amount reading this very well written book. He has many and this one is one of my favorites.

The Bears are feasting

You saw a nice sell off today across the board in everything except the dollar and a few selected companies. The Bears went to town. As I explained earlier today the Technicals were basically right on the money if you are looking at charts, know how to read them and are watching the Economic reports. Earnings.com is a good website to see the upcoming events as well as dividend payments. I use it everyday.

The calls I got today from clients we're all the same. What do I do? Most of these people are trading with me and have long term positions in many different types of investments. In reality they have nothing to worry about since most of them own solid companies posting solid numbers as we can see from most of the companies that have reported earnings.

Bonds are a great investment over time. I especially like municipals or muni's as they are know. Reason being is that you have limited risk, you get you principal back and get tax free interest. Now you have to know how to buy Bonds since they all carry different rates of interest based upon the risk. In the future I'll do a post about them. Not a sexy subject but a great investment for the long haul for a balanced portfolio and very important.


I know you're all thinking so what should I do now? First I never tell people what to do unless I'm doing it for them. I post to educate and help you take control of your Portfolio. With that always in mind I can tell you what I would do but that might not be right for you. You have to make that decision. I can only show you what I look at and you have to put the work in to utilize the tools. They are never always right.

My belief is that we will see a further sell off tomorrow after the unemployment figures are released. Could be as much as today. That's when you start to look at what has been sold the hardest and in what sectors. You have to look at the strongest companies if you want more safety since that's where the traders will move into first. Then you have others that are smaller and are typically carry a higher risk. They are volatile. That is measured by what's called Beta. Any stock with a Beta of 1 or less carries the same volatility as the market. Over 1 carries more volatility.Just look at the stock you're looking to buy and see what the Beta is. That tells you how fast it moves relative to the market.


You can look at something like MGM, GE, AA, LVS, F, FITB, AAPL, AMZN and possibly some of the steel companies once things sell off enough. Now I love when you have opportunities in the markets like this since they typically move up quickly. That also signals that the market is some disarray and unable to pick a direction. That's when charts and reading through economic/political info. becomes even more important. Even with all that you can still be wrong on your timing but if you apply some common sense you will be right fairly quickly. Look for low RSI and read the candlesticks on 1 ,3 and 6 month charts. The shorter the duration on the chart typically the more accurate it is on the short term. The dailies help pick the entry point during the day but that's a whole different ball game with the same principals. Below is a link for a starter book and a good place to start.

Dollar cost averaging is so important. My plan is to buy a little if everything looks the way I suspect going into the close tomorrow but I'll cross that bridge when I get there. Every plan needs a plan B. We shall see what that brings us but in the meantime realize the world didn't end and you're worried about a particular position then post a question or comment.

Jobs, Jobs, Jobs

As we can see from today's weekly Jobless claims it gives you a solid picture of the state of employment. The street was expecting 8,000 new claims and got 10,000 and the market sold off across the board.

Tomorrow will show the state of January's Unemployment. Expectations are for a 10.1% unemployment on non-farm payroll a slight increase from 10%. Anything over that will create a wider sell-off. You're seeing a flight to safety as the U.S. Dollar hits it's 7 month high against the Euro and the 10-year note up 1/4 to yield 3.676%. The flight to safety shows the markets reluctance to take risk in equities. Why take any risk if you can make money not? You wouldn't. Funds are still looking for a drop off on the equity side to get long. Still a lot of cash sitting on the sidelines and the individual investor is still plowing cash into Bonds.

Even with the growth of the economy Cisco's great numbers and forward looking statements we can see that the traders are focused on one thing-Jobs. People can't buy goods and services without them.

If we look at the charts we can see that this market bounced right off the S&P 1100 number that everyone was watching closely. The VIX is the other major indicator that is gone through the roof this morning moving $3 points.

http://stockcharts.com/h-sc/ui?s=vix&p=D&b=5&g=0&id=0

As this chart shows it bounced right off of the 50 day moving average again. That creates what's called a double bottom. That is when a stock goes to one level in this case $21.22 goes back to that level and goes up. A Bullish indicator. The VIX measure volatility in the options market. It can be used as a hedge on long term positions that you own. It can also be used as a trading vehicle. As with anything once they become over bought or sold it creates opportunities to make money. In this case the Fundamentals of the Employment figure created a catalyst and the RSI on the chart does not give us a clear indication of the coming movement from yesterday. the 50 day moving average was your only guide along with the wick on the red candle yesterday indicating a reversal to the upside for the VIX.

The question always comes down to what to do? If your a long term investor you have nothing to be very concerned about since you have a long time horizon. Trading wise you have some opportunity on the VIX since there is sure to be heavy volume tomorrow.

Questions and comments are always welcomed. stockguy911@yahoo.com

Cisco (C)-King of all Techs.

Cisco (CSCO) is one of the most important companies in the market and the backbone of Technology. I've always been a John Chambers fan and believe that he runs one of the best companies in the World. He's always been honest with the shareholders and conservative in his conference calls. As usual they beat the anticipated numbers on the EPS and revenue fronts. The important factor is Chambers statement himself on the conference call.

Chambers said that during the quarter the company saw "dramatic across-the-board acceleration and sequential improvement in our business in almost all areas." They are adding 2-3,000 jobs so if you're a Tech. guy then send over that Resume.

Now I've been following CSCO  for about 20 years. Even during the boom, boom times of the Internet 90's he's never made such bold statements. He's a not cheerleader type of CEO and actually has always the opposite. So strong Revenue growth/Cash flow, number one in their business, looking for strategic acquisitions and one of the best managed companies in the world. That's what you get as a shareholder.

Would I run out and buy more tomorrow? No. If you want to trade it then I wait on the long side. Think about a short but be careful. We have that jobs report out on Friday. I can't for the life of me see how it can be good so we probably will see a major sell-off especially if those numbers are bad.

If you want a solid company as part of your long term portfolio then wait until the jobs report is out on Friday and then start your position. I say START because we always dollar cost average. Buy a little at a time and get a good cost average by buying more on down days.

Technical's:

In looking at the 6 month chart you can see that CSCO bounced right off $22.50 with a reversal pattern. Several Red candles and then a wick at the bottom and the reversal. Looks like Ford huh. See a pattern?
At $23.07 you can see that this was decision time. That's indicated by the Black open candle with a wick on top and the fact the it backed off last time at that level. However, if you look at the RSI (Relative Strength Index which measures momentum) you can see that that is a very nice low number at 43.08. With that in mind it's a better long at that level than a short.

http://stockcharts.com/h-sc/ui

Maria Bartiromo-The Pant suit lives

For some reason this former Coat check girl from Brooklyn continues to host the most important hour from 3-4pm on CNBC. It's always been clear that Maria (the former Money Honey) wasn't the brightest bulb in the land but made up for it with her good looks. Melissa Lee or Mark Haynes should take over this last hour since they have the knowledge. Maria's pant suits have become too much for my eyes anymore and she is about the worst interviewer I've ever seen. Never let's anyone finish a sentence.

Ford Motors- (F)

Yesterday Ford reported it's Jan. Sales. They are increasing in their market share and had a nice increase from last years same period of 26%. That with less than last years selling days and the "Toyota effect" not yet taking hold. The interesting factor here is the the sales of Fusion which saw a 49% increase in sales and won car of the year from Motor Trend. Ford has backed it's future on this vehicle. Time will tell of whether or not it will be the savior of Ford. Ford still has the sale of Volvo waiting in the wings which would add much needed cash and consolidate the focus of the company further. The question always put fourth to me is of course should I sell? My question back is always are you trading Ford, investing long term or both? The problem most people make is first they only buy one position and second they have no exit strategy other than to sell it higher. Just guessing and having no plan based on at least something in the way of a Fundamental analysis and/or a chart is not a plan. My answer is yes and no depending on what your objective is about selling some stock here. As you can see from the chart I've linked for you Ford followed up last weeks sell off with a clear reversal. This can be seen by looking at the Red candlesticks in a row and then a wick at the bottom. The wick portion represents the confirmation that the stock is reversing it's downward move. Based on what it did the week prior and the run up to $12+ the stock should continue to run up a bit further. How far is hard to say however if you did buy some shares last week selling off some a little at a time starting today is good idea. I like to sell 1/3 of the total position at a time. Dollar cost average in and dollar cost average out. It's almost impossible to pick a top or a bottom so if you have a range of what your objective is and make an average sale and profit your doing pretty good over time and you still own the stock. You can always buy it back. Major factors to consider: 1. Is the Toyota affect which seems to be snowballing 2. The Jobs report on Friday. Chances are it will not be good. You can be sure the Technicians are looking at the 1,100 S&P as a place to sell. The Technicians on Ford are watching it getting close to running out of steam so watch the volume. Up on light volume tells you that's exactly what's happening.

http://stockcharts.com/h-sc/ui?s=f