glgene
616 posts
msg #100357
- Ignore glgene |
4/22/2011 6:16:31 AM
In the April 25, 2011 issue of Investor's Business Daily (IBD), which hit the news rack April 22, the following statement was included on Page 1 in the "Big Picture" article:
"...IBD research shows that (stock) leaders, on average, peak once they climb 111% above their 200-day moving average."
They cite Travelzoo (TZOO) as the example, showing its 153% above its 200-day MA.
I wrote this script, accordingly:
Found 46 results (I added $15 as the minimum price).
Sure enough, TZOO was included in the results. Its close on 4/22 was $94.22. Its 200-day MA is $37.20. Do the math:
$37.20 + $37.20 + $19.72 = $94.12 = 153% gain. Actual number is really a 153.28% gain. Close enough.
That said, I know the IBD sentence included the words "leader" and "average," so I know the 111% reference isn't an overall 'black box' answer. That said, I would appreciate any remarks to my post. How would you use this script (as is or modified) to know when to sell or short a stock?
Thanks.
Gene
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jimvin
173 posts
msg #100375
- Ignore jimvin |
4/22/2011 9:56:45 PM
My experience has been that no automatic profit-take and a 5% stop-loss offers the highest over-all returns...if a model works well. Of course, you have to look at other factors such as big gap-ups (generally leading to rapid, big retreats), MACD trending, etc. when selecting the investment.
Also, in the current market I've noticed that a lot of significant price drops occur on Thursdays as short-termers take profit. I usually buy on Monday and sell on Friday, however in this market I sell on Thursday afternoon to lock in gains.
Finally, note that I buy between 5 and 10 stocks on Monday; my experience in this market has been that those pocks which close down on Monday (no matter how slight the loss) do not go up significanlty in price (i.e. less than 1%) the rest of the week and, indeed, tend to lose even more value. As a result, I sell any stock that closes negative either in after-hours Moinday or at open Tuesday.
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glgene
616 posts
msg #100384
- Ignore glgene |
4/23/2011 10:07:10 AM
Interesting points. Thanks.
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jimvin
173 posts
msg #100392
- Ignore jimvin |
4/23/2011 6:25:56 PM
Thanks for sharing the filter!
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glgene
616 posts
msg #100501
- Ignore glgene |
4/30/2011 10:35:53 PM
TZOO lost 13% since my original posting (1 week back). Maybe there's something to the 111% rule (guideline).
Gene
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jimvin
173 posts
msg #100503
- Ignore jimvin |
5/1/2011 12:46:20 AM
Take a close look at the technicals for TZOO: There was a major leap on Friday the 22nd which almost always leads to a fall-back (in this market) due to profit-taking; also the MACD was very weak; 2 classic signals (I've found) for a pullback short-term.
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glgene
616 posts
msg #100512
- Ignore glgene |
5/1/2011 6:40:52 PM
Indeed, TZOO had a strong 2-day run-up in price April 20-21. And, yes, MACD was weak (as you said).
AMRN was the top-volume stock found in my search end-of-day April 21. TZOO was second.
* AMRN was 207% over its 200-day MA on April 21. It subsequently lost 5.44% the following week.
* TZOO was 153% over its 200-day MA on April 21. It subsequently lost 13.11% the following week.
As I stated in my original post, IBD found that when a stock leader is up 111% over its 200-day MA, it's ripe for a decline.
This mini-test supported this claim. But it was a limited test. Worth watching, I think.
Gene
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glgene
616 posts
msg #100513
- Ignore glgene |
5/1/2011 6:46:53 PM
It will be interesting to see what REDF does on Monday, May 2.
It was the highest-volume rated stock in my search end-of-day Friday, April 29. It's up 219% over its 200-day MA. It's RSI is in nosebleed territory.
Gene
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jimvin
173 posts
msg #100515
- Ignore jimvin |
5/1/2011 7:21:30 PM
If you get a chance, take a look at the technicals on StockCharts.com; the candlestocks look like its stalling out, but the P&F Chart indicates that its got some room to go before its projected top-out. BarChart.com indicates that its still below its first resistance point.
A lot will (of course) depend upon over-all Market performance; if there's a strong open Modnay it should do well through most of the weak; if its a weak open it will more than likely be subject to profit-taking (much like TZOO last week.)
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johnpaulca
12,036 posts
msg #100516
- Ignore johnpaulca |
5/1/2011 7:46:10 PM
I tried shorting REDF on Friday but couldn't get any shares, is anyone having this problem?
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