Your 10 Trade Ideas For The Week 10-1-12

In last week’s post there were nine long setups and one short.  None of the longs triggered and the short triggered only to be a scratch by the end of the week.  That is typical for the market we have been in the last few weeks.

This week I see a lot of “extended flags.”  Flag patterns on stocks that have gone on a bit longer than they should have.  This week will probably tell if most of those flags fail or break to the up side.  All the setups this week are long, but all bets are off if the broader market tanks.

$YELP has been on the list three weeks running and each week the chart has looked better and better.  If it break the large “W” pattern and can hold, the measured move is about 10 pts or to around $37.00.  Buying a breaks above $27.40 with a stop two bucks below gives you about a 1:5 risk/reward ratio trade.

This is the only “non-flag” setup on my list this week.  $XCO has a nice long basing/bottoming pattern.  It has tested the $8.00 level a number of times and each time the odds it break increase.  You could use Friday’s candle for entry/stop.

$RDN is one of those “extended flags” I was talking about.  It’s almost getting too long, but it has the right range and volume pattern.  This could be the make or break week.

A nice flag that pulls back right from an 18 month high.  Keep an eye on $NWL.

$LVS came out of a large channel, flagged, broke out, flagged, and broke out again. Now it is starting to base under its 200ma.  Needs a couple more days of sideways movement but then could be ready to go.

Financials have been looking healthier, starting with a move in $MS in early September.  $JPM showing a flag right below gap resistance.

$FITB is another financial that is flagging near two-year highs.

Last year, so-called “alternative schools” were all the rage, then fell out of favor.  $DV has recaptured it’s 20 and 50ma and is flagging here.  A break above $23.25 with a buck lower stop, and a target of the gap at $27.50 gives you a 1:4 risk/return ratio trade.

A progressively tightening consolidation below a gap resistance level could set up a nice pop in $DSCO.

Not the best looking flag in $CPE (a bit sloppy), but it does make somewhat of a “”handle” on a cup and handle “type” of formation.  *Note: Cup and handle is traditionally more valid on a weekly chart and beginning of the “cup is usually a pivot high unlike this chart.  However, I still think the price action is bullish.

BONUS: Not a set up, but something to watch.  The ETF $UNG which represents natural gas is moving up with progressively higher highs.  It’s recaptured its 200ma for the first time in over a year.  Keep a watch on it and check out this interesting article about the relationship between nat gas and coal.

Coal vs. natural gas: It’s complicated (via Houston Chronicle)

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Best Of The StockTwits Blog Network 9-28-12

Let’s be honest, you could pretty much throw a dart any day of the week at the StockTwits Blog Network, and end up hitting a post that is better than 99% of the other stuff out there that passes as financial blogging.  So to say these are “The Best of….” is a little disingenuous; let’s just say these are some of the posts from the last week that caught my attention and I think will interest you.

What Volume Bars can tell you about a stock 1nvestor

Dividend Guy’s Stock Screen Crossing Wall Street

I Hope Warren Waited For a Proper Signal Before Selling Muni’s Dragonfly Capital

Investing books that go above and beyond Abnormal Returns

Putting This Stock Market Rally Into Perspective All Star Charts

Stock Market Video ANnalysis for Week Ending 9/28/12 Alphatrends

Marketview: Further Rotation Required Dynamic Hedge

Two important days–keep these levels on screen High Chart Patterns

Google will be the First Trillion Dollar Company Howard Lindzon

Four Common Trading Mistakes and How to Avoid Them Ivanhoff Capital

Vringo – Google Patent Maneuvering Nears Fever Pitch Kid Dynamite’s World

USA Consumer Confidence Surges to 7-Month High! Osprey Flyer

Big Pharma Faces its China Moment AlphaVN

How Much Is a Tulip Bulb Worth? Phil Pearlman

4 Ways To Reform Tax Code For Growth Points and Figures

How Brain-Lag Can Wreck Your Trading Rogue Traderette

Bull vs. Bear Debate for the 4th Quarter Sizemore Insights

StockTwits Official Microblogger of the Value Investing Congress StockTwits Blog

Home Prices up (CHARTS) The Basis Point

Managing Risk: Car Insurance Edition The Minimalist Trader

Goodbye, Smith Barney The Reformed Broker

The Most Astonishing Fact About The Stock Market Since 2010 The Armo Trader

Housing Supply Signals Increased Employment ValuePlays

And what you may have missed on bclund this week….

5 Ways I Can Smell You Will Be A Failed Trader A Mile Away Brian Lund

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

New VW Passat Commercial Featuring Rush

If you are a drummer or a fan of the best band yet to be inducted into the Rock n Rock Hall of Fame you will appreciate this VW Passat commercial featuring “Fly by Night” by Rush.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Using “Magic” To Be A More Profitable Trader

This post originally appeared on TraderPlanet.

I have a real issue with magicians. I put them in the same category with clowns, mimes, and Canadian teen idol singing sensations; they just creep me out. I mean just look at David Copperfield and the late Doug Henning…do I need to say more?

However, just because I don’t like magicians doesn’t mean I don’t like magic. Today I am going to show you some trading magic that will make you profitable even if you lose on two thirds of your trades.

RECENT PICKS
In the last month I have done three posts on three separate stock trades. The first in was in Morgan Stanley ($MS) where I suggested risking 50 cents for a potential $3.00 gain.

Then next was in Chesapeake Energy ($CHK) where the risk was $1.00 for a $5.00 reward.

The last was in Vocaltech Communications ($CALL) which risked $1.00 but didn’t have a specified reward target.

MS did trigger and hit its target. CHK triggered, but failed for a possible $1.00 loss. And CALL didn’t trigger, but let’s just say it did and you lost a buck on it.

But where is the magic O’ Great Lundini?

POSITION SIZING
The magic is in how you size your positions. By taking a set percentage of your account equity, you end up with a fixed dollar amount of risk capital on each trade. You divide that dollar amount by the spread between your entry and stop on each trade ($.50 on $MS, $1.00 on $CHK, and $1.00 on $CALL). That gives you your position size on each individual trade.

You then are risking a standard fixed amount or “R” on each trade.

DO THE MATH
On the $CHK trade you then lost 1R. On the $CALL trade, 1R as well. But you made 6R on the $MS trade, for a net profit of 4R.

So even though you lost on 66% of the trades I suggested, you are net profitable.

Alakazam…..!

See related post The Most Important Concept For Successful Trading.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

No Matter What You Say, I’m Not Coming Out Of The Closet.

Despite what your dirty mind thought that the title of this post suggested, it is really just an invitation to read my guest post, “”Find Your Voice: Blog Like You’re In a Closet” on ProBlogger.

This post chronicles the five-year journey of my blog from an unreadable piece of crap to….well, whatever you have decided it is now.

Thanks again to Darren Rowse and Georgina Laidlaw for giving me a shot at a guest post.

Find Your Voice: Blog Like You Are In a Closet (via ProBlogger)

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

9 Reasons Everyone (Yes Even You) Should Learn To Trade

Can everybody learn how to trade the markets?  Well, that’s a tricky question.

A better questions is “should everybody try to learn how to trade the markets,” to which I answer a resounding “Yes!”

It’s kind of like learning to swim; why wouldn’t you at least try it.  It may help you stay afloat when you need to and you might actually be good at it.

The problem is that the term “Trading” is intimidating and needs a re-definition.  Most see it as a high risk, all-or-nothing endeavor, much of which they only know about from watching movies like “Wall Street,’ or cheesy late night infomercials.

But what if you found out that trading was not about complex systems,  risking financial ruin, or “wrecking companies because they are ‘wreckable,’” but was more about being able to add an extra ten or twenty percent of your yearly salary to your income?

Would you be interested in learning to trade then?  Is the sky blue?  Do I like beer?  Is Justin Beiber a legendary talent.  The answer is “yes, yes, yes, and no friggin’ way.”

In the following weeks I will be expanding the ideas in this post into a book and if you want to be alerted when that happens make sure to subscribe to my blog for free Via E-mail or Via RSS, but for now let me give you the cliff notes as to why everyone should learn to trade.

The Markets Don’t  Care “What” You Are

Black…Brown….White.  Male or female.  Ugly or pretty.  Skinny or fat.  No matter what label society puts on you, the markets don’t care.  Your ability to trade successfully won’t be based on any of those things.  Trading is the purest form or meritocracy I know of.

It’s A Business Without The Drawbacks

If you trade correctly, you treat it like a business, but a business without all the bad things like employees, customers, regulations, business licenses, city and county taxes, HR issues, and competitors.

Your Social Class Is Irrelevant

Sure, having a big bankroll will help you get started in trading, but it is not necessary. Nor does your success matter if you grew up in Beverly Hills or in a two-horse town in West Texas.

The Market Doesn’t Care What Or Who You Know

Your college degree won’t help when you start to trade, nor will the fact that your Grandfather was the mayor.  You can be a high school dropout who came to this country as a refugee and you will have as equal a chance as anyone else to be successful in the markets.

It’s One Of The Few Situations In Life Where You Totally Control The Risk

I guarantee you this….when you trade, you will never lose more money than you allow yourself to.  Sounds funny right, but all risk decisions are made by you, and you alone.  You can even, depending on the style of trading you choose, create a situation where outsized risk is virtually zero.

You Can Prosper In Bad Economic Times

If you learn to trade properly, you can make money in both up or down markets.

Information On Trading Is Abundant and Free (or Cheap)

Want to be a doctor, lawyer, engineer, coal miner, truck driver, bartender, whatever, good luck on finding free or cheap quality info and more importantly real-world training on how to do it.  There are a tremendous number of experienced “virtual mentors” at your fingertips via social media when it comes to learning to trade.  And most won’t charge you a dime for the benefit of their wisdom.

The Market Doesn’t Care What You Did In The Past

When you have a traditional job and you screw something up, I mean really screw up bad, if you are lucky enough to keep your job you’ll be hard pressed to wipe the stigma of failure from your reputation going forward.  If you fail one day while trading the market, well tomorrow is another day where you are automatically reborn, clean as the virgin snow.

You Have More Freedom Than In Any Other Job

You might think that any business owner has freedom to do what they want, when they want, but as a former business owner myself I can tell you that is a myth.  You have employees who depend on you, customers who expect of you, and competitors who are ready to overtake you if you let up for a moment.  Traders, especially successful traders, have more flexibility with their time than any other profession.

So, What Is Your Point?

My point is not to tell you that trading is easy or that anyone can do it, but that more people than currently try it should give it a shot.  The public at large, both here in the US and abroad, have bought into a false and uninformed concept about what trading is about and what its purpose is.

If people were to understand what trading is really about and approach it with a methodology that is risk based, I believe it could benefit a much larger percentage of the population than it currently does.

Stayed tuned to blog in the coming weeks as I go into detail as to what exactly I mean and how trading might be for you.

Make sure to check out my new book  Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

Updated Amazon Banner

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Your Trade Ideas For The Week Of 9-23-12

Not much action off of last week’s list.  The vast majority never triggered and the couple that did would have washed against each other.

Here are some setups for your consideration this week.  Unless otherwise noted they are good-looking setups on the daily chart for taking day trades,( i.e. ”Set up for home runs, but hit singles and doubles”) and then swing traded at your discretion.

No idea what $CALL does, but flagging right below six year highs is a good set up.

A holdover from last week’s list.  I was looking for sideways action in $FB and we got it.  Two inside bars right at support/resistance level provides a great risk/reward ratio.

$LF broke the 200ma, bounced, and now is right below it again.  A break of the small trendline is a short.


A mini consolidation area just above resistance is setting a good risk/reward setup in $MRGE.

$PZZI is a pizza stock. Okay, whatever.  Double bottom, a break of resistance, and then a consolidation in a flag-ish pattern has my interested.

Another flag right below the highest pivot point in the last year in $RDN has my attention.

$YELP is another holdover from last week.  The little “hook” on the “W” pattern is good, and increases the chances the stock breaks.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

5 Ways I Can Smell You Will Be A Failed Trader A Mile Away

In honor of my 45th birthday I went out to my favorite cigar bar this weekend, The Buena Vista Cigar Club owned by Rigo Hernandez.

The “club” is really just a hole in the wall, but it is a great little bar and one of the few places left in Southern California where you can actually enjoy a cigar, inside, with a cocktail.  Rigo has been in the business for over 40 years and he knows everything there is about cigars and the cigar business.

As he and I were chatting, a couple of heavy-set, very well dress ladies came into the bar.

“They are not cigar smokers,” Rigo immediately said to me.

I assumed he was taking a cue from the way they were dressed or the fact that they were women, which seemed like a bit of a superficial judgement, and very out of character for Rigo.

“Why, because they are women?” I replied.

“No certainly not,” he answered.  ”I have plenty of women come in here who love cigars.  In fact my Abuelita in Cuba used to smoke three or four cigars a day.”

“Then why do you say that,” I continued.

“When you have been doing this as long as I have, you just develop a sixth sense for these things.”

Now being the gentleman that he is, Rigo wasn’t going to treat these ladies different than any other customer, no matter what he thought their proclivities were, and he went on over to greet them and take their order.  The conversation went like this….

“Welcome ladies, what can I get for you tonight?”

“Can we see a food menu?”

“Well, we don’t serve food here, however we have a menu from the Italian restaurant next door.  You can call them to order and they will deliver it here for you to eat.”

“Hmmm, okay…well then could we see a champagne list?”

“I only carry two types of champagne as we don’t get much call for that.  However, I have a very extensive selection of fine rums, scotches, cognacs, ports, and tequillas. Of course we also have a great wine list and a number of domestic and imported beers.”

“No champagne list, huh?  Do you have any Groupon deals?”

“No, I am sorry madame, we don’t.”

I was mesmerized by this conversation. Everything these two said or did screamed that they did not belong in a cigar bar, the final evidence coming when they asked Rigo if he had any “cherry flavored cigars.”

They eventually did order pizza from next door, had white wine spritzers, and a couple cigars….both of which they let burn out only three-quarters of the way smoked, and then asked for plastic bags for them so they could “take them to go.”

As the night went on and I thought more about this incident, I realized that it really wasn’t all that amazing.  Rigo was right, when you do something day in and day out for years on end you will often be able to pick up on cues and characteristics that can quickly let you “clock” somebody.

In fact, it is something I do all the time when I speak to people about trading.

Now first let me say that I think EVERYBODY should try to learn to trade.  I also believe that learning to trade takes a lot of work, and it is not always evident right away whether or not someone will ultimately end up as a successful trader.

But there are some characteristics that I see in people from time to time that are almost always “deal breakers” in terms of their ability to become successful traders.  As long as they posses these traits, in my opinion they will never be successful at trading no matter how long they try.

Assuming Expertise In Some Field Will Translate To Trading

This is the classic “doctor at the poker table” scenario.  Poker pros love it when a doctor sits down with them at the table, because doctors as a percentage are notoriously bad poker players.

Despite being able to complete tremendous amounts of study, survive intense on the job training, and at times having the power to snatch life back from the brink of death, none of those skills transfer to the poker table.

I don’t care how great you are in sales, chess, astrophysics, yoga, firefighting, electronics, engineering, bull riding, construction, or cinematography, none of those things will help you when you decide to learn to trade.

Those that come in wearing their extraneous successes as a badge of honor, sure it will give then a leg up in the markets, will almost always end up like the poker playing doctor….busted, broke, and bitter.

Having A ‘Know It All” Attitude.

We all know this person.  They know everything.  I mean EVERYTHING.

Who played keyboards on The White Album. The mean temperature on Pluto during winter. How the President can fix the economy.  Who built Stonehenge.

These types will find out how much they don’t know, and quickly, once they get in the markets. For them trading will be their worst nightmare, one they probably won’t survive.

It will be like they are in a street fight and the market is their opponent, hell-bent on teaching then a lesson they won’t soon forget.  Only it won’t be the type of fight where a few punches are thrown until somebody gets knocked down, and then the victor helps the defeated up, they shake hands and have a drink together at the local watering hole.

No, it will be the type of fight where when they get knocked down the market will start kicking them on the ground, in the head, with steel toed boots.  Then the market will go look for a pipe from a nearby construction site to start beating them with.  And if they haven’t crawled away in a bloody mess by then, the market will take a friggin’ cinder block and use it to try and crush their skull.

Not Knowing When You’ve Have Had Enough

In middle school I watched a guy taunt a bully all day long, and then run away when the bully came after him.  He kept doing this until the bully finally caught him, and I thought the guy would get what was coming to him.  But surprisingly, the guy begged and begged the bully for clemency, and perhaps feeling a momentary flash of compassion, the bully let him go.

And as soon as he did, they guy started taunting the bully again. Suffice to say, when the bully caught him the next time, he kicked his ass.

The guy didn’t know when to stop.  When he had pushed it enough.  He’s the same type that takes one to many drinks and crashes his car.  Throws one to many rolls and craps out. Lips off to the policeman one to many times and ends up in jail.

This type will always keep taking trades NOT because the setups are valid and warrant it, but because they never know when to say “that’s enough.”

He will be the guy that gets up for the day, but has to take “one more trade,” and gives it all back.  Being up 50K won’t be enough, because he could be up 100K, so he will push his positions and lose it all.

Not Understanding The Concept Of Risk/Reward

I knew a guy in college.  His standard move was, when drunk, he would climb to the top of the apartment complex he lived in off campus, and jump down into the pool in the center courtyard.  Everyone that was partying in the complex would be cheering as he stood atop the roof, egging him on for the big feat.  He loved this, as it gave him the distinction of being labeled a “party animal,” which was his “reward.”

Then one night he missed.  Came up a wee bit short. Smashed his foot into the edge of the pool as he came down.  Broke his foot and shattered his tibia and fibula.  That was his risk.

He still walks with a limp to this day.  He didn’t really understand the concept of risk/reward, but hey, all his drunk college buddies did think he was cool.

Those with this character flaw are made mince meat of in the markets.  They will take on three, four, five units of risk for one of reward.  When you practice this inverse risk/reward relationship you can be right on 80% of your trades and still blow your account out.

Being Afflicted With The “Babe Ruth” Syndrome

Everyone knows The Bambino was a home run king.  The mythical figure who pointed his bat skyward, picking the exact spot where he would crush a dinger for little orphan Timmy before he succumbed to rubella.

But “The Babe” was also the strikeout king.  Of his at bat outs, 24% of them were strikeouts. The average batter of his time only struck out 12% of the time, meaning Ruth struck out twice as much as his contemporaries.  It was all or nothing.  Home run or strike out.  Sydney or the bush.

In baseball you can get away with that, but in the markets you can’t.  You build your success with singles and doubles and if you are lucky, the occasional home run will pop up, but if that is all you are shooting for, you will in all likelihood have too many strikeouts.

Those strikeouts will deplete your capital until you will get to the point where you can no longer play in the game.

In Conclusion

Like Rigo I try to be a gentleman whenever I talk to people about trading, making sure to treat everybody with the same respect, and never disparaging them, even if my gut tells me that they possess one of  the previous traits.

If you possess one of these traits and are thinking of learning to trade, it’s best to seriously consider if this is something you are willing and able to change about yourself, or you risk having a very rough time in the markets.

Make sure to check out my new book  Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Stupid Crap I Said On Twitter Last Week

If you are not following me on Twitter here is the stupid crap you missed from last week…

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Green Day’s Billie Joe Explains What “One F***ing Minute” Means

At Friday’s “I Heart Radio” festival in Las Vegas, Billie Joe Armstrong of Green Day didn’t like it when the producers cut their set short in order get Usher on.  Here is his live “punk rock” reaction to that.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.