2- "Buy that which is showing strength - sell that which is showing weakness. The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to "buy low, sell high", but to "buy higher and sell higher". Furthermore, when comparing various stocks within a group, buy only the strongest and sell the weakest."

16- "Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all."

I almost agree with SLO champion when he wrote "Reassured that the Fed will step in whenever ill winds blow, the market looks ready to keep moving up", but I am not ready to go long yet because I don't see any group showing strength. On Monday I sold half my all-short funds portfolio, then on Wednesday I sold the other half, technically the bears are still winning but maybe the forces are ready to shift.
I would like to see some ma crossovers before I start fighting on the long side, for now I'm taking my less-than-a-year 18% gain to the bank.

I'm still on the short side on my personal portfolio but I don't hold any short funds, let's see what happens in the days and weeks to come.

I'm trying to project an intermediate bottom for the markets using two technical theories, the measured move and the swing rule on the downside. If that bottom is reached I'm liquidating all my shorts and going 100% cash, if my projections prove wrong and the markets break above major resistance and the 50 sma, I'm also liquidating all my shorts and going 100% long.

The Dow broke below the neckline of a well defined head and shoulders reversal pattern when it closed below 12725 in the first week of this year. The pullback move carried the Dow to 12743, almost exactly the break down point. The move from the 14093 head to the 12743 neckline is 1350 points. The downside swing rule projects the Dow at 12743-1350= 11393

The measured move theory states that the second leg on a downtrend imitates the size of the first leg after a 30 or 50% countertrend swing.

The Dow went form 13450 to 12099 non-stop, forming the first leg of the move. (A - B on the chart). 13450-12099=1351. The countertrend move took the Dow to 12743 ( B - C), that is a 644 point move. (48% pullback).

Next leg of the move is projected to C - 1351= 12743-1351= 11392.

But............

To everyone, a happy and prosperous 2008.

And now the charts:

The nasdaq needs to clear the 2730 resistance level to start thinking of a new uptrend. In the following weeks any move over the broken trendline (blue) maybe will signal a new intermediate bull market. Just maybe.
Any break down below the second trendline (red) and the 2540 level, definitively will be a bearish sign.

Shorts anyone?

Shorting never doubles you money but sometimes you get a quick 30%. If you believe that a bear is coming, this two are good candidates.

El invertir en acciones individuales persigue obtener un rendimiento superior al del mercado en general y definitivamente obtener un retorno superior al que ofrecen los bancos y los bonos del tesoro, que se consideran inversiones 100% seguras. Ahora mismo las tasas de CD en dólares tienen un retorno promedio en los EU de 4.57% al año según Bankrate.com, el bono a 30 años rinde 4.65% anual actualmente.

El mercado en general ha retornado 15% aproximado anual en los últimos 5 años. Nuestras inversiones en acciones persiguen superar las tasas en CD y los mercados en general, y nos enfocamos en obtener al menos un 25% de ganancias al año.

Yo utilizo una serie de indicadores técnicos del mercado que tratan de determinar básicamente hablando los niveles de oferta y demanda de acciones. Cuando mis análisis indican que es el momento propicio para comprar, trato entonces de determinar los sectores mas fuertes y luego identifico compañías dentro de esos sectores, haciendo un análisis fundamental de cada compañía, es decir tratando de calcular el valor real de ese negocio mediante retornos de flujo de caja, proyección de las ventas, niveles de deuda, márgenes de beneficio y situación de cada compañía frente a sus competidores entre otros.

Luego que identifico un negocio con fundamentales sólidos hago entonces un análisis técnico de esa "stock". El análisis técnico es el estudio de gráficos y otros datos objetivos para tratar de predecir los futuros movimientos de los mercados. Simplemente hablando está basado en cuatro variables fundamentales que son precio, volumen, tiempo y velocidad la cual es función del cambio del precio entre el tiempo.

Prefiero los indicadores técnicos semanales a los diarios pues de esa manera obtengo mas claridad en tratar de identificar las tendencias, sin embargo de esta manera por lo general se entra mas tarde en los mercados y se sale mas temprano, disminuyendo de alguna manera los posibles retornos pero tratando de cumplir la regla no. 1 de todo aquel que especula en los mercados que es PRESERVAR EL CAPITAL ANTE TODO.

Luego de varios años negociando en las bolsas y después de hacer cientos de transacciones es que se empieza a tener algún entendimiento pues como dicen "el mercado en si es el gran maestro". Hacer dinero especulando en acciones, opciones, futuros y todos los otros instrumentos financieros que se negocian en las bolsas no es fácil, si lo fuera todo el mundo lo hiciera. Todas las cosas que valen la pena en la vida dan trabajo y es mediante el estudio y la práctica que se perfeccionan las habilidades para tener algunas posibilidades a nuestro favor. Sean pacientes, mantengan la mente abierta y corran la carrera larga.

A N y M

"Have you ever heard of the golden rule? whoever has the gold makes the rules!"

On September 18 the FED lowered its target rate by 50 basis points, then again on October 31 the Fed reduced the rate, this time by 25 basis points.
When economic activity declines Central Banks lower their interest rates and expand credit but they are not so fast to remove the cuts on interest when things improve, the consequence is that money keep growing worldwide and the effect of that is inflation.
When credit expansion is not accompanied with savings and wealth creation, people are on the understanding that they are more prosperous than what they really are, they expend more money, buy more cars, furniture, clothes etc. As money flow keeps growing and people are buying more, inflation shows its ugly head.
Gold hold its value when other things are loosing theirs because of inflation and currency devaluation.

In the period between Sep 18 to Oct 31, the Nyse Composite went from 9909.03 to 10311.61, that is a 4.06% gain in 30 trading days, I looked at the SPDR series of ETF to see which sectors posted the best performance.

Materials and utilities beat the market in the period between rate cuts, energy did not perform so well.
The utilities sector went from 40.36 to 42.45 for a 5.18% gain, the materials sector got a 6.69% gain, and the energy sector incremented only a 2.7%.

Zooming in the materials sector and searching for gold, lets take a look at what happened with gold miners.

Gold Miners ETF (GDX) provides equity results that correspond generally to the price and yield performance of publicly traded equity securities of gold and silver mining companies, as represented by the Amex Gold Miners Index (GDM), a specified market sector Index published by the American Stock Exchange (Amex). The Amex Gold Miners Index (GDM) is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. (From Amex web site)

GDX went from 43.60 to 50.60 for a strong 10%, gaining double of the general market in the period.

The simplest rules for technical trading are:
Strong market +
Strong sector +
Strong stock
----------------
Strong profits

Great trading,
Erick

PD: I gave up on NGA because of strategylabopen not being able to correct the error, I sold all my holdings on NGA today.
The market is not so strong anymore but I think it still has something in it, maybe until December.

Why it is that everyday my strategylabopen portfolio has an error. Today it is my NGA total that shows a 0.00 result. Yesterday my NGA total was correct but my GVP total was wrong. Everyday there is some error on my total, this have been going on since I bought NGA for the first time on October 15.

I do not want to sell my NGA holdings yet, but also I would like to have my correct total and rank, after all this is a contest.

Are you guys at strategylabopen going to fix this or do you advice me to sell my NGA holdings to have my accurate total???

Then again on Sep 20 HSVLY closed at 15.68, a three year high, with above average volume. I started to look in the different financial pages and found out that there was not any single news about HSVLY. Now I am really really interested.

Hsvly is in the steel industry, the DJ US steel index is up 17% from Aug 17 to Oct 4, in the same period HSVLY is up 32%, something about HSVLY is attracting buyers, or is the stock only going up because of the group performance.

The outlook for the company in their interim report state that they expect a similar performance for the second half of the year compared with the results of the first half of 2007.

A company named Evraz is the owner of 54.1% of HVSLY and they made an offer for the remaining shares, the board advisors recommended that shareholders don't accept the offer made in June. The stock is thinly traded.

Is it possible that a second offer will be made?
Are these owners taking this company private?

The long resistance of more than 5 years is being overcome right now. Average volume for the past 6 days was 377,900; for the past month 6 days ago it was 101,085, volume more than tripled in the last 6 days, that means big money is buying the stock.

NTCT has a history of positive earnings surprises, and the eps estimate trend is also positive.

Intermediate term target for NTCT is 16.40, risk is below support at 10, with the price at 11 that is a 10% downside risk with a 45% possible profit. The risk reward ratio of 4:1 is completely in our favor.

YTD the Nyse composite is up 9%, last 5 weeks the Nyse is up 7.15%.
I try to adhere to the following basics rules when trading:
- Strong market.
- Group or industry stronger than the market.
- Stock breaking out over a base, the longer the base the better.
- If the stock is at its all time high, that is a plus.

The investment objective of the Market Vectors - Gold Miners ETF (GDX) is to provide equity results that correspond generally to the price and yield performance of publicly traded equity securities of gold and silver mining companies, as represented by the Amex Gold Miners Index (GDM), a specified market sector Index published by the American Stock Exchange (Amex). The Amex Gold Miners Index (GDM) is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. Copied from the AMEX description of GDX.

YTD GDX is up 14%, in the last 5 weeks GDX is up 28%, that is positive relative strength here and everywhere.
AZK is in the gold miners group. AZK crossed above 3 in January this year and the price has been moving between 3 and 4 for the last 7 months. Volume is slightly favorable in the uptrends, and the accumulation distribution line is going up.
Right now the price of 3.88 carries a risk of 30% because support is at 3. Ideally the best entering price must be over 4 with a volume above average, anyway the strong group is going to take this stock over 4 soon. This week AZK broke over 4 briefly.
AZK is above the daily sma(10) and sma(50), also is above the monthly sma(10 and 30).

AZK is up 24% YTD leading its group and the market.

(Spanish version)
Desde principios de este año el NYSE Composite ha tenido un aumento de un 9% y en las últimas 5 semanas el aumento del NYSE ha sido de un 7.15%.

Las reglas que uso para invertir son:
- Mercado fuerte
- Grupo mas fuerte que el mercado
- Stock iniciando un breakout sobre una base, mientras mas larga la base mejor.

GDX es el ticket de un ETF que representa el comportamiento de las compañías públicas pertenecientes a la industria de la minería de oro y plata. Gdx ha aumentado un 14% YTD y en las últimas 5 semanas su aumento ha sido de un 28%. Eso es relative strength positiva donde quiera que se mire.

AZK pertenece al grupo de las minas de oro. Su precio se situó sobre los 3 a principios de año, y se ha estado moviendo entre 3 y 4 por 8 meses, el volumen ha favorecido ligeramente las alzas, y su acc/dis line muestra un patrón ascendente. Actualmente la compra a 3.88 tiene un riesgo de un 30% hasta su soporte a 3. Idealmente la compra debe hacerse si la stock se sitúa sobre 4 con un volumen sobre el promedio. De cualquier manera yo pienso que la fortaleza del grupo debe impulsar esta stock sobre los 4 en las próximas semanas, esta semana subió sobre 4 brevemente. Cuando AZK esté sobre 4, todo los tenedores la stock tendrán un beneficio. Actualmente AZK está sobre su sma(10) y sma(50) y también está sobre sus 10 y 30 SMA mensuales.

Azk ha aumentado un 24% YTD superando limpiamente su grupo y al mercado en general.

PLM pertenece al grupo de metales dentro del sector de materiales básicos. Materiales básicos fue uno de los grupos con RS superior antes de la baja, y nuevamente encabezará los mercados.
PLM interrumpió su downtrend en Agosto del 2006 cuando rompió sobre su primera downtrending line, pasó de 2.70 a 3.68 en dos semanas. Eso es un 36% de avance. Luego a lo largo de 7 meses su precio se mantuvo subiendo y bajando encontrando siempre soporte cerca de los 2.75.
En abril de 2007, PLM rompió sobre su segunda downtrending line, esta vez pasó de 2.96 a 4.13, eso es un 40% de avance en 4 semanas. PLM inició entonces un largo pullback de mas de 4 meses encontrando de nuevo soporte alrededor de 3.
PLM se encamina a su tercer y definitivo breakout, cualquier cierre con buen volumen sobre 3.75 situará la stock sobre su canal de 4 semanas y a la vez romperá sobre su tercera downtrending line completando lo que los técnicos llaman una "fan formation". Ese sería el momento ideal de compra
Nota: "Marketocracy" no me permitió comprar stocks de EPM, cualquiera que lea esto haría bien en chequear la historia de EPM, estoy seguro que encontrará algo interesante.

English Version (Translation by myself, sorry about that)

"If the doors of perception were cleansed every thing would appear to man as it is, infinite. For man has closed himself up, till he sees all things through narrow chinks of his cavern." From William Blake's The Marriage of Heaven and Hell.

I do not have the slightest idea about what the FED will do with interest rates. Economy is not my area of expertise and since I don't live in the U.S., I can't get a "feeling" of things. What I know is that markets are beginning to recoup, first the volume is low, it is always that way. In the coming weeks we will see markets going up and that uptrend is going to be in effect at least until December of this year.

I have a portfolio of stocks that are beginning to break out. My sectors were the hottest a couple of months ago, and they will be leading the market again. I expect a profit of 30% up, at the end of December.
PLM is in the metals industry and the basic materials sector. Basic material is an excellent group with a positive RS since the beginning of the year.
PLM interrupted its downtrend in august 2006 when it broke out above its first downtrending line. Plm went from 2.70 to 3.68, that is a 36% advance in two weeks, after that the price kept going mostly down, finding support around 2.75.

In April 2007 PLM broke out above its second downtrending line, this time the price went from 2.96 to 4.13 in 4 weeks for a 40% advance. PLM started then a long pullback that took the price again to the 3 area, where it found support.

PLM is going for the third break out above a down line, any close over 3.75 will situate the stock over the 4 week channel and also over a third downtrending line. The breaking of the third trendline signals the upside trend reversal. Right now is an excellent low risk entry point with only a 10% risk and an intermediate target of 4.75 for a 40% profit.

PD. Marketocracy wont allow buying stocks of EPM, that is why that stock is not in my portfolio, if you check that stock you will find something of interest.

I believe the semiconductor is a neutral group, I mean lately it goes as the Nasdaq goes, but if we are hoping to see some strengthening in the markets, stocks with high beta will perform very good.

What I like about asys:
- Asys is trading near its 5 year high, which means almost all holders for the last 5 years are making a profit in this company, so nobody is in a rush to sell.
- Asys is beating the group. The stock RS is positive against the semi group.
- Asys has a very short interest ratio. I like to own stocks of companies with small short interest, short sellers are very sophisticated investors, is better not going against them. Matter of fact I don't believe in the most publicized "short squeeze"
- Asys broke above the 4 week channel today, with above average volume.
- Asys is trading above the 10 and 30 moving averages, weekly and monthly.
- It has an up trending Acc/Dis line.
- The company has more cash than total debt.
- The company is getting new orders from solar cell industry consumers.
- Analyst are predicting a 30% grow rate for the following 5 years

What I don't like:
- Receivables are growing faster than sales, that made the company cash-negative this quarter.
- Accounts receivable from two customers exceeded 10% of accounts receivable; one customer accounted for 14% and the other customer accounted for 12% of total accounts receivable.

What will happen in the following months?, who knows, but knowing that "past performance is no guarantee of future results" and still believing that the market long-term up trend is still intact, we will look at simple statistics.

For the past 20 years the NYSE had grown 18.51% average in the third year of a U.S. President term, making the third year the best for the markets. Since this is the third year of the actual U.S. President, I think we will be seeing a strong market for year end. Asys is in the brink of breaking out, combine that with a healthy market and you have a nice profit for the next 3 months.

That's from the Velvet Underground, I'm also waiting with 244,000 dollars in my hand for a few good stocks.

First I have to see the following:
1- Strengthening in the market internals (New-Highs vs New- Lows, and the advance decline line)
2- A stock or stocks with good fundamentals breaking out of a long base.
3- That breakout must be in the company of exceptional volume.

I did a lot of screening over the weekend but I'm not satisfied yet.
Stocks that look interesting are:

Hew, anik, nnds, plm, skm.