Tuesday, July 22, 2014

Can you see the BIG PICTURE: Part 2


  Today I would like to continue the topic of seeing the BIG PICTURE by talking about "news events". 
  There are different types of "news events" in the life of the company's stock.
  Those of you who trade stocks most likely are familiar with such event as Upgrade/Downgrade of the company. Usually it's a press release by well known rating agency. Most famous are Moody's, S&P, Fitch, Morgan Stanley, JP Morgan, Goldman Sacks, UBS, Deutsche Bank, Bank of America, Jefferies. 
  There are also less known agencies which come out from the silence once in a while to issue report on some non-popular stock. These agencies usually specialize on sketchy penny stock. A lot of you know these stocks as pump&dumps. 
  Upgrades/Downgrades usually swing between:
  • strong sell
  • sell
  • hold
  • buy
  • strong buy
Every agency has it's own scale but general idea of the scaling stays the same.
  Another "news event" for a stock is quarterly and annual Earnings Releases. It's a press release which describes of how did the company do financially in last quarter/year. Also it gives comparison for actual earning per share with:
  • "the street estimate" 
  •  same period of previous year
Estimate is made by same agencies we've talked about when talking about upgrades/downgrades. Usually this data is published by PR Newswire.
  Another "news event" would be some sort of an article or blog post by some sort of analyst. Among the most famous and influential websites are bloomberg.com, marketwatch.com, thestreet.com, wsj.com SeekingAlpha.com, MontleyFool.com, Zacks.com, theflyonthewall.com.
  Another "news" event for the stock would be positive/negative mentioning about the company on TV show or radio. Here TV channels by CNBC ans Bloomberg are major players. "Mad money" hosted by Jim Cramer is a very popular show. Good example of such company mentioning was today's Bill Ackman's talk about HerbaLife (NYSE:HLF).

  News about insider buying/selling could be also treated as company "news event". Insiders are people who directly work for the company and occupying senior roles such as CEO, COO, CFO, CTO.

  Once we know now about all these company "news events" lets talk about...why are these news are available to the public.
  Every year rating agencies spend millions on company's business research. But somehow they are being so generous and give away results of these studies to the general public...for free. In did, we can hear from TV screens and read in news papers that "Goldman downgrades Ford" and "JP Morgan is optimistic on AIG future". 
  Why they give average Joe such a valuable results of their research? Or is it valuable...Hmmmm
Let's see....
Bellow are screenshots of the chart of CRM and history of rating updates:

On this day company release what seems like a great Earnings Release. As we see from screenshot #2 at least 8 different rating agencies issued reiterated buy or strong buy rating and increased their targets.
   And as we see that was the exact day when everything started to fall apart for this stock. Do you think that this is a simple coincidence? Take a look on the increased volume that day. 
  ...wall street was aggressively selling shares to fly-high optimistic crowd. 

To be continue...

 remember and think about "Apple will hit $1000", "Facebook IPO disapointment"....and pay attention to GPRO news-chart development.

Sunday, May 4, 2014

Can you see The BIG PICTURE? part 1

   Hey everyone.
It's been a while since I posted anything on my blog. Well, quality is betters then quantity.
   Today I would like to talk about seeing the big picture. What is it?
Have you ever thought about how big institutions keep their doors open when economy is good or bad? Recessions, high unemployment, trade deficit...etc.
But "they" seems to be doing just fine. No one going out of business. How do they do that? ....
We about to find out!
   There are different types of institutions. Let's call them "lazy" and "aggressive" ones.
 First type's model looks very simple:

  1.  You spread the word in mass media that everyone should be invested in stock market, stock market is a way to go, Joe! Notice all of your friends talking "I own this, I own that, my friend is fully invested in this biotech" etc. So we can agree that institutions are very successful on this task.
  2.  You create ways for ordinary and extraordinary people to participate in the stock market. By providing trading services. You open trading accounts, you encourage people to trade. You get trading commissions, platform fees etc. If they feel scared to trade by them selves (not totally dumb people, some thinking still happens), you offer them to "manage" their capital for a fee by "one of our professional account managers". Usually it's about 3% annual from sum under "management".  Notice I put these words in a quotes. 

 Second type's model looks much more complex:

  1. You look into ways to attract a lot of capital. A LOT. 
  2. You find your "target" stock, sometimes even a sector. 
  3. You create from "negative" to "very negative" news environment for a stock.
  4. You start to buy shares. You maintain "negative" news background, some level of uncertainty for the company's future. 
  5. After you have bought A LOT of shares you start to paint green days on a daily chart, draw well known "long-patterns" to catch traders attention. At this point we are targeting successful traders, momentum traders. Those who are able to recognize good opportunity at early stages. 
  6. As the stock progresses, at this stage our job is to gradually change news environment from bad to OK.
  7. After a stock went 100%+ from our average price (depending on features of a stock) we are ready to unload our shares. At this point you can be sure that all major blogs, all major market portals, all yahoo message boards, all forums, all financial TV and radio shows will be screaming that finally we found a greatest stock of all. We can read/hear/see upgrades made by "reliable" (and sometimes they are very well known) rating agencies, target raises etc.
  8. Job is done. "Well done bro! Let's call hookers and celebrate, grab cocaine bro! Lets buy another private airplane! No, no...let's buy a country! Which one, which on?!! :-/  Fuck, I don't know... Emmm, let's buy Ukraine! I heard it's on sale now."
  9. And your average Joe start to realize that he has bought a top, as always...Just a bad luck, right? "Next time I might get more lucky."

   Sometimes I wonder who are getting paid for news pump more: Jim Cramer or Seekingalpha.com.

 to be continued...

Have a great weekend.

Sunday, October 13, 2013

A detailed look of my possible short on $VISN tomorrow.

   I decided to spend some time to lay down a plan for a possible short tomorrow in VISN since a stock is pretty hard to trade.
   It is very volatile, thin and buyers are very aggressive. These reasons are making it hard to make a precise entry. In cases like this a solid gameplan is a must!
Otherwise you'll get smashed and stoploss is guaranteed.

I call a stock is Green when a daily candle of a stock is green (last price is higher then the Open) and call it Red when a daily candle is Red ( last price is below Open).

The reason I mention that is because a lot of people name a color of a stock by comparing last price with a previous day close.

General idea of shorting pumps and when you have an edge.

The lower the Open compared to previous day close (gap down), the bigger the chance of a stock to go Green and stay green on a day.
The bigger the gap up - the bigger the chance of a stock to turn Red and stay red on a day.
These setups are for situations when a stock already reached a definition of a pump.

I call pump everything that went up 50-100% and more in 1-3 days. It can have news, PR, earnings, insider buying, FDA and so on. It is still a pump for me. The only difference is that I would approach a short with more or less aggression, may or may not keep it overnight.

...back to VISN.

Stock went 200+% on fuck knows what.
Last earnings were in the beginning of September and were not great.  Near $7.50 the management of a company refused to comment on an unusual activity in a stock price (rather typical symptom of an end of the move).

So my thought process is this:
I see a stock going lower in near future but I want to have an edge...

  1. I already know that I want a stock to gap up before I would start thinking of a short.
  2. if it gaps up but still under $7 I would want it to go $7+ and short a parabolic near 7.50 or a fake of 7. Then add on going Red (GreenToRed) and possible EOD support crack. Stop HOD/$7.
  3. if a stock opens above $7, I would 
  • look to short "7 wash/going Red" right from the Open and look to swing it with a stop at Open (going Green) . Swing target $5-.
  • or if still strong - short on parabolic towards 8 with Open as a first target, stop HOD/$8.
    Then add on GtR. If acts right and stays Red, keep it swing with $4-5 as a target.
Hope you will benefit from this article when shorting VISN and other pumps to come.
Stay alert and calm. 
Always have a plan!

Wednesday, September 18, 2013

Friday, September 13, 2013

Gameplan for Monday

Kept $ACFN overnight from $6.12 entry. Pretty sure we'll see $7 soon. 21% short float, should be a massive squeezer. Strong close
 long on RtG, thin so be precise with your entry
  long on RtG
  long on RtG, would like it to show holding .50 first
 long on RtG, volume coming in