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<DIV><FONT color=#000000 size=2>Andre,</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT><FONT size=2>
Thanks for your input. As you know, I'm in the process of changing to QP2
for my scans. Since QP2 doesn't have a relative search capability, I'll be
forced to do exactly what you are suggesting so I hope it works well
<G>. For the scans I've got working, I do reject a number of
securities based on a combination of fundamental and technical factors.
Then I have it save a comma delimited list with some of the criteria which I can
import into Excel and sort on any of the criteria. Then I can delete the
bottom part of the list if I want to or just resave the whole sorted list.
In reality my real final check on whether I want to add any of the resulting
stocks to my MetaStock database is my 20/20 eyeball check
<G>.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>JimG </FONT></DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 solid 2px; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>A. Scholberg <<A
href="mailto:scholberg@xxxxxxxxxx";>scholberg@xxxxxxxxxx</A>><BR><B>To:
</B>metastock@xxxxxxxxxxxxx
<<A
href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A>><BR><B>Date:
</B>Sunday, November 29, 1998 7:04 AM<BR><B>Subject: </B>Re: Building Blocks
- Narrowing the Universe of Potential
Stocks<BR><BR></DIV></FONT>Jim,<BR><BR>You have asked for suggestions or
comments on why we would believe that<BR>what you are doing is wrong. So let
me comment. <BR><BR>Your objective, as I understand it, is to reduce your
stock universe<BR>based on fundamental criteria in order to apply
technical trading<BR>techniques. Obviously, in doing so, you want to
increase your technical<BR>trading odds.<BR><BR>While I do not think that
fundamentals are useful in short term (a few<BR>days max) trading, I do
agree that the combination of fundamental<BR>criteria and technical
indicators is a key to better medium to long term<BR>trades. The problem is
to gauge the fundamental criteria you want to<BR>use. Market Capitalisation,
Price-to-Earnings, Price-to-Book,<BR>Price-to-CashFlow, Price-to-Sales,
Dividends yields, Earnings-per-share,<BR>Return-on-Equity have documented
individual significance, but optimising<BR>their combination, if at all
possible, is not an easy matter.<BR><BR>It is a fact that all indicators -
fundamental and technical - have<BR>rather low predictive value. Their
correlation with future stock prices<BR>is in fact extremely low. In
that case, it can easily be shown that<BR>increasing the number of
indicators will as a rule reduce and<BR>effectively cancel the value of the
prediction. <BR><BR>While you can reject a number of securities on the basis
of fundamentals<BR>and additional technical criteria such as high volume or
price growth, I<BR>cannot see any way to rank your selection depending on a
multiplicity of<BR>criteria, as suggested in your note. Perhaps it would be
useful to<BR>clearly separate the process of security rejection in a first
step, and<BR>then select the securities to include in your database on the
basis of a<BR>single preferred indicator in another.<BR><BR>Best
regards,<BR><BR>André Scholberg<BR><BR><BR><BR>Jim Greening
wrote:<BR>> <BR>> All,<BR>> I'd like
to start a discussion on how to narrow the universe of<BR>> stocks to a
few potential trading candidates that have certain<BR>> characteristics
that have resulted in successful trades in the past.<BR>> I'll explain
what I do and hope you chime in with comments on<BR>> additional
suggestions or comments on why you believe what I'm doing<BR>> is
wrong.<BR>> First I believe that there are
many different selection<BR>> techniques that work and there are times
when one technique will work<BR>> better than others. For example,
large cap momentum selection<BR>> searches have worked exceptionally well
for the last three years and<BR>> small cap value techniques have
not. However, if you look back in<BR>> history, that's very unusual
because small cap value techniques have<BR>> worked better on average
over the last fifty years. I also believe<BR>> that the mirror
image of a search for long candidates isn't<BR>> necessarily a good
search for short candidates, but I don't want to<BR>> get into that
today. I test the market indices to decide if my new<BR>> positions
should be long or short and my new positions have been long<BR>>
positions for some time now, but that is also the subject of a
future<BR>> post <G>. To keep this post fairly short, I
want to concentrate on<BR>> searches for long stock candidates only
today.<BR>> I use several different
searches to select the few (less than<BR>> 200) stocks that I keep in my
MetaStock database. My searches are<BR>> only to find stocks to add
to my database and I only add a few each<BR>> week. (I also prune
my MetaStock database periodically.) I look at<BR>> the results of
the searches and use my 20/20 eyeballs for my final<BR>> decision.
I used to use Telescan for this by recently dropped them<BR>> due to cost
and bad data. I'm now using QP2 for my daily and<BR>> historical
data. It does have a built in search capability using a<BR>>
combination of fundamental and technical data. However, I'm
just<BR>> learning its programming language and it doesn't have a lot
of<BR>> criteria to search on. Still, I believe it has great
potential and<BR>> understand that they may add additional fundamental
data after the<BR>> first of the year. In the mean time I'm using
Microsoft Investor and<BR>> eSchwab search
capabilities.<BR>> What I'd like to do
here, is not give the search formulas, but<BR>> rather discuss the
criteria I use for the various searches. I'll be<BR>> glad to share
the QP2 searches after I finish them. I've found that<BR>> for
fundamental criteria, the price/sales ratio by itself works best<BR>> for
me. I can enhance it's performance by also using debt/equity,
and<BR>> various earning and revenue growth criteria. Today I'd
like to<BR>> describe a momentum breakout search CANSLIM that I use for
both large<BR>> and small cap stocks; a bottom fishing search BotFish; a
value growth<BR>> search,ValuGro that can be used for both large and
small cap stocks;<BR>> and a small cap search, SmalCap. You will
see my favorite criteria<BR>> used in most of
them.<BR>> CANSLIM is a momentum search
that I've been using for a long time<BR>> that is based on parts of the
CANSLIM strategy. What it looks for is<BR>> stocks that are trading
at a new 52 week high on high volume and meets<BR>> several other
conditions. In all my searches I begin by limiting the<BR>> stock
to a price above a minimum and below a maximum. For CANSLIM<BR>>
that's 5 and 144. Then I ask the search to list the 52 week high
and<BR>> the 52 week low for my info on making a final decision on adding
the<BR>> stock or not. The search continues by limiting the
selection to those<BR>> stocks which are in the top 20% considering
earnings per share growth<BR>> and the top 20% considering price growth
over the last year. Then I<BR>> ask for group rank, fundamental
rank, 30 day average Volume, and 3/30<BR>> day Volume to be as high as
possible. This doesn't limit the<BR>> selection, but helps rank the
selection and I only take the top 20. I<BR>> also ask for analyst
rank to be as good as possible, institutional<BR>> holding to be as low
as possible, market cap be as low as possible,<BR>> and insider trading
to be as high as possible (buying). Finally I ask<BR>> that the
stock has set a new 52 week high within the last 5
days.<BR>> BotFish is a search for stocks
that have been beaten down and<BR>> look like they are bottoming.
It looks for stocks that are trading at<BR>> 50% or more below their 52
week high but still have decent<BR>> fundamentals and are showing signs
of recovering. I again start by<BR>> asking for a price between 5
and 21. I also ask it to list the 52<BR>> week high and low.
Then I ask that yesterday's close be lower than<BR>> 1/2 the 52 week
high. That makes sure that we are looking at only<BR>> beaten down
stocks. To insure good value I ask that the Price/sale<BR>> ratio
be less than 1 although I sometimes raise that to 2.1. I may<BR>>
also use the same criteria for price/book if that's available.
I<BR>> further ask that the price/sales be as low as possible. I
may or may<BR>> not use a debt/equity below 1 requirement. I then
ask that the annual<BR>> revenue growth be greater than 13% and that it
also be as high as<BR>> possible. I may or may not use the same
criteria on earnings growth<BR>> depending on how much that limits my
results. Finally I ask that the<BR>> 3 month relative strength be
as high as possible to show early signs<BR>> of turning
up.<BR>> ValuGro looks for stocks that are
growing strongly yet are still<BR>> good values as shown by low
price/sales ratios. It starts off asking<BR>> for a close greater
than 3 but then asks for a price as low as<BR>> possible. I also
ask it to list the 52 week high and low. I then ask<BR>> for a
price to sales ratio that is well below the industry average.<BR>> This
way I get the benefit of a relative low price/sales but don't<BR>>
eliminate stocks in groups that have higher price/sales ratios.
I<BR>> then ask that the price/sales be as low as possible. I then
ask that<BR>> the debt/equity be below 1. I ask for a market cap
above 250,000,000<BR>> to eliminate micro caps. I eliminate stocks
whose price dropped in<BR>> the last quarter. I then ask that the
quarterly price change, the<BR>> annual revenue and earnings growth be as
high as possible.<BR>> SmalCap looks for
small cap stocks that are showing exceptional<BR>> earnings growth but
are undervalued. It starts by displaying the<BR>> previous days
close and the 52 week high and low. It asks for a<BR>> market cap
less than 500,000,000. It asks that the 3 month relative<BR>>
strength be higher than the 6 month relative strength. It asks
for<BR>> annual EPS growth greater than 30% and projected growth greater
than<BR>> 30%. It asks for price/sales less than 1. Finally I
display P/E,<BR>> ROE, and
Debt/Equity.<BR>> I run each of these
searches weekly. I then look at charts of<BR>> the resulting lists
on QP2 and decide if I'm interesting in adding any<BR>> to my MetaStock
database. If they look good I'll export the<BR>> historical data to
my MetaStock database and run my MetaStock system<BR>> tests on
them. If they don't return better than a 100% profit on one<BR>> of
my system tests, I'll delete them form my MetaStock database.
The<BR>> point to remember is that these searches are not a stock
selection<BR>> system by themselves, they are merely the first building
block in my<BR>> stock selection
system.<BR>> Any comments or
suggestions?<BR>> <BR>> JimG<BR>><BR></BLOCKQUOTE></BODY></HTML>
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From: "Walter Lake" <wlake@xxxxxxxxx>
To: "metastock bulletin board" <metastock@xxxxxxxxxxxxx>
Subject: Linda's Interday comments
Date: Sun, 29 Nov 1998 19:05:59 -0500
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The following are Linda's minute-by-minute comments during a trading day.
===
Linda's daily comments
"To join us live November 30 and December 1, go to the following site:
http://www.mtrader.com/rooms.htm
Next, scroll down under Raschke to "more info".
9:11: LindaRasc: There are intra-day Grail buys on all time frames.
9:11: LindaRasc: Over the next few days, we will trade these setups as they
come along.
9:11: LindaRasc: Overseas markets:
9:11: LindaRasc: Japan, which was closed on Monday,
9:11: LindaRasc: was up 3%.
9:11: LindaRasc: However, the european markets
9:11: LindaRasc: are not having any followthrough.
9:12: LindaRasc: In fact, Germany is presently down. We watch the foreign
markets
9:12: LindaRasc: for principles of confirmation, non-confirmation.
9:12: LindaRasc: It helps set the tone for the overall trading environment.
9:13: LindaRasc: We are coming in today with a 5-day Trin reading of .77.
9:13: LindaRasc: This is overbought and sets up a sale.
9:13: LindaRasc: The 10-day Trin is still above .80 with a reading of.84.
9:14: LindaRasc: The 10-day reading is more significant than the 5-day
reading.
9:14: LindaRasc: The Ticks yesterday,
9:14: LindaRasc: never got overbought.
9:14: LindaRasc: This is unusual for the trend type of move that the market
had.
9:15: LindaRasc: By the way, if you missed the first part of this morning
commentary, the entire transcript will be available at the end of the day.
9:15: LindaRasc: Back to the ticks.
9:15: LindaRasc: We would like to see some very large tick readings to
signal that buying has climaxed.
9:16: LindaRasc: You know what they say....it ain't over till the fat lady
sings.
9:16: LindaRasc: Part of the last few days has been a short squeeze
9:16: LindaRasc: as evidenced by stocks like EBAY and AMZN.
9:16: LindaRasc: Do you realize EBAY, a recent new issue,
9:16: LindaRasc: has a current market capitalization of 8 billion?
9:17: LindaRasc: Half the valuation of Sears, and it's just an internet
auction house.
9:18: LindaRasc: Well, Amazon is presently up 10 so we will watch some of
these market leaders to see when the last short has been squeezed out.
9:18: LindaRasc: We are also short these bonds from this morning.
9:18: LindaRasc: We posted a bear flag on the 30-minute chart. Our initial
stop is set at '29.p i
9:19: LindaRasc: The June Euros are the contract we are watching for a
retest of the '05 low.
9:19: LindaRasc: (p.i.) was a typo on our stop.
9:20: LindaRasc: The 15 minute type grail buy set up yesterday, so the next
time frame we would monitor would be the 30-minute chart.
9:21: LindaRasc: Support on this time frame will come in on the SPz around
1182 - 1185.
9:21: LindaRasc: Quite a ways off!
9:24: victoria: We are watching the 60 min Silver chart for a possible break
to the down side.... The 20 day low is 485.
9:25: victoria: Open in the s&p in 2 min
9:28: victoria: Spz open at...1191.50
9:30: victoria: When we are not transmitting, we are monitoring markets for
choice set ups.
9:32: victoria: EBAY Yahoo Intel...all opened down.
9:32: victoria: Amazon came off quickly.
9:32: victoria: These were the momentum leaders yesterday..
9:32: victoria: Obviously a short squeeze.
9:34: victoria: We will call the trades as we see them...but we are also
very good at doing nothing...if we don't feel confident with a set up.
9:34: victoria: During these times, we will try and point out interseting
things along the way.
9:34: victoria: ..thats interesting
9:35: victoria: The tape is slow this morning.
9:35: victoria: Reflecting lots of activity...
9:36: victoria: In other words, transmission of data is lagging slightly.
9:36: victoria: Yesterdays mkt vol. was the highest of the last 4 days but
is not anywhere near climax level.
9:38: victoria: It appears a very large bid/ask spread in the stocks such as
Yahoo.
9:38: victoria: This might be reflective of the jammed data pipe line we
were refering to...
9:39: victoria: If Yhoo trades below 191 either today or tomarrow, it will
give a dramatic reversal sell signal.
9:41: victoria: In spit of the weekness in short squeeze stocks, the Nasdq
futures are currently up...lead by Micrsoft.
9:41: victoria: The transpotation index is also up.
9:43: victoria: Remember....we would expect choppy 2 way trading after
Monday's wide range day.
9:46: LindaRasc: we are making sure people can get onto this page right
now.....
9:49: LindaRasc: Ok!
9:50: victoria: We are squared away now...
9:52: victoria: Transports and Nasdq still running to the up side.
9:53: victoria: This a.m. spz just missed globex low 1189.10, the upside
test is at 1198.00
9:55: victoria: Jan Crude Oil making new contract lows..
9:55: victoria: We did trade as low as 11.65 a few months back.
9:56: victoria: Transports up 46.
9:57: victoria: The new lows in crude are confirmed by new lows in unleaded
and heating oil.
9:57: victoria: Even though we are making commentary we will give plenty of
warning when we are actually going to make a trade.
9:59: victoria: We are looking for a reason to buy the coffee...
10:00 victoria: 109.80 was yesterdays high.
10:00 victoria: The wid range reversal system will give a buy at this point.
10:01 victoria: Nasdq futures are currently trading at new highs..
10:03 victoria: We are short the bonds from earlier this morning..if you
would like a good way to enter this market at this point
10:03 victoria: would be to put a sell stop at 127'15
10:04 victoria: Spz traded 30 cents above yesterday's high.
10:06 victoria: Still tame readings in the ticks.
10:11 victoria: The feb hogs will give a buy on our wide range revesal
system if they trade above 3810 tomorrow....just a piece of trivia.
10:14 victoria: Sugar is holding it's 20 periond ema...it will set up an
ooops buy at 825,
10:15 victoria: We are watching to see if it finds support on a small
reaction down.
10:15 victoria: S&ps are working off a mild sell divergence on the 5 min.
chart.
10:22 victoria: Ticks are -158...no extreme reading
10:23 victoria: Mornings low is being tested.
10:24 victoria: Remember...the 30 min. ema is at 1182.50
10:27 LindaRasc: ticks reading -408.....not a buy signal yet...
10:28 LindaRasc: Grains opening....
10:29 LindaRasc: Any big morning rallies in the grains would set up a grail
sale on the 30-minutes. We will be watching for this setup.
10:29 LindaRasc: We have been having our highest win-loss ratios on these
grail trades over the last month.
10:30 LindaRasc: We will always call them when we see them.
10:35 LindaRasc: another market we are watching for a potetial longer-term
breakout is the gold, which has a great volatility contraction.a
10:35 LindaRasc: We will have to wait, though,
10:36 LindaRasc: for the market to tip its hand and come to life.
10:36 LindaRasc: No great plays in the spz so far.
10:36 LindaRasc: We always make the assumption that we will have at least 50
cents slippage in AND out.
10:37 LindaRasc: So we wnat to be sure we can see at LEAST 3 points
potential move.
10:37 LindaRasc: There are so many great opportunities that set up in this
market,
10:37 LindaRasc: there is no need to settle for marginal trades
10:37 LindaRasc: just for the sake of trading.
10:38 victoria: Tis is the art of not trading.....which is far more
difficult than trading.
10:40 LindaRasc: Again, this is typical choppy 2-way trading following a
huge trend day.
10:41 LindaRasc: By the way, yesterday was a classic example of one of our
favorite trades:
10:41 LindaRasc: NR7 day set up...implying breakout.
10:41 LindaRasc: Gap opening, implying trend day.
10:42 LindaRasc: breakout of 1st hours range indicates direction of the
trend.
10:42 LindaRasc: Enter on the breakout of the first hour's range and exit on
the close....
10:42 LindaRasc: this trade has a very impressive staatistical profile!
10:44 victoria: Even though it seems like the markets are quiet going int
the holiday...we are always on our guard during quiet periods.
10:44 victoria: Sometimes the wildest moves can happen in the afternoon even
during a holiday week.
10:45 victoria: We are going to put a buy stp in the dec GOLD at 298.40
10:45 victoria: To enter on a break out.
10:46 victoria: 299.10 would be the swing high test in this market.
10:48 victoria: transports still making new highs in spite of spz attempt at
new lows.
10:49 victoria: Sugar's reaction is below a.m. lows....we will leave this
mkt alone for now.
10:51 LindaRasc: ticks are -499
10:52 LindaRasc: -629
10:54 LindaRasc: -675
10:55 LindaRasc: -743 and premium finally collapsing a bit.
10:55 LindaRasc: We will watch for a low right her..
10:56 LindaRasc: and then a very minor retest of it.
10:57 LindaRasc: 85.8 low so far
10:59 LindaRasc: We are stopped out of our bonds for a small nick, but will
still keep a sell stop at 127'15 to short this market if it comes down.
10:59 LindaRasc: 85.50 was spz low here.
10:59 LindaRasc: Still must see a retest or support to from.
11:04 victoria: These s&ps should hold here..
11:05 victoria: By the way when we put on an s&p trade..
11:06 victoria: we will automatically put in a three pt. stop at the time we
enter the trade
11:08 LindaRasc: by the way, the commentary we provide
11:09 LindaRasc: is in regards to our own trades only.
11:10 LindaRasc: Though we post our entries and setups, nothing should be
construed as a trade recommendation for a third party.
11:10 LindaRasc: But you may feel free at anytime to jump in ahead or after
us.
11:11 victoria: retest of lows here..
11:12 victoria: We still have no position....this retest has more momentum
to the down side than we like to see.
11:13 LindaRasc: ticks -747
11:13 LindaRasc: tikis hit -26
11:15 victoria: Trans ports still holding..up 50!!
11:16 victoria: Buying divergence on a short term time frame.
11:21 victoria: Market should rally here..
11:23 LindaRasc: If you want to see an amazing stock chart, check out EBAY.
11:23 LindaRasc: Looks like the shorts are still holding this stock up.
11:24 LindaRasc: A good example of why NOT to short the relative strength
leaders!!!
11:24 LindaRasc: YIKES!
11:28 LindaRasc: We will also put a sell stop in Dec gold at 295.7 so we
have this market bracketed.
11:29 LindaRasc: The 5-minute EMA in the spz is at 1188.2, a good upside
objective.
11:30 LindaRasc: For late comers onto this page, the daily gold chart is
building for a great breakout trade.
11:30 LindaRasc: We will let the market pull us into this trade.
11:32 LindaRasc: Dec gold, silver and copper will go into first notice day
in a week.
11:32 LindaRasc: There is often a great move which coincides with this
event.
11:33 LindaRasc: Usually, it is a flush of the small specs, since they trade
with a bias to the long side.
11:33 LindaRasc: (We have a buy stop in gold at 298.4).
11:35 victoria: We are still waiting for a reason to buy coffee...buy stop
at 109.30 to enter.
11:36 victoria: This is a short term volatility breakout system we use.
11:36 victoria: The wide range reversal system would go long at 109.80.
11:37 victoria: Transports still making new highs!
11:37 victoria: Market should still rally here>
11:39 victoria: Nasdq futures are plus on the day too...despite the weakness
in Yahoo, and Amazon.
11:39 victoria: Microsoft is the main contributor to this index today.
11:41 victoria: Again for late comers..the entire transcript will be
available at the end of the day.
11:42 victoria: Still looking for at least 1188 on the spz.
11:44 LindaRasc: transports still cooking....
11:45 LindaRasc: We always like to watch other markets, ie, transports,
nasdaq, etc., for confirmation or non-confirmation.
11:45 LindaRasc: It helps us to stay with trades
11:45 LindaRasc: or look for new opportunities in the case of a divergence.
11:46 LindaRasc: I know it's Murphy's law, that on our first day here...
11:46 LindaRasc: most of these markets are deathly quiet!
11:46 LindaRasc: (grains, metals, currencies, softs...
11:46 LindaRasc: )
11:47 LindaRasc: Again, we still have a sell stop in the bonds at 127'15.
11:50 victoria: The spz has made it back to the 5 min moving avg...that was
our objective for this rally.
11:50 victoria: Linda is having a vision with coffee.....she is compelled to
buy it.
11:52 victoria: by the was there was a picture perfect Grail sale in the 60
min. cocoa chart..
11:52 victoria: A good chart example to study if you are bored.
11:55 victoria: We are going to use this opportunity for a short 5 min.
break...we did buy coffee.
11:56 victoria: No play in the spz right here.
12:07 LindaRasc: we are back...
12:13 LindaRasc: Amazon is testing its prior swing high....trying to come
back to unchanged.
12:13 LindaRasc: We watch the momentum stocks the smae way we do the
indexes...
12:13 LindaRasc: for confirmation and nonconfirmation.
12:15 LindaRasc: Ticks are neutral here, as is the trin.
12:15 LindaRasc: As of yesterday's close, the 5-day moving average of the
trin wasa less than .80...
12:15 LindaRasc: signaling a market reversal within 5-days.
12:16 LindaRasc: The 10-day trin, which is more significant, has not yet
closed below .80
12:16 LindaRasc: Although, if the market closed right here, it would read
.82.
12:18 victoria: We are having lots of people joining us while coming into
the lunch time lull....is this some sort of contrary indicator?
12:24 LindaRasc: it's a contrary indicator for the level of trading
activity!
12:25 LindaRasc: Amazon...plus on the day.
12:25 LindaRasc: I think it's pathetic that we're even mentioning this
stock...
12:25 LindaRasc: Sort of scraping the bottom of the barrel
12:26 LindaRasc: for movement..
12:28 victoria: ohhhh it's lunch time all right..
12:29 victoria: quiet and slow.
12:29 LindaRasc: we told you that we're good at doing nothing when there's
nothing to do...
12:31 victoria: Swiss frank and d mark both have bear flag set ups on the
intraday charts.
12:31 LindaRasc: currently, there are intraday grail sale setups still in
the swiss and d-mark.
12:31 LindaRasc: These have been good shorts for us the last week.
12:31 LindaRasc: we are flat them now though...
12:32 LindaRasc: Silver is acting heavier.
12:32 LindaRasc: We know there is a very intense battle between 2 large
market participants in this market.
12:32 LindaRasc: It has been going on for the last year.
12:33 LindaRasc: Buffet still has a large long position and the other party
is still waiting for a flush.t
12:33 LindaRasc: This is generic lingo for Wyckoff concept.
12:34 LindaRasc: Imagining a large composite operator, or 2 opposing market
forces.
12:34 LindaRasc: We don't really know who's long or short the silver market,
but it helps conceptually to imagine, what will happen to this market if it
breaks out of its prolonged trianlge.
12:34 LindaRasc: triangle.
12:35 LindaRasc: One side will definately be taking heat.
12:35 LindaRasc: Silver and copper are the 2 markets at the top of our
ranking for a potential trend move setting up.
12:36 LindaRasc: You can easily see the low ADX readings on the daily chart.
12:36 LindaRasc: Any time you see a very low ADX reading...
12:36 LindaRasc: start drawing trendlines on the chart.
12:36 LindaRasc: There will usually be a significant chart formation.
12:37 LindaRasc: The breakout from this low vol period can have tremendous
potential.
12:37 LindaRasc: for example,
12:38 LindaRasc: look at the spz on a hourly chart.
12:38 LindaRasc: or even a 120 minute chart.
12:38 LindaRasc: good trending moves come ou of this environment.
12:39 LindaRasc: The chart pattern coinciding with a low adx on the hourlies
was a bull flag which occured 11/9 through 11/11.
12:41 LindaRasc: s5
12:41 LindaRasc: oops...
12:42 LindaRasc: that was supposed to be another keyboard..
12:42 LindaRasc: Silver...gold.. going DOWN.
12:42 LindaRasc: We're short on the volatility breakout system if silver
hits 484.
12:43 LindaRasc: Yesterday was a NR7 day in silver...a narrow range.
12:43 LindaRasc: We'll see if it can get something going.
12:43 LindaRasc: This would be an odd time of day for a move to start.
12:45 LindaRasc: Amazon now up 6...
12:47 LindaRasc: new highs in beans..
12:47 LindaRasc: There's a 30-minute grail sale in the beans at 573.
12:47 LindaRasc: We never put resting orders to sell at a price level when
initiating a trade. We
12:48 LindaRasc: would rather see
12:48 LindaRasc: the price rally, find resistance
12:48 LindaRasc: and then sell at the market or put a sell stop underneath.
12:48 LindaRasc: Eventually, we will have a thread on Silicon Investor
12:49 LindaRasc: where we can answer questions and allow for more
interaction. We will fill you in on the details of this later.
12:49 LindaRasc: sort of like watching paint dry here right noww...
12:51 LindaRasc: The trin is showing no new buying or selling coming in, and
the ticks are neutral.
12:52 victoria: There is a first cross buy on the spz 5 min chart
12:52 victoria: Ebay having a short squeeze...
12:53 LindaRasc: probably the most successful IPO in history. EBAY
12:56 LindaRasc: Very light volume here.
12:56 LindaRasc: Never try to read to much into the tape during lunchtime.
12:57 LindaRasc: We just got back from the Las Vegas TAG conference.
12:57 LindaRasc: This annual conference is a great bargain.
12:57 LindaRasc: The 2 speakers we liked best were...
12:58 victoria: Mark Cook and Stewart Taylor
12:59 victoria: wow..that sounded like we were announcing the Oscar awards.
13:01 victoria: Hmmm I heard Linda Raschke wasn't bad either
13:01 LindaRasc: ha ha
13:01 LindaRasc: The ticks have been negative since 10:15.
13:01 LindaRasc: Should rally to the plus side.
13:02 LindaRasc: By the way, anytime we use a time, it is EST.
13:02 LindaRasc: Amazon up 12.
13:02 LindaRasc: Oh what mania.
13:03 LindaRasc: We actually fell a bit shy of the 30-minute grail buy this
morning, but if it had been hit,t he objective would be a retest of the 1195
level.
13:06 LindaRasc: trin droppin..
13:10 LindaRasc: ticks -69...still struggling to go positive.
13:10 victoria: We are still long coffee will exit at the end of the day if
it has a weak close...otherwise we will hold it over night.
13:11 victoria: Low for the day is 107.25 high109.25
13:12 victoria: Looks like the short squeeze is over in AMAZON
13:12 victoria: Likewise with EBAY
13:12 victoria: Market hardly rallied on the blowoff of these two stocks
13:13 LindaRasc: Wyes victoria, this means we are bearish now.
13:13 LindaRasc: oops, that was yes.
13:15 victoria: Linda wants to see some momentum in this s&p
13:16 victoria: We will only take a trade if we see a clear set up..
13:18 LindaRasc: ticks starting to come down.
13:18 victoria: Our typo's are really low considering the amount of sleep we
got...
13:18 LindaRasc: We flew in late from the TAG conference.
13:19 LindaRasc: pretty easy to see the 1-2-3 pushes up on Amazon on a 15
minute chart.
13:20 LindaRasc: It's always much easier to identify chart patterns when
there is activity and volume.
13:20 LindaRasc: Volatility...we like volatile markets.
13:20 LindaRasc: The more volatile the market, the shorter the time frame
you can trade off.
13:22 LindaRasc: tikis plus 24
13:22 LindaRasc: ticks finally going positive.
13:24 LindaRasc: Once again, a reminder for any late comers, the transcript
in its entirety will always be available at the end of the day.
13:24 LindaRasc: With this type of format, you can only see commentary from
the point at which you log on.
13:25 LindaRasc: Amazon should close down on the day.
13:25 LindaRasc: I don't normally harp so much on 1 stock,
13:25 LindaRasc: but what you are seeing in the last few says in some of
these stocks
13:26 LindaRasc: will definitely go down in history
13:26 LindaRasc: !!!
13:27 victoria: New lows in Cocoa...that was the best grail sale of the day
so far.
13:27 victoria: s4
13:27 victoria: oops
13:29 LindaRasc: there is a seasonal sell in cocoa for the next 2 months.
13:30 LindaRasc: this market could be weak for awhile...(cocoa).
13:38 LindaRasc: trin still low...ticks eeked out +190.
13:39 LindaRasc: We just received three GREAT books in the mail.
13:39 LindaRasc: We haven't read them read, but will post a review when we
do.
13:39 LindaRasc: They are old classics which have just been republished.
13:40 LindaRasc: They are from the same series as the reprint of
Schabacker's course.
13:40 LindaRasc: Just mentioning them now because noone knows they're
avalable yet...
13:40 LindaRasc: and because I'm not long here.
13:41 LindaRasc: he market is testing the highs of the morning as influenced
by the 30-minute chart.he
13:41 LindaRasc: Anyway, the 3 books are:
13:41 LindaRasc: "A Course in Tradin" - by Wetsel,
13:42 LindaRasc: ooops - Trading, and "New Blueprints for Gains in Stocks
and Grains and One Way Formula for Trading in Stocks and Commodities" b
13:42 LindaRasc: by William Dunnigan,
13:43 LindaRasc: and "Graphs and their Application to Specualtion" by George
Cole.
13:43 LindaRasc: We like these old classic that analyze price action before
the advent of computers.
13:44 victoria: Transports up 70
13:45 victoria: Bonds are having an inside day..
13:50 victoria: 1 min grail buy right here...spz
13:51 victoria: we are not trading it but will see if the mardet gives one
more push up.
13:52 victoria: We need to see a minimum of 3 pts in a move to enter....here
the objective would only be 94.50
13:53 victoria: volume is extremely light in the pits today.
13:54 victoria: Everyone is catching their breath from yesterday.
13:54 LindaRasc: transports still making new highs.
13:56 LindaRasc: Trin still dropping.
13:56 LindaRasc: The grail test is complete.
13:57 LindaRasc: Not that it can't go higher...
13:57 LindaRasc: but there's a double top here.
13:57 LindaRasc: This is why we don't trade on a 1-minute time fram...
13:58 LindaRasc: frame....too hard to get in and out,
13:58 LindaRasc: too noisy,
13:58 LindaRasc: but it's still good to watch how the market reacts to these
setups.
13:58 LindaRasc: It indicates strength or weakness.
13:58 LindaRasc: That was a patheticly weak test.
13:58 LindaRasc: sp???
13:59 victoria: if the market picks up downside momentum ...we are looking
to put on a short.
14:09 LindaRasc: ticks -464
14:12 LindaRasc: testing 5-minute EMA and holding.
14:12 LindaRasc: This is what usually happens during a consolidation period.
14:13 LindaRasc: Lots of tests on very short time frames.
14:13 LindaRasc: It's tough to have the patience to wait for an extreme,
like we had this morning when the ticks were
14:14 LindaRasc: -800.
14:16 LindaRasc: See, when it looks like you have a buy on one time frame
and a sell on another,
14:16 LindaRasc: you are forming a triangle.
14:17 LindaRasc: It takes a momentum surge to pull free from a triangle.
14:20 victoria: there is really nothing to say right in here.........except
transports are on their highs again.
14:20 LindaRasc: I've been waiting..
14:20 victoria: slap accepted
14:21 LindaRasc: sorry...I set you up.
14:21 victoria: well we needed a set up today....
14:22 victoria: quickly.....if anyone has been logging off and on today.....
14:23 victoria: you will loose the script of the day..
14:23 victoria: in order to keep it rolling...
14:24 victoria: the only way is to stay logged on and minimize the chat room
if it is possible.
14:26 victoria: EBAY up 37 points...
14:26 victoria: re-diculous
14:27 victoria: s&ps trying to gun for rising trend line on down side....
14:27 victoria: take a look at 3 min....
14:28 victoria: there is a little head and shoulders forming
14:28 victoria: The trend line broken (neck line) on a sharp move below 1190
14:29 LindaRasc: Again, have to wait for the market to tip it's hand forst
to the downside,
14:30 LindaRasc: I meant first,
14:30 LindaRasc: because the momentum is still to the upside from yesterday.
14:32 LindaRasc: Crude is at the lows for the day.
14:33 LindaRasc: There is a very large thunderstorm due to hit our office in
5-minutes.
14:34 LindaRasc: ticks rally to +180
14:34 LindaRasc: Even the ticks are forming a triangle!...
14:35 LindaRasc: The storm is going to be bad because the dogs are crying
and it hasn't even hit.
14:35 LindaRasc: They don't like thunder.
14:36 LindaRasc: We have a backup generator attached to our office, so
hopefully we will never have to worry about being down.
14:36 LindaRasc: Here we go to the downside...
14:36 LindaRasc: like the impending storm...
14:37 LindaRasc: the Trin is rising.
14:37 LindaRasc: If we break this trendline, our office will be selling the
first "pause" ...
14:41 LindaRasc: we're selling market..
14:42 LindaRasc: we're short.
14:42 LindaRasc: The rain is hitting our office.
14:43 LindaRasc: torential downpour.
14:47 LindaRasc: Ticks rallying..
14:47 LindaRasc: not encouraging.
14:49 victoria: we are wrong on this trade
14:50 victoria: we have our three point stop in place...and will watch this
reaction in here.
14:52 victoria: this market is super thin in here.
14:53 victoria: market coming back to where we sold it....we will follow it
down.
14:53 victoria: 4 minutes til the bond close
14:54 victoria: Nat. gas going out on it's highs
14:58 LindaRasc: we have moved our stop down...
14:59 LindaRasc: the trin is still low.
14:59 LindaRasc: we're stoped out here
15:00 LindaRasc: stopped...
15:00 LindaRasc: 1.60 loss...
15:00 LindaRasc: that's ok.
15:01 LindaRasc: too thin..
15:01 LindaRasc: and the trin never really showed selling followthrough.
15:01 LindaRasc: Maybe now the ticks will make a run to the upside.
15:02 LindaRasc: Nat gas..!
15:02 LindaRasc: spz testing the afternoon high right here.
15:04 LindaRasc: yeah yeah yeah...
15:05 LindaRasc: Are we having fun today?
15:06 LindaRasc: Can always reshort.
15:06 LindaRasc: market just had to have that last test...!
15:07 victoria: markets can be that way
15:12 victoria: we are reshorting this market
15:14 victoria: we would like to see AMAZON sell off
15:15 victoria: We are short from 150...had some slipage..but we don't think
it is too late to sell in here
15:16 victoria: It is so thin in here...this is not the normal conditions we
trade in
15:17 victoria: we usually like to see more liquidity
15:17 LindaRasc: but victoria has been hammering on this head and shoulders
setup for the last hour...
15:17 LindaRasc: Also, we hate amazon.
15:17 LindaRasc: We want to see it die.
15:17 LindaRasc: If this is unprofessional..
15:17 LindaRasc: sorry.
15:18 LindaRasc: \Slow days are wearing.
15:18 LindaRasc: They wreak havoc on a trader's sanity.
15:18 victoria: sanity...
15:18 LindaRasc: or lack thereof..
15:19 LindaRasc: EBAy is cracking too.
15:20 LindaRasc: The low this morning was 1184.20
15:20 LindaRasc: we are moving our stop down to 1190 to at least make up for
our loss on the first try.
15:21 LindaRasc: ticks are -596
15:21 LindaRasc: We are right on the 30-minute EMA..
15:21 LindaRasc: look at yhoo ...
15:22 LindaRasc: down 10
15:22 LindaRasc: EBAY broke down 30.
15:22 victoria: AMAZON is down 3 on the day
15:23 victoria: Looking for 1 more push down..
15:26 victoria: We are going take a profit on the next test down..
15:27 victoria: here is the test
15:28 victoria: we are going in to cover right here
15:28 victoria: paid 1186.70
15:28 LindaRasc: it's ok if it goes lower here...
15:30 LindaRasc: booked 4.2
15:30 LindaRasc: EBAY is falling apart.
15:30 LindaRasc: but still not down on the day.
15:31 LindaRasc: Would like to see it close down on the day too.
15:31 LindaRasc: The hourly moving average is the next support. it is at
1181.35.,
15:31 LindaRasc: Tikis hit -30.
15:32 LindaRasc: would advise covering here if not already covered.
15:34 LindaRasc: Victoria says she is eating dirt.
15:34 victoria: hey qualify that..
15:34 LindaRasc: Ok...something about letting in the horses from the mud.
15:35 LindaRasc: it's really raining hard outside.
15:35 victoria: if you would like to give us feed back.....
15:36 victoria: you can email me at vlp@xxxxxxxxx
15:36 LindaRasc: We will be running this service for free for the next few
days...
15:36 LindaRasc: hopefully, the markets will have a bit more action.
15:36 LindaRasc: but if not, that's part of the game too.
15:37 LindaRasc: On Monday after the close, I will be conducting a special
class.
15:37 LindaRasc: It will be followed by a class offered by Ken Wolf, who
trades over the counter momentum stocks.
15:37 LindaRasc: We hope you all will join us.
15:38 LindaRasc: The details will be posted on the site, and we will mention
it again on Monday.
15:39 victoria: once again my e mail address is vlp@xxxxxxxxx
15:39 victoria: feel free contact us
15:40 LindaRasc: I think we should use CAPITAL letters when we are going to
make a trade.
15:40 LindaRasc: separate it from all the other drival.
15:40 victoria: ~~~~~~~ befor a trade
15:41 LindaRasc: ~hmmm
15:41 victoria: ~~~
15:41 LindaRasc: This market is closing weal.
15:41 LindaRasc: weak
15:41 LindaRasc: The hourly moving average should be hit tomorrow.
15:42 LindaRasc: 81.30.
15:44 LindaRasc: You know what would be really perverse...
15:44 LindaRasc: would be if the Dow weekly set up a Turtle Soup Sale over
the next week.
15:44 LindaRasc: We are testing the top perfectly here!
15:44 LindaRasc: Way premature to trade it though.
15:47 LindaRasc: Just be aware of the setup...
15:48 LindaRasc: The Nasdaq futures are down on the day.
15:48 LindaRasc: VIX index is still low.
15:52 LindaRasc: We would short this market on the close to carry home
overnight, except that there is a grail buy underneath, and I don't like to
do it under those conditions.
15:52 LindaRasc: Grail buys indicate potential support.
15:55 LindaRasc: Ticks have been rallying all the way back and the spz are
going sideways...
15:55 LindaRasc: hmmmmm...
15:56 LindaRasc: 2 large tick readings to the downside today...
15:56 LindaRasc: no large readings to the upside.
15:56 LindaRasc: To summarize today,
15:57 LindaRasc: we were expecting choppy sideways 2-way trading.
15:57 LindaRasc: We call this a "Z" day and it follows a wide range day such
as yesterday.
15:58 LindaRasc: It indicates consolidation. With this type of day, you can
sell rally extremes and buy oversold conditions.
15:58 LindaRasc: The maraket tested the previous day's high first, and then
correctred down to the point of yesterday's upside breakout.
15:59 LindaRasc: Ticks were oversold, accompnied by buy divergences on the
short term time frame.
15:59 LindaRasc: We never clearly got overbought on the upside, but we made
a stab at selling it based on the retest of the morning's high.
15:59 LindaRasc: The main intraday pattern today
16:00 LindaRasc: or the dominant influence,
16:00 LindaRasc: was the 30-minute chart, where a Grail buy offered support.
16:00 LindaRasc: This morning's selloff didn't quite hit that level,
16:00 LindaRasc: but we reached it this afternoon.
16:01 LindaRasc: We will alway qualify the daily voaltility conditions first
(ie., wide or narrow ranges))
16:01 LindaRasc: and then see if there is a directional play.
16:01 LindaRasc: We will always check to see if there is a dominant pattern
on the intradays.
16:02 LindaRasc: The main intraday charts we use are the 30, 60 and 120
minute charts.
16:03 LindaRasc: We also went home long coffee today. We will watch how it
openes tomorrow, and see if it can get anything going to the upside.
16:03 LindaRasc: It closed in the upper part of its range so we take it home
overnight.
16:03 LindaRasc: We also had buy and sell stops on gold which were never
hit,
16:03 LindaRasc: and a sell stop on silver which was never hit.
16:03 LindaRasc: There are several outstanding Grail setups
16:04 LindaRasc: which we will review tomorrow during the preopening
commentary.
16:04 LindaRasc: Copper, Gold and Silver have incredibly low vol breakout
setups
16:04 LindaRasc: as we go into first notice day.
16:05 LindaRasc: We also still like the bonds to the downside
16:05 LindaRasc: and will be entering on the break of the bearflag forming
in the 60-minute chart.
16:06 LindaRasc: We made an unsuccessful attempt to play this today. We are
suing a sell stop of 127'15 to pullus into this trade.
16:06 LindaRasc: We would like to make this service the best possible,
16:06 LindaRasc: since it is one of the first of its kind.
16:06 LindaRasc: So we appreciate your feedback and commentary.
16:07 LindaRasc: We hope to show you that we can stay calm and trade
rationally while calling our shots in front of a live forum....
16:07 LindaRasc: ha ha
16:07 LindaRasc: We can only do this because our sanity was damaged a long
time ago.
16:08 LindaRasc: Victoria wants to talk now, so I will say good-night and
hope to see y'all tomorrow.
16:08 victoria: whew....that was a mouthful
16:08 victoria: Transcripts will be available through a link on the web
site..
16:09 victoria: Look for it it is not in yet but should be within a few
minutes..
16:09 victoria: If not...bear with us we are still adjusting some of the
links..
16:10 victoria: Once again...e mail for feed back etc to:
16:10 victoria: vlp@xxxxxxxxx
16:11 victoria: Prting comment Amazon closed down onthe day...why do we hate
Amazon again?
16:11 victoria: haha
16:11 victoria: that was parting..
16:12 victoria: We will be back first thing in the A.M.
16:13 LindaRasc: sellers on the close
16:20 victoria: Once again....
16:20 victoria: sorry to be redundant..
16:21 victoria: Email us at vlp@xxxxxxxxx if you have any feed back or
questions..
16:53 victoria: transcripts available at www.mtrader.com/linda.htm
16:53 victoria: thats:
16:54 victoria: www.mtrader.com/linda.htm
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