My strategy consists of applying my own technical analysis to stocks I feel have low downside risk and great upside potential. My
initial technical/fundamental screening eliminates 95% of all stocks. The strategy itself is purely technically based and is for trades usually of weeks/months in duration, depending upon when the target price is
reached. I feel the most comfortable applying it to stocks of companies that are fundamentally sound, with high ROE's and nice uptrends in revenues/earnings. The optimum trade has the intent of making 50%+; however,
many will only have the potential for 20-50%. Some of the riskier trades may be made in unlisted shares, simply because I think the volitility presents greater potential. Here are some stocks filling my criteria
currently near or at buy levels:
Currently I am watching:
ANSS: a buy below 7, a sell @ 9 Compare 2 year charts of ANSS to NMGC with the money flow indicator. Qualitatively both price charts appear the
same; however, the money flow indicator would suggest that money is flowing into ANSS and out of NMGC. I think that's an interesting difference. I think there is logic in being swayed toward the upward trending money
flow in stocks of no apparent direction such as these.
I have averaged down on NMGC. I just started to incorporate a volume component in my analysis. It compliments the logic of my price analysis very well in my opinion, and it
seems to point toward NMGC as being the most desirable of my current picks. My other holdings, BNTI, VDIM, PSSI, and CERN, would likely not have been picks had I been incorporating this new volume component during their
BNTI: a buy below the big $0.20 -- a sell around $0.50
150% potential return anyone?
Bought PSSI @ $12-9/16 -- selling @ $18 1/2
I don't know that this one would qualify as a strong recommendation.
If fills my technical requirements and additionally the fundamentals
look quite favorable. 3X the average volume today on a big drop is
probably scaring most away from this one. There are multiple large
blocks over 20k shares, so I think maybe simply some institutionals'
stops have been triggered in succession. There is the potential that
smart money has been pulling out, but I'm gambling that this is
another example of PSSI's historic high volitality.
Sketchy Buy Recommendation:
QMDC: a buy below 20, a sell @ 25
The reason the recommendation is sketchy is that it has no earnings.
There should be support around 19-20, but if not then look for strong
support @ 16. It would be more compelling at those levels (after
indications of support there).
Bought CERN @ 16 -- selling @ 22
SSPE: a buy around 11 1/2, a sell around 21 1/8
Bought NMGC @ 13 1/2 -- selling @ 17 1/2
I realized I was in error claiming a class action suit had been filed
against PRXL, so I took a position @ $21 3/8 (on 1/26/99). Superb timing on
my part as the stock exploded on an earnings announcement today (1/27/99)
and I sold out at my target of $28 1/2. I wouldn't mind waiting for 6
months + for that kind of return.
It appears that TLXN may stay at supressed levels while the class action
My other holding (VDIM) got downgraded. I'm going to have to recommend this
one strongly in the $6-7 range. Nice uptrends in revenues/earnings. I'm
still holding waiting for my target of $11.
Currently I'm watching:
NMGC: a buy under $13 1/2, a sell around $17 1/2.
There is a slight fundamental concern with all its lawsuits with TRID, but I
don't think this would classify it as a sketchy recommendation.
Buying prxl @ $21 1/2
Update to old picks:
Sold OCLR at $25 1/2 (I forgot the exact date)
Still holding VDIM
Sketchy recommendations (negative fundamental developments recently):
TLXN: a buy below $13 1/2, a sell around $19
PRXL: a buy below $21 1/2, a sell around $28.5
I still can't decide whether to take positions in these two (class action
suits have been filed against both)
To get a better understanding of my strategy, take a look at the charts of a
few of my picks over the last few years (I don't want to spell it out
completely). The premise of my strategy is the principal of regression to
the mean. Remember that this stategy is only in its infancy, so I'm open
to suggestions. Traditional thinking in TA is that stocks either trade or
trend with RSI/Stoch. or MA's/MACD/LSQ's being the appropriate
indicators. I want to capture 1/2 of the "chatter" in the stocks I have
determined to have the most desirable characteristics technically (and
usually fundamentally for extra safety). If only a dozen or two of these
opportunities pop up per year, I still should make out very profitably.
December 17, 1998
BNTI: a buy around $0.20, a sell above $0.30
DSTM: a buy around $8-9, a sell at $14
OLCR: bought at $19, selling around $25.50
VDIM: bought at $7.75, selling around $11
I will update my list to show completed trades and new cantidates for trades.