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Underexposed - American Stock Journal (long term)
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Underexposed - American Stock Journal (long term)

  #41 (permalink)
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mid-week status Feb 4

I still have not made a decision on the above Utilities.... I was a little ticked off to see such large companies have negative debt to equity values...not just one company but most of them that I selected for final selection. Perhaps this is normal for the industry but I don't feel comfortable so I don't buy. Things have been good... what would happen to these guys in bad times??? don't know...don't want to find out.

The week so far is not working out...but things are volatile so who knows how the week would end.


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  #42 (permalink)
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choosing a Utility stock

Well, I narrowed my search down to 2 stocks... IDT Corp [IDT] and Vonage Holdings Corp [VG]

Now comes to the Technical Analysis

I have 4 basic charts that I use time in...time out. If you read my Canadian Journal you will understand the development of these charts and why they are arranged as they are. I am not going to repeat the gory details of how they are arranged... I will just interpret them side by side.

I always start with a P&F chart...basically because it gives me more of a long term feel for the stock. I can identify resistance/support on a macro level this way which is more important in long term trading than day trading... the latter you must find subtle short term R/S


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Both charts are reasonably bullish in the past.... the difference is that the one for VG has 2 major resistances ahead of it, at $4.50 and then soon after at $4.80...IF it breaks these resistances...man that would be a great buy But either on could scuttle the rise. On the other hand there is a diagonal and a horizontal resistance... I feel tend to feel diagonal resistances, especially where one of the main points are over a year old are somewhat weak... so I would say there is less resistance to rising prices for IDT but just marginally so... not much difference here.

Advantage to IDT


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This is my "trigger chart" and shows whether a share price is about to break out or if a a bull/bear run is comming to an end.

There is VERY LITTLE to choose from here... both stocks are in consolidation after a bullish run... the bull run for IDT is much better than VG. ... not choppy but rather a continuous rise from Oct.

On the other hand there is little difference between the indicators....there is a slight edge here to VG as the Slow Sto remains in the bullish so-called Over-bought zone but the MACD and BBWidth look very similar.... both stocks will not make their true direction known for about 7-10 business days IMHO

No advantage either way


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here too the sentiment (my term) charts are almost the same...the RSI is stronger in the IDT bullish run but that is over for now ... the ADX DI+/- currently is identical.... the CMF sligtly favours IDT as the VG values are definitely on the decline whereas the CMF in the IDT cahrt hints at a decline

Advantage very slight to IDT


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clearly the OnBal Volume is much more bullish while the CCI is quite similar currently but the IDT chart shows a longer bull run.

Not much difference in the Ichimoku charts...under than the share price is higher above the green clouds.

I give a very slight advantage to IDT because of the On Bal Vol


Conclusion

Both stocks right now look about equal.... I give a slight preference to IDT Corp [NYSE:IDT] but only by the barest amount. Also I find less resistance ahead of IDT as shown in the P&F charts.

It won't be known for a week or so as I mentioned before a breakout will be bull or bear.

I believe it will probably come down to test its support level around $21.40

I will place a smaller 500 share order for IDT Corp [NYSE:IDT] with a limit bid of $21.45/share

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  #43 (permalink)
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Looks like an interesting thread. I skimmed through this, so apologies if I missed this, but how and when do you decide to cut your losses?

I bought some HTLD in March 2014, but exited a couple of days later when it could not hold my breakout point. Close to a year later, I would not have been up much on the position.

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  #44 (permalink)
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Hi and thank you for your comments

Heartland Express is not working out very well as a long term play right now and I will probably sell it though I will give it a chance to recover.

I Have had a great deal of trouble finding good long term picks on the American exchanges... if you look at my Canadian journal I have much more success there and feel more comfortable....but that is the excuse...not the reason for my failures in the American marketplace and already by constructing this journal I have found several reasons for my past failures.

But let us talk about Heartland stock HTLD.

I have not been paying the attention to this stock that I should have... but let us look at the reasons and mistakes that I have made and what I would do now..

Here is the P&F chart


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the share price has a maximum at $27.80...this is its all time high... at the time I bought it the stock was heading for another run at that all time high. If it had breached that resistance things would have gone well but it did not go that way.

This was never a really good choice for a buy in the first place but I was struggling to find some kind of stock to start this portfolio.

I should have sold it when it broke through that red line which was a support at $25.60 and now turned resistance. It was a strong support at the time(one top of "X" column and 2 bottom of "O" columns). The next support is somewhere around $24.10 ish as shown in the chart.

I have not got a huge loss from a long term standpoint ... a $1 loss on $25 is less than 5% so not serious though if you were a daytrader it would be a disaster I suppose. I will give this stock a chance to recover off this support... break this support and I would sell. for sure.

let us look at my so-called trigger chart now


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you see my buy-in point it was bouncing off a support at the time .... selling at $27.50 was not an option for me as it is not enough gain and if it breached that high I would have missed a greater gain

Now this is not my best choice of a stock situation.... I usually use this trigger chart to decide when to buy and I violated my rules here. This link takes you to a detailed discussion of how I use this chart

https://futures.io/trading-journals/30636-underexposed-canadian-stock-journal-26.html#post426055

back to the chart in question.

you can see that the price was following a R/S channel. Now look at the vertical red line....this was a sell signal for this chart.... in the dotted blue line you see the declining Slow Sto , declining MACD, these were clues things not going well....but the sudden rise of the BBwidth is the REASON to sell..... and I did not look at this.

Now look at the orange circle

See that when the price fell ... it fell hard and was below the lower Bollinger Band.... it stayed below for 3 days and now has re-entered the Bollie envelope.

Is this a bottom??? Not yet...it may be only a rest before further declines

Now look at the MACD and BBwidth in the small blue circle.

IF...IF the MACD rises at the same time the BBwidth falls....this is sort of a "pinch" and may indicate a bottom as well. So far these two indicators are only hinting at doing this maneuver. If that happens then the share price has a tendacy to go to the dotted green line (20daySMA)

So we are at a decision point now

So what do I do....well I won't sell outright... I rarely do so.

What I will do is protect myself from a much greater loss. I will set a LIMIT STOP-LOSS just below that support line in the P&F chart

I will set a LIMIT STOP-LOSS order for 1000 shares of Heartland Express [NASD:HTLD] in a range from $$24.00 - $24.05

doing a potential sale this way gives the stock the potential to recover.... if it does recover, I will trail the limit stop-loss behind it's rise...until it eventually sells or I decide that the order is no longer necessary and I will cancel it.

Has far as how I judge how long to keep a stock goes it is a several post discussion.... I have done this already in my other journal but am willing to discuss it here if you want the details here.

Essentially it involves looking at the price as it approaches a resistance... if it passes then I am good until it reaches the next resistance then another decision is required. Sometimes the price stalls and I could use the money elsewhere so I will take the profits and re-invest.

I am willing to discuss more if this interests you...and ask questions along the way...Please do.

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  #45 (permalink)
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Underexposed View Post
I am willing to discuss more if this interests you...and ask questions along the way...Please do.

Thorough, as usual. Thanks.

Bob.

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  #46 (permalink)
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Week end status Feb 6/15

Well Heartland Express has dragged us down this week.... I have placed the limit Stop-loss sell on the company as well as added the buy order for IDT Corp

Hopefully things turn around next week

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  #47 (permalink)
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Underexposed,

Thanks for the detailed explanation. You seem to have a logical way of running through the decision making process. I don't wish to a) post in a way which may influence your decision making process in this journal, and b) come across as judging your decisions. Any posts here are purely my opinion.

HTLD - I actually had two stabs at this stock - one on 21.03.2014 and one on 12.09.2014. What attracted me to the stock was the fact that it was trading in a narrow range with an upswing in earnings and a big upswing in sales. However, the stock just never gained traction and both times I sold for a small loss (<5%) after a couple of days. Usually I would hold longer, but there was never any volume on the upside. Right now, earnings and sales are slowing, volume on negative days is big, and the stock broke through its prior low creating a lower low. Thus, not on my radar any more.

IDT - On my main stock scan, but I missed the initial cup-with-handle breakout at 20.43 on 07.01.2015. Volume characteristics have been good and earnings seem to be increasing nicely. Perhaps a little extended now, so I will watch but not buy.

Since this is a journal with simulated money, I'll offer some friendly advice - I have found that having "decision points" on stop-losses is generally not a good idea. Yes, a stock may recover and you will feel like a fool for selling, but if you ever get stuck in a stock that just implodes, you may find that when you sell you will sell at the low of the move. Much better to just get out at a predefined loss and be done with it. Less regret and less what-ifs. A good example of what can go wrong is CROX which completely imploded in 2007/2008. The first day of selling came without warning and was brutal. At that point, you just want to step aside and reevaluate.

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  #48 (permalink)
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grausch View Post
Underexposed,

Thanks for the detailed explanation. You seem to have a logical way of running through the decision making process. I don't wish to a) post in a way which may influence your decision making process in this journal, and b) come across as judging your decisions. Any posts here are purely my opinion.

HTLD - I actually had two stabs at this stock - one on 21.03.2014 and one on 12.09.2014. What attracted me to the stock was the fact that it was trading in a narrow range with an upswing in earnings and a big upswing in sales. However, the stock just never gained traction and both times I sold for a small loss (<5%) after a couple of days. Usually I would hold longer, but there was never any volume on the upside. Right now, earnings and sales are slowing, volume on negative days is big, and the stock broke through its prior low creating a lower low. Thus, not on my radar any more.

IDT - On my main stock scan, but I missed the initial cup-with-handle breakout at 20.43 on 07.01.2015. Volume characteristics have been good and earnings seem to be increasing nicely. Perhaps a little extended now, so I will watch but not buy.

Since this is a journal with simulated money, I'll offer some friendly advice - I have found that having "decision points" on stop-losses is generally not a good idea. Yes, a stock may recover and you will feel like a fool for selling, but if you ever get stuck in a stock that just implodes, you may find that when you sell you will sell at the low of the move. Much better to just get out at a predefined loss and be done with it. Less regret and less what-ifs. A good example of what can go wrong is CROX which completely imploded in 2007/2008. The first day of selling came without warning and was brutal. At that point, you just want to step aside and reevaluate.

I don't mind this kind of discussion.

Heartland Express was a stock picked at a time when it looked as though it was going to break an all time high. Things looked favourable to me as you could see from previous posts and at the time fuel costs were falling and the American economy was seeming to improve... so I believed there was a good shot at breaching that resistance.

It does not have a history of falling off the earth... it does have a history of pullbacks and then recovery.

I hear you as far as sudden dives But in the case of CROX you would have had to be psychic to have sold it at its high

Crocs Chokes (CROX)


Quoting 
True, Crocs' third-quarter results were impressive, with net income more than doubling to $56.5 million, or $0.66 per share. Revenues were similarly strong, growing 130% to $256.3 million. However, if you compare this balance sheet to its year-ago counterpart, inventory has increased 297%, far outpacing Crocs' increase in sales; meanwhile, accounts receivable swelled 165%. Both could be red flags.

The reason Crocs' shares have taken a substantial tumble, though, is because its guidance fell short of Wall Street's expectations. As with many premium-priced stocks, missteps can shake confidence, causing such a stock to sell off because it was so pricey to begin with.

Back then things were out of control and shortly thereafter was the huge financial crash.


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This is one case where TA would not have helped at all. It is an anomaly... that catches any one it was that fast a reaction to missing expectations.

I do not use simple Stop-loss as you can see. I like Limit stop-loss... I find this a better way to sell stocks... I have been very emotional in the past regarding sale of stock. I find that using a limit Stop-loss reduces that emotion.

the limit stop-loss gives a dollar range where the sell order is valid. I find that if a stock is truly selling then it will drift through this range...

If the price plunges through that range then it is usually an over reaction to some news. A normal stop-loss order has created a market sell that will be filled as soon as possible and that is usually at the bottom of that fall. I don't like that since it usually pulls back somewhat and I will access the situation and I should get a better price

So my use of a Limit Stop loss order for selling a stock is to take the emotion out of selling. I have made the decision to sell but the actual point of selling has not been decided yet and I will move that selling range up if it rises....

It is just a way to take the emotion out of a sale and it works for me.


BTW: Though for the purposes of this journal this is a fake stock profile. HOWEVER... I have made this as real as possible by announcing my trades before they would be executed in reality, I use real data not simulated data and I post bi-weekly status updates and you see the good weeks and bad weeks. If I announce a price I wish to buy or sell and the price drifts through that range I will assume my order would have been filled. If it gaps above or below I will talk about that and what I would do.

I don't have a big American portfolio in real life (contrary to my Canadian portfolios) In my Canadian journal the performance most (if not all) stocks there are probably in my real portfolios...in different quantities of course... The American journal here is totally new as I try to understand the American markets....which, if you read this journal from the start, has startled me as to how different they are from Canadian markets and this is probably the reason for my past failures in buying/selling American equities.

Your discussion is welcome


Last edited by Underexposed; February 9th, 2015 at 01:27 PM.
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  #49 (permalink)
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Underexposed View Post
I don't mind this kind of discussion.

Perfect, I like your journal and like the thought that goes into your posts.


Quoting 
It is just a way to take the emotion out of a sale and it works for me.

Perfect again, you have a method that works for you with regards to getting out. Regarding CROX, I was not in it thus can't comment on how I would have gotten out. Knowing my own trading, it probably would have been close to the bottom of the day's range...That being said, even getting out there would have saved my neck since it looks like CROX lost 99% of its value thereafter.

Please also note that I was not criticizing your use of the Stop-Limit order. I was merely pointing out that you referred to HTLD being in a "decision point" area. Again, in my own trading, and yours is very probably different, I like to have my scenarios planned in advance. Thus, once a stock reaches a certain level, I know I need to start getting out. My downside protection is already planned the moment I place my initial buy. By having this in place, I hope to mitigate some of the shock when an event like the CROX break occurs. Not perfect, but that is what I use. Thus, regarding losses, there is no decision to be made while I am in the trade. That decision is made right at the beginning of the trade.

Other than that, I might refrain from posting a little for now, but will keep on reading your journal. I find that the more I post on forums, the worse my trading results become. Could never quite figure out how that works.

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  #50 (permalink)
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grausch View Post
Perfect, I like your journal and like the thought that goes into your posts.

Thank you for the compliment... appreciated


grausch View Post
Perfect again, you have a method that works for you with regards to getting out. Regarding CROX, I was not in it thus can't comment on how I would have gotten out. Knowing my own trading, it probably would have been close to the bottom of the day's range...That being said, even getting out there would have saved my neck since it looks like CROX lost 99% of its value thereafter.

2007 - 2009 was a real education for me... up to mid 2007 I was making money hand over fist... but by March 2009 I had lost about 45% of my holdings... but only on paper... I did not do a lot of selling then. It was very depressing to see all your gains fall away... so my philosophy then was just to hold tight and not sell.

That is still a major thought that I have in a decline. If the decline is due to a problem within the company I would sell easily.... but when the company is caught in the collateral damage of something beyond its control I woul hang on and ride it out.... It still is part of my thoughts today.

People would ask...how did you survive that crash and not sell your stocks??? Well I had a contingency plan back then. As I said I was making pretty good coin prior to mid-2007, So I salted away about 5% of any profitable sale into into Money Market Mutual Funds... they are always worth $10/unit and paid a minuscule distribution. I had enough in there by mid 2007 to be able to hunker down and draw money from these units to survive 3 years if necessary and not touch my equities.

I have now developed ways of taking the emotion out of the sale as I pointed out so my philosophy has changed somewhat


grausch View Post
Please also note that I was not criticizing your use of the Stop-Limit order. I was merely pointing out that you referred to HTLD being in a "decision point" area. Again, in my own trading, and yours is very probably different, I like to have my scenarios planned in advance. Thus, once a stock reaches a certain level, I know I need to start getting out. My downside protection is already planned the moment I place my initial buy. By having this in place, I hope to mitigate some of the shock when an event like the CROX break occurs. Not perfect, but that is what I use. Thus, regarding losses, there is no decision to be made while I am in the trade. That decision is made right at the beginning of the trade.

There are many ways to skin the investment cat... mine is only one and I did not climb a mountain and return with tablets So I am open to opinion though I may not always agree and as long as it is civil and no attempt is made to hijack the direction of my Journal I am good with it. I like discussing stuff as often some of my best ideas have been spawned by such interaction.

You will see that my trading strategy is a combination of fundamentals and technical. I have really discussed charting in great detail in my Canadian Stock journal. I don't plan on duplicating those posts in as much detail but when necessary I will post links to my other journal so you can see how a chart I have developed evolved.

You will not see me use any "protection" when I buy... I am pretty confident of where the price is going long term... though in the short term I have losses in the 5-10%. I find that if you deal with fundamentally sound companies the bottom does not usually fall out of the share price.


grausch View Post
Other than that, I might refrain from posting a little for now, but will keep on reading your journal. I find that the more I post on forums, the worse my trading results become. Could never quite figure out how that works.

hahaha... post when you can and as often as you want.

If I may suggest one place to read in my Canadian Journal it is here

https://futures.io/trading-journals/30636-underexposed-canadian-stock-journal-25.html#post424743

this is where I discuss in gory detail the construction and basic use of my so-called "trigger" chart. Of all the charts I use this is the major one I use.

There is a lot more interpretation than I show there but each company's chart is different and tells a different story as you assemble the clues.

Take care and good trading

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