The Trading Digest

Family is visiting and I have had my hands full the last week. I will get all the T2108 exits exits posted for your review tomorrow. You can always gauge the Ultmate Oscillator at stockcharts.com with the default setting.

Dave Johnson

Just got a new laptop at work, strange thing happens, I plug in the headphones but the speakers don’t mute. So while trying to listen to music at work through my headphones it’s also playing through my speakers.

No problem I think, I’ll do a quick search, find a setting/driver I missed and be on my way. This is what I found.

Unbeleivable.

- John

My father-in-law owns an irrigation/landscaping company that primarily installs sprinklers systems. Last night he mentioned that in the past week, the wholesale price of PVC pipe (plastic pipes used in pretty much everything) has risen 25%. This means that all bids and prices are increasing by $150+ per install just to cover the extra raw material costs.

This is the type of trickle down that is just starting to work it’s way into the system from oil being $120+. These type of increases take months to make their way through the supply chain and be reflected in consumer prices.

- John

The number of paid clicks on the Web sites operated by Google and its partners during the second quarter fell 1 percent from the first quarter, the first sequential downturn that the company has ever reported in the category. The 19 percent year-over-year increase in Google’s paid clicks also was the company’s lowest ever.

- John

IYF hit the 3% Profit Target this morning.

Here is a post with the present holdings.

Many of these will probably start to exit based on a cross of the Ultimate Oscillator crossing the 50 line. We’ll know at the close.

Once we get back to cash I will do a full review.

Dave Johnson

This Bloomberg headline caught my eye:

Pakistani Investors Stone Karachi Exchange as Stocks Plunge

The history of dumbasses is a well littered trail, yet the ones that got together at the Karachi Exchange decided to :

In Karachi investors today broke windows, threw plant holders in the parking lot of the building, burned shareholder statements and at least one protester was injured, prompting intervention by police and the paramilitary. Investors were also protesting outside the Lahore and Islamabad stock exchanges, Geo Television reported.

and

Police surrounded the exchange after hundreds of investors stoned the building and shouted anti-government slogans. They directed their ire at the government and Securities and Exchange Commission of Pakistan, which this week removed a 1 percent daily limit on price declines. The measure was aimed at halting a slide that wiped out $30 billion of Pakistan’s market value in three months, threatening to undo a 14-fold rally since 2001.

That is right folks. A 14 fold rally since 2001. Yet prices slide 25% in a short period and this requires stoning the building. Here is the recent chart. Were there any obvious warning signs in the past 3 months? Of course.

Dave Johnson

Source:

http://bigeyedeer.wordpress.com/2008/07/15/this-cartoon-wrote-a-sweary-word-on-your-toilet-wall/

Dave Johnson

From Sept. of 2006 (via The Big Picture)

One one hand, we have news that Bush has given an “amber-light” to the Israelis to bomb Iran.

On the other we have a largest bank failure in decades, which is will cost the FDIC billions.

And of course we have the beginning of earnings season where we learn how realistic those 3rd quarter EPS projections really are…

No summer doldrums this year :).

- John

Whenever you read a story about declining consumer savings rates or increasing consumer debt load followed by some media explanation of why it’s not the consumers fault and it’s due to economic “headwinds”, remember this picture.

Consumers are lining up for hours for the opportunity to spend $199 to buy a new iPhone.  Has there ever been any activity that makes less economic sense than waiting for hours/days in line to buy a product that will be mass produced to the point of saturation?  It boggles my mind.

- John

Below you will find entry prices followed by price targets for exits. Yesterdays rally brought some a bit closer.

IYF 67.66 - 69.69

IWP 102.22 - 105.29

EWA 25.69 - 26.46

IWB 70.79 - 72.91

EWY 51.43 - 52.97

EWT 14.21 - 14.64

EWU 20.81 - 21.43

EPP 132.89 - 136.88

The other exit criteria is the Ultimate Oscillator crossing above the 50 level.

In this foray below 20 on the T2108 indicator we have had 9 entries. IYF was entered twice with the first entry exiting at its 3% profit target. We presently have a full position now with 8 holdings. 

Dave Johnson

Tomorrow the system will be buying:

IYF- We were in and out of that profitably last week

IWP

Here is a look at those ugly charts.

These are at tomorrows opening price.

This brings the system to 8 full positions and the system will no longer add any more positions unless we get some exits.

Dave Johnson

Only one signal for tomorrow and that is:

EWA

Australia

Alright Australia it is. With the the one exit today this kind of evens things back out again at 6 holdings. Maybe tomorrow we can get a really really big down day to fill out the portfolio. We’ll see

Dave Johnson

IYF hit the profit target at 69.45 this morning. Figures it is the financial one that hits first

The 3% targets for the other 5 entries are as follows:

IWB 72.91

EWY 52.97

EWT 14.64

EWU 21.43

EPP 136.88

Remember the other potential exit is the Ultimate Oscillator crossing 50 if the profit target is not reached.

Dave Johnson

On my ETF list of holdings in yesterdays post I wrote one of them twice.

EWU should be in place of that second EWY. I posted it that morning, I just screwed up the list.

EWU entry was @ 20.81

Dave Johnson

Ok, we have 6 holding in our portfolio that can hold 8 total positions. With today’s mini-reversal we have no new entries for tomorrow because no ETF’s crossed below the level of 30 on the Ultimate Oscillator.

Remember our exit is either a 3% profit target or the Ultimate Oscillator crosses above the 50 level.

Here are the 6 holdings and their entry prices.

IWB @ 70.79

EWY @ 51.43

EWT @ 14.21

EWY @ 51.43

IYF @ 67.43

EPP @ 132.89

Remember the only reason I am trying to highlight this system is because it has a couple key elements I have found in backtesting.

1) High win/loss percentage
2) Favorable profit factor when comparing cumulative profits versus loses over the long term
3) Although risk is open ended it can be mitigated by using a small percentage of the overall portfolio

If, again If, this catches a major swing point you just might be able to let a small portion of these positions run with a major swing low as a point defense. If the overall trade begins to hit profit targets make sure those runners are small enough that if they hit those swing lows you are still ensured a profitable trade. Keep the overall trade small and if those runners represent 1% of your overall portfolio you just might have the basis of a some exposure to extreme oversold conditions.

Dave Johnson

Todays entries are:

IYF and EPP

Big gap down which helps a bit

Dave Johnson