Stock Market Investing for Dummies at StockIdeas.net

Hi,

some have requested that I post picks from the support strategy. I would be glad to do this and I will begin posting picks starting next week. Not every day presents opportunities and down days on the market usually produce no results. I will only post picks that I personally believe I would buy with my own money. However, no matter what stocks are picked or how much they would have, could have, or did go up or down - no pick is an actual recommendation to buy or sell any stock or option and you trade at your own risk!! I hope you enjoy the ride.

Some information about the picks:
- They will be chosen after the close of the current day.
- The price of the pick will be the closing price of the stock for the day it was chosen.
- The exit points will be the typical 10% gain (trailing stop or normal limit) and 5% loss (limit)

I will try to write a program that will keep track of the picks online in one spot. This may take some time to put together.

Have a nice day!

-J. Walden

P.S. My webhost does not allow url fopen php functions nor socket connections to outside websites. Therefore, I will have to host the tracking program on a different server.

Stock Market Investing for Dummies

Hello everyone,

yesterday was the last day of trading for the year 2006. The final market condition:

DJ Indu          12,463.15    -38.37
Nasdaq Comp      2,415.29     -10.28
S&P 500          1,418.30     -6.43

WFR has performed precisely as the technical analysis would indicate except for one unforseen price anomaly. Please observe the following chart:

Here, WFR appears to show all the healthy signs of a downtrend as mentioned in previous posts. But, looking at the next chart we see something interesting...

The 50-day EMA was not previously considered as a powerful technical analysis tool on this website (we've only considered the 50-day SMA!). However, this does not make it any less important to the instutions and traders that buy and sell WFR every day.

Therefore, this creates a problem for the current strategy. We really need WFR to track back to the 200-day SMA (which will net our synthetic short stock/collar trade of a long put and short call a LOT of money in the short term). Yet, this is clearly not going to happen if the 50-day EMA gets in the way.

I will need to carefully figure out the impact of the 50-day EMA on the downtrend at hand. If WFR turns around substantially (meaning we get the 3 buy indicators for WFR), then right now at this point is where its going to do it. Even if WFR does go up, its great for my long WFR position. I am only risking the capital generated by selling the 4 calls.

Lets see what happens next!

Have a nice day!

-J. Walden


Stock Market Investing for Dummies
Stockideas.net

Q: 8.37 Chg: +.27 (+3.33%)

Hi all,

here is the recent activity in the stock market (intraday at 1:37 PM ET):

DJ Indu          12,346.10    -75.15
Nasdaq Comp      2,402.22     -13.63
S&P 500          1,410.62     -7.68

As you may have seen, the stock market has pulled back a bit since its recent gains. This has had an adverse effect on the current WFR position. However, because WFR has begun pulling back as well, we are presented with another opportunity to make money on the trade. With the $1,600 earned from writing WFRDH, I can use this to open a long put position and take advantage of near term losses, also known as a collar trade. This transforms my neutral bullish written call to a very bearish collar. Please observe the following chart:




As you can see, the technical analysis shows that the trend is returning to a bearish state. There is still the uncertainty as to whether or not WFR will continue to go down or if that was it. I'm willing to take the risk and buy some in the money puts to hedge downside movement.

Here is a table of calls and puts from bigcharts.com:

As you may have noticed, the most reasonable put position to open is WFRMH, the first in-the-money put option. This is because WFRMH has a much higher delta that WFRMG and nearly the same delta as WFRMI (which costs about 4x as much). By buying WFRMH with WFR currently at 39.55 and the 200-day SMA support at 37.00, WFRMH should make around $2,000 if I buy now and sell when WFR drops this low.

I have entered an order into Ameritrade to buy WFRMH at 1.65 but it looks as though the bid has risen to 1.75. I am in no immediate rush to open this position so I will wait the day at my current limit.

Other positions:

Q

Opened at 8.10, currently 8.29, chg +.19 (+2.35%)

Enjoy!

J. Walden

Hi all,

recent market data:

DJ Indu         12,441.27    -4.25
Nasdaq Comp     2,435.57     -21.63
S&P 500         1,422.48     -4.61

I wanted stockideas.net to provide valuable insight into various methods of finding stocks and evaluating emerging opportunities (for free). Why? Well, that's simple. If I could really make money buying and selling stock using the information on this website and become super rich, I wouldn't need anyone's money, right? Second, if what is on this website is as valuable as garbade, I'd be scandalous to try to sell it as though it were profitable!



Nevertheless, allow me to dispense with my findings. The scan, as of the close of 12/18/06, only came up with 1 acceptable candidate. Here is the info on that stock:



Symbol: Q (Qwest Comm Intl)
Last Price: 8.10
Change: +.15 (+1.89%)
Shares Outstanding: 1.91 Billion
Institutional Ownership: 83.20%
Top 10 Institutions: 59.20%
Mutual Fund Ownership: 48.11%
Earnings/Share (EPS): -.09 (-109 Mil income)
FY(12/06) EPS Estimate: .28
General Rating: 6
Chart:

Looking at this chart, all the technical data agrees with the criteria mentioned before; decent trends, possible bullish MACD, rising RSI, proper price reactivity etc. Also, Q has fair fundamentals. It is clear that Q has declined recently due to the losses it is facing for 2006. However, Q estimates a positive EPS (whether or not this will pan out is yet to be seen).

Furthermore, Q has terrible options trading possibilities and offers nearly no support there. A purchase in Q is 'as-is' making its success dependant on the sell targets. I would surmise that the stop loss would be safe at 5% below 8.10 (7.70) and the exit at 10% (8.91), initiating a 3% trailing stop (min 7% gain).

I'll be keeping an eye on Q and append its performance at the conclusion of every new post until its price reaches a sell target (at which point, watching it will be closed and moved to a record of its tracking).

Have a great day!

-J. Walden

Disclaimer: This post, anything on this website or any link to any other website should NOT be viewed as any type of investment advice or substitute for investing research whatsoever. Trading is risky and you do so at your own risk!

Keyword cloud: Also note that Stockideas.net provides beginner stock market investing information that may assist in helping a good trader determine the best stock investments and also the top stock investments and even good stock investments using basic stock market language. This site teaches kids buying stock with the aid of free stock tips and learn how to invest in the stock market.

Hello all,

I wanted post an update with the recent activity in the market:

DJ Indu           12,445.52     +28.76
Nasdaq Comp       2,457.20      +3.35
S&P 500           1,427.09      +1.60

WFR has gone up a total of 15.00% and my 455 shares are now worth around $19,815.25. Of course, I have a short option position currently worth -$2,640.00 not including the $1,320.00 from initially selling the 4 option contracts.

WFR is currently worth 43.55 a share which is a bit higher than my break even point with the options (by selling the options contracts at $3.30/share at a $40 strike price, its the same as selling the stock at $43.30/share and therefore the extra $0.25/share is unrealizable gain.)

Since the 4 WFRDH calls are now worth $6.60/contract, the break even point for any option buyer is $46.60/share of WFR. This means that in order for an option exercise to be profitable for a buyer today, WFR would need to rise above $46.60. Even though WFRDH is in-the-money, its still unlikely it'll be exercised anytime soon. WFRDH is worth about $3.05 in time value which is actually less than when I sold the options a month ago when WFR was at about $36/share.

In the meantime, I can still make money while I am forced to hold a position in WFR that is already making more money than I originally planned. Now that WFR is unusually high relative to my expectations, I am actually hoping WFR will drop a bit. $40 January 21 WFR puts (WFRMH) are currently worth nearly nothing at .65 - .70 with a delta of around .20 (a bit low but will get higher in a sell signal). With the remaining $1,600 in my account, I am just waiting for a sell signal to buy up these cheap puts to protect myself from a downturn on the stock (and make money!).

Please observe the following charts from StockCharts.com:




Through the use of options, I am prepared to take advantage of any move in WFR. I can define my WFR position in states:

State 1 (Initial Position):
- Purchase stock using 100% capital available (see my stock choosing strategy)
- Write supplemental amount of calls to make money from the start.
=>If WFR goes up, proceed to state 2
=>If WFR goes down, proceed to state 3

State 2 (My current state):
- Hold WFR until either the written option contracts expire unexercised or they are exercised and I exit the position at the desired amount (my chosen exit = strike price of calls)
=>If WFR goes down, proceed to state 3

State 3 (Secondary Position):
- WFR begins throwing up sell signals left and right (declining RSI and MACD, 5 day EMA falls below 20 day EMA)
- Purchase cheaper short term put contracts to offset downside movement.
=> Proceed to state 4

State 4 (Tertiary Positon):
- WFR has gone down and begins to turn around, showing buy signals.
- Close long put position (hopefully at a healthy gain)
- Close short call position (also, hopefully, they are now worthless and can buy them back)
- If desired, purchase more WFR stock with the profits
- Write more options contracts (appropriate strike/time value).
=> Return to state 2


At the moment, I am merely watching WFR to see what will happen next. If WFR is going to make a move, it really needs to be a strong move. My strategy will actually hurt me if I move into a new position on a weak downturn.

Thats all for the moment, in the future I will begin posting hypothetical positions to analyze more strategy at a faster pace and simply keep my actual positions in an online portfolio.

Have a great one!

-J. Walden

Disclaimer: This post, anything on this website or any link to any other website should NOT be viewed as any type of investment advice or substitute for investing research whatsoever. Trading is risky and you do so at your own risk!

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