Solitaire Trader

6/14/06

The portfolio was down -0.38% yesterday and down -0.35% today.  The awful market continues.

FMD - it's fallen back a little more than I'd like, but it's still holding up.

FCBP - again, it's dropped back but is still in good shape.

DECK - hit its stop yesterday, out.

CBK - hit its stop yesterday, out.

As for the watchlist, nothing is working.

It's possible I might buy something tomorrow, but with the market this bad I'm hesitant to do anything.  It just seems better to sit back with the 2 stocks and my puts and watch.

FMD Breakout!

The portfolio was down -0.18% today, which was considerably better than the Russell's -2.59% loss.

FMD - FMD broke out today, jumping over 50 but falling towards the close.  If it successfully tests the 49 level and resistance becomes support, it could be a good breakout.

DECK - not a good day, it's closing in on its stop.

FCBP - slightly up on a terrible day for the market.  Still looks good.

CBK - down a bit today but it held up well.

AP - hit its stop, out.

UPL - hit its stop, out.

EMCI - hit its stop, out.

Watchlist -

ALJ - not a good day, it dropped below its 50 day moving average.

NTRI - also dropped below its 50 day moving average.

SMDI - big drop near its 50 day moving average.

DXPE - I'm dropping this from the watch list, it just keeps going down.

New additions to the watch list:

GROW - this strong stock is trying to find support at its 50 day moving average.

WOOF - a strong stock that is trading in an ever decreasing range just above its 50 day.

While I'm watching these stocks on the watchlist closely, I didn't buy anything today and I'm going to need to see strength before I buy anything tomorrow.  I'm just not seeing very many good candidates for buying.

I did buy some puts in IWM today, so maybe that will cause a rally.

Changes

The portfolio was down a horrific -4.44% this week.  This officially confirms that we are in a bear market.  Therefore, my trading strategy will change.  Previously, I had been mostly buying pullbacks in strong stocks.  This works well in a bull market, but you get your head handed to you in a bear market, as happened this week.

So I'll be switching to a different strategy.  My trading activity is likely to be greatly reduced, which means that the previous format of this blog won't work too well.  So I've been thinking about what to do on this blog.  I've decided as an experiment to try something similar to Stock Insight, who follows a small number of stocks at a time.  I'm probably going to be looking at only a few stocks now, and although my holding period is much longer than Stock Insight's, the format might work, although the posting would be less often.

I'm going to be looking mostly at stocks that are on IBD's Top 200 Composite Stocks list, which is published every Thursday.  I like this list better than the IBD100.  Not only are there more stocks, it's a more comprehensive list than the IBD100.

So, here's a look at each stock currently in the portfolio, plus a few on my watchlist:

FMD - The star of the portfolio.  They increased guidance on Friday and the jumped up very close to a new high.  If it breaks out, this thing could really move.

DECK - Not in the top 200 list, this was purchased on the pullback.  It's holding up fairly well, but needs to start showing some strength.

EMCI - One of the few survivors of this week's purge.  It's staying just above it's long term trendline.

UPL - New to the portfolio.  Not in the Top 200, but if energy recovers, UPL will recover too as it is one of the highest rated energy stocks.  It had a disturbingly bad day on Friday, it needs to hold its most recent low.

AP - Also new.  It looked like it might have hit a low on Thursday, but Friday's action was very bad.

CBK - New.  This stock has shown great strength over the past month.  It had a big drop on Thursday, which looked like a good entry point.

FCBP - New.  Banks have been one of the strongest sectors during this selloff, and it's one of the few sectors that I think I want to be in.  On Friday it broke above its recent high of 59.32 and it looks headed for its 52 week high of 61.15. 

On the watchlist:

ALJ - Energy stock that held up relatively well on Friday.  I'm watching this closely for possible entry.

DXPE - IBD's top stock.  I've been watching this for awhile now, but the downtrend continues and it looks less and less like it's going to give an entry point.

NTRI - a great stock, it held up very well in the market drop.  The slight downtrend line and the rising 50 day moving average are forming a triangle that if it breaks to the upside might form a good entry point sometime next week.

SMDI - another stock that has held up well and the tightening action might form something worth looking at next week.

Capitulation

Stops were hit everywhere today: GMXR, GRMN, ADS, PWEI, and FORM.  There are only 3 stocks remaining in the portfolio: FMD, DECK, EMCI.

Incidently, I don't believe I've mentioned that the reason I still have FMD is that the stop sell from a few weeks back was busted.  There was some technical reason why it should not have sold out and the trade was reversed.  I certainly didn't mind as FMD is one of the few stocks that is showing strength in this disaster of a market.  I'm happy to still have my shares bought from last October, even though it means those gains are now unrealized. 

I was tempted today to just sell out the DECK and EMCI and just ride with FMD only, but in the end it is best to let the stops do their job.

I'm looking at a very small handful of stocks to possibly buy if this turns out to look like a bottom.  But it will be no more than a few stocks.  It seems like this is the start of a bear market, not the end of anything.

Sells

It's not been a good week for the portfolio.

The following stocks have sold out, hitting their stops: SGMS, CMCO, FCFS, KEX, GDI, FDS, LTXX, BRY, VLO, UARM, TGE.  Most of these were small losses of 2-5%, with a few small gains in there as well.

Week of 5/30/06

The portfolio was up +1.66% this week, compared to the Russell 2000 which was up +1.08%.

There wasn't a lot of activity in the portfolio this week.  Two stocks sold out for small losses when they hit their stops:  ERS and FRD.

I added two new stocks during the week: KEX and UARM.

The portfolio now consists of (in order of performance): FMD, TGE, GMXR, BRY, GRMN, VLO, FCFS, PWEI, EMCI, FDS, DECK, KEX, GDI, FORM, CMCO, ADS, LTXX, UARM, and SGMS.  The first 17 stocks are up, only the last two are down (both less than 1 percent).

I should be back to regular posting some time this week.