Friday, August 21, 2015

Dr. Wish Notes

My trading style of buying breakouts in momentum stocks  has been a highwire act. It requires heightened risk management because I expect that many of my trades will fail.  I'm wondering  if there might not be a better way. That affords more margin of error.

A friend of mine keyed me on to Dr. Wish and gave me some links to review.  I took some notes for my weekend research.  It re-emphasised for me the importance of the broad market.   As good as I have been over periods, I frequently have been trading against the grain of the broad market.

Here is the video  I watched,   and my notes from the video:
Key points:
  • Buy stocks making new highs -- Darvas
    • Stay out of a bear market. Do not go against the Grain. 
  • Weinstein Stages 
    • 30 week average cross stage 2
    • Only be in a stage 2 stock long -- Stage 4 for shorts 
      • The importance of stage analysis is crucial.  Buy only stage 2 and short only stage 4.
  • O'Neil CANSLIM
    • M - Market indexes 3/4 stocks follow market trends
      • Be on the right side of market averages
      • There is a time to be out of the market
    • Cup with handle
      • It is a base in a stock that has already launched at least 30%
      • 7 weeks
  • Livermore -- Buy going up. " I never buy too cheap or too easily."
    • Never average against a losing position. 
    • Pyramid up 
    • If a position fails. sell it
      • if it gives another signal-- re-buy it often an initial failed trade an lead to big gains if it re-sets.
Guidelines for buying growth stocks
  • Market must be in an uptrend
    • GMI must be buy
    • IBD market pulse
      • "IBD is very good you don't want to go against them"
    • other?s
      • Stockbee Market monitor
  • Great fundamentals -- IBD 50 
    • new highs--- stocks up 100% from a year -- MDT
  • Weinstein --
    • Stage 2 -above 30 week.
    • multi-month base
    • MACD rising
    • Stoch rebound from oversold
    • 10 > 30 week > avg.
    • price > 30 ma or close
  • Exit -
    • - below 30 week avg
    • tops never lowered only raised
    • tighten stop -- stop if GMI < 4 or TI2109 > 80-85% 
    • sell if doesn't act like it is expected
  • stops entry every trade as if it failed
    • know where it failed 
    • know what you are going to do. 
  • Key to market -- preserve capital
    • start with pilot buy
    • buy up, never down
    • options to hedge positions 
General Market Trend
  • GMI
  • Put /  Call Ratio
    • if above 1-- people too bearish bounce likely 
  • T1208  --% stocks > 40 ma. 
    • Yearly if single digits -- start pilot buys in indexes and add as it goes up. 
    • weekly 80 tops  -- < 20 bottoms
  • Market Trend Checklist
    • Warning-- when leading stocks break down-- its a leading indicator for the market
    •  measured by % of stocks that  hit new highs 10 days ago that are higher now.
SCANS:
Darvas- -  TC2000
  • percent of 52 Week high 90 -100
  • EPS % change last quarter > 50
  • c-30wkma >.01
  • c/minlow250 >1.8
  • Price > 30
  • 4wkgt 10wkgt 30wktg = true




Results. I put the scan together and it produced one good stock.  However, due the Market conditions--O'Neil's "M", no stocks should be bought at this time.


 good fundamentals / Good technical Scan
  • new high 250 days
  • Return on equity > 14
  • % change of rev last qtr >0
  • price >20
  • volume 20,000
  • eps change last qtr >25
Results:  I ran this scan and came up with only 1 stock. Even without the price and volume requirements.  Likely because the market sold off so heavily there are no stocks making new highs.


Timing purchase
  • 10.4.4 stochs
  • MACD
  • 30 day avg
  • volume
  • multiple time frames
Oversold and then cross 30 day avg buy signal

Other tool for buying stocks
look for cross of 10 week over 30 week.
  • Green line charts
    • Monthly - above 5 month average -- new monthly highs
  • Yellow Line
    • Now uses Guppy "Red white and blue" charts.
!!The same setup that works in an up trending market will fail in a downtrending market!!

More videos and Webinars 



Doctor's Orders:  

Goal is to catch a trend and ride it till it ends.
  • Manage risk / Trade smart 

  • General Market is key -- 
    • if you know the overall trend you have half the battle won
    • 70-80% stocks follow general market
    • In a downtrend do not try to find the needle in the haystack.
  • GMI/ GMRR
    • Gets out of market < 4.
    • In a good market stocks that hit new stops should keep going
    • want to see 100 new highs
    • IBD Mutual fund index   9currently bearish




  • T2108  -- lowest every 1987 crash -- below 10 look for market bottoms.

      • 80% tops out.
      • Tracks every day
    • MACD -- Nasdaq 100 stocks > MACD signal line. 
    Stan Weinstein's stage analysis

    longs only worth to own stocks in Stage 2
    Only time worth shorting is Stage 4. 
    • Sell stage 2 as 30 MA  starts to flat --- *Scot1and note, how about using MAMA to ascertain flattening?
      • Consider guppy charts. 



    • Win the easy ones
      • When market is in stage 2 -- it easy to make money on longs
      • if its not clearly in stage 2 it is better to be out of the market. 


    Submarine Scan -- stocks to short

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