Saturday, May 13, 2017

Reverse Splits


ALT:

RNN

RBCN:

APHB



QTM

INPX:

TNXP


Wednesday, May 10, 2017

Setups

Here's a couple examples of setups.  First, the slingshot.



Then the fishhook, great for earnings plays.




The fishhook can be used with a 1/2 or hour slingshot as a trigger for an earlier entry.  The shorter the timeframe the more false positives there will be.




Monday, May 1, 2017

Review of Muathe .com

Eric Muathe.  Muathe.com 

One of the members on Stockbee pointed me to Eric Muathe's "Ultimate Breakout"  This was an Eureka Moment  for me as it looks a lot like the method Stewart applies and is stated in a manner that is easy to understand.

Most people look at RSI as being  an "over bought / oversold" indicator" over bought being a sell signal and over bought being a potential buy signal on cross overs.  Muathe does not.   He wants RSI power but there's a catch.  He wants the RSI power to be on a monthly time frame.

Muathe's website subscription is inexpensive ($250 for the year) but it could use some updating and a message board would be great.  That said, his analysis is decent   and his videos are  lengthy.


Muathe's criteria using a monthly chart are:

1.  RSI over 69.10 (most people use 70 on the RSI but Muathe uses 69.10 as it is a fibonacci number)
2.  An RSI 3 year high?
3. A price breakout with RSI over 69.10

Muathe's risk management is to apply a stop 5-8% from the buy.

Fishhooks & Muathe's Rest Periods:

Last year I worked out a setup I call the fishhook, which is designed to catch the power moves off a significant event.  It was aimed at avoiding the "pop and drop" I figured that If a stock popped and was able to fight off the attempt by the bears to drop it and made a new high it could go a lot higher. My first description of the setup is here but I've made a few tweaks.

After subscribing to Muathe I realized that he also had a rule for trading those types of set ups. Muathe's technique for chasing extended stocks is brilliant and was eye opening for me.

  1. On a daily chart a stock must have 2 days of rest 
  2. On a weekly Breakout 2 weeks of rest
  3. On a monthly 1 week of rest.



My Experience.

My experience using the Muathe's techniques has been limited as I've only been using it for a month.   I feel that it works well with the StockBee's momo burst setup.

My process for combining the StockBee Momo Burst With Muathe Ultimate Breakout:
  1. Start with the Scan for 3 year RSI highs (Muathe uses 34 bars as that is the fibonacci number).  I usually get between 150-350 stocks.
  2.  I then sort by highest MDT (on the daily) This tells me which stocks are currently enjoying the highest momentum AND a 3-year RSI high.
  3. Look at charts for weekly breakouts and set alerts.  It's a weekly B/o if has had at least  2 weeks of rest.
  4. Use the StockBee Momo Burst setup for an entry on a daily chart.  I will not take a weekly breakout if the stock is extended on a daily chart.  Although my sample size is still limited, I believe that the best trades result when a tight daily range triggers both a momo burst and a week 1 breakout.
  5. Stock's Risk management works better for me as I feel the %5-8% rule is too nondescript.  On a cheap stock I can have a 20% stop and still only risk .25 of my account depending on position sizing.  That I understand. 
Example Trade:
I bought MRGE at 4.80  On week 2, I have over a 15% gain:



On the daily, Momo Burst on breakout day: Tight range and expansion.


Update:

I no longer found the service to be valuable.  The scans are interesting in that a high RSI on a weekly will identify trending stocks.  However, Muathe's "picks" and trade management were nothing special.