Mike
07-24-2013, 06:20 AM
Yesterday showed NASDAQ distribution, the 4th distribution/stall event in the last 6 trading sessions. Sizeable clusters of distribution over a short period has shown in the past that it is best to move some money out of the market when it occurs. An optimization study was performed using the NASDAQ since January 1973 on distribution clusters. Before conducting the study the experienced traders believed when 3 days of distribution occurred over 5 trading days that this level warranted defensive action. It turned out that this was true, that a portfolio buying the NASDAQ was bettered by taking money off the table with 3 out of 5 days distribution. But when the dust settled after trying many cluster sizes and periods 4 out of 8 became the better strategy. So we have arrived. The Market School Exposure Model has dropped the exposure count from 5 to 4 in response to this rule.
The leading index right now is not the NASDAQ. The Russell small cap index is far outperforming. The Russell only represents something like 6% of the market, so if we look to larger caps the S&P500 is also out performing the NASDAQ. I find that for CANSLIM investors that when the NASDAQ is lagging it is often tough sledding. How this has translated in my own portfolio is that I never got it filled out. I didn't find enough setups that I liked to enter. A proper setup needs a base of proper length with constructive price and volume action in the base. Bases that are too short (less than 7 weeks) or show too much distribution or stalling bars within the base are usually rejected. So I have ended up with TSLA, SNTS and CELG. CELG may not be held into its earnings reporting tomorrow as I have no margin in the position. My average cost on TSLA is below $102 which now has a comfortable margin as the 50-day moving average is higher at $105. I actually didn't buy TSLA at $102, more like $107+. The shakeout six days ago caused me to step aside just above the 10-day moving average and then buy back on the strong recovery the next day at a lower price resulting in a lower average purchasing cost. On average this sell/repurchase approach has worked out for me. On occasion however it causes me to not reenter a stock that goes on to make higher highs so it is a tradeoff suited to my temperament.
Below is an image of the Thrust Monitor in the Real Time System section of the site. Some of you will not be familiar with this area. I upload my watchlist each weekend (sometime more often) and use this real-time monitoring of stocks to alert me to unusual thrust action. An alert such as shown on LOPE here is not a buy signal, it just signals that something is going on with price and volume suggesting institutional buying activity. It just means that I should go take a look and make up my mind as to potential action. As you can see there are two other lists in the section (Pascal's and Paul's lists). The second image is what pops up if you click on a symbol in the watch list. This is the real-time EV of LOPE shown here. Real-time EV updates during the day whereas the regular EV charts are end of day. It is easy to see on the R-T EV what triggered the thrust alert with the sudden rise in LEV.
19270
19271
The leading index right now is not the NASDAQ. The Russell small cap index is far outperforming. The Russell only represents something like 6% of the market, so if we look to larger caps the S&P500 is also out performing the NASDAQ. I find that for CANSLIM investors that when the NASDAQ is lagging it is often tough sledding. How this has translated in my own portfolio is that I never got it filled out. I didn't find enough setups that I liked to enter. A proper setup needs a base of proper length with constructive price and volume action in the base. Bases that are too short (less than 7 weeks) or show too much distribution or stalling bars within the base are usually rejected. So I have ended up with TSLA, SNTS and CELG. CELG may not be held into its earnings reporting tomorrow as I have no margin in the position. My average cost on TSLA is below $102 which now has a comfortable margin as the 50-day moving average is higher at $105. I actually didn't buy TSLA at $102, more like $107+. The shakeout six days ago caused me to step aside just above the 10-day moving average and then buy back on the strong recovery the next day at a lower price resulting in a lower average purchasing cost. On average this sell/repurchase approach has worked out for me. On occasion however it causes me to not reenter a stock that goes on to make higher highs so it is a tradeoff suited to my temperament.
Below is an image of the Thrust Monitor in the Real Time System section of the site. Some of you will not be familiar with this area. I upload my watchlist each weekend (sometime more often) and use this real-time monitoring of stocks to alert me to unusual thrust action. An alert such as shown on LOPE here is not a buy signal, it just signals that something is going on with price and volume suggesting institutional buying activity. It just means that I should go take a look and make up my mind as to potential action. As you can see there are two other lists in the section (Pascal's and Paul's lists). The second image is what pops up if you click on a symbol in the watch list. This is the real-time EV of LOPE shown here. Real-time EV updates during the day whereas the regular EV charts are end of day. It is easy to see on the R-T EV what triggered the thrust alert with the sudden rise in LEV.
19270
19271