Saturday, May 31, 2008

Johnson's Trading Blog

I'm going to take a cue from Chris Perruna's great blog and ask you to please take a moment to subscribe to my RSS feed and / or receive my posts via email if you haven't already done so. Both are free and allow my content to come to you, instead of you having to come to it. Click on the orange icon or enter your email address in the field and click "Subscribe" to get my daily posts in your RSS reader or email inbox.

I also highly recommend Google Reader. I've been using Google's Reader for well over a year now and it allows me to fairly easily read well over 100+ market related blogs every day with very little effort. You'll also notice that I share a number of my favorite posts that I come across; these are visible to you on the right hand sidebar of my page, just underneath the Twitter updates and just above my list of favorite trading sites.

Here is a brief video I found on Google Reader for those of you who aren't as familiar with RSS or Google Reader:

Friday, May 30, 2008

MDR setup

MDR is setting up as a great buy on a breakout over 63.

Thursday, May 29, 2008

SPY Divergence

The SPY is divergent on the 5 min chart and failed to close over the 21 day MA. I could see it slipping back a few points here and I'm short from 140.43

GOOG - Using multiple time frames to increase your risk / reward

GOOG today is a great example of how I like to use shorter termed time frames to enter swing trades.

By entering a trade using the 1 min bars (on the left) I'm able to cut my risk down substantially. In this case I like GOOG above 580 on the daily, as it is trying to break out of the little flag it has been forming. Entering on the 1 min gives me very little risk for what looks like it could be 600ish upside in the very near term (a few days)

GOOG 580

If GOOG can hold a break of 580 it'll have broken out of the flag and looks poised for much higher.

Wednesday, May 28, 2008

Trader Interview

I had the pleasure of being interviewed by Tim Borquin for the Trader Interview series last week. The interview has been posted to the site today so give it a listen and I'd love to hear your comments. I hate both the sound of my voice and how inarticulate I am at times so hopefully it isn't too painful.

Give it a listen at: Johnson's Trader Interview

Friday, May 23, 2008

LEH Short

I'm short LEH here using the inverse holy grail trade. It hasn't gotten over the 20 bar moving average on the 15 min chart (top right) since crossing below it on the 19th. I went short when it started breaking down near the average and I'll likely hold until the close.

Thursday, May 22, 2008

Ominous Data Point for the Nasdaq: Net New Highs

From Rob Hanna's excellent Quantifiable Edges Blog:

"Since early April the Nasdaq has been a leading index. Net new highs have failed to expand, though. According to my data provider, they peaked at 64 on May 2nd. The last few days there have been significantly more new lows than new highs. If you take the net difference and divide it by the number of stocks trading on the Nasdaq your result for Tuesday and Wednesday was less than -1%. (Wednesday: 53 new highs – 93 new lows = -40 net / 3030 issues = -1.32%). Coming off a 4-month (80 day) high this is an unusual occurrence.

I looked back to 1994 (as far back as I had the data) to see if I could find other times where the Net New High Percentage ratio closed below -1% twice within 3 days of an 80-day high. I found three other dates 7/23/98, 7/20/07, and 11/02/07."

Click through to his blog to see just how well you'd have done going short on those three dates.

Link: Rob Hanna's Quantifiable Edges

Wednesday, May 21, 2008

AAPL - break of the 20 day

I'm watching AAPL for a break of the 20 day moving average. If it breaks it could TANK. GOOG and BIDU already have failed.

Monday, May 19, 2008

MON - Great example of my favorite type of trade right now

Below is a trade that I unfortunately missed today. It's a great representation of my FAVORITE type of trade - shorting into resistance. These work great because there is big upside and little risk. Short it at 125 and use a mental stop above the HOD at 125.27. MON had struggled to get and stay over 125 this last week so there was a good chance it'd fail again. A little patience and a convenient market sell off and 3 points would have been made with about .30 of risk.

MBT #2

giddy up. I got out at 85.31 - great two days of action.

Friday, May 16, 2008

MBT Follow-up

MBT was up over 5% today as it broke through the declining tops line (in white) I referenced in a post a couple of days ago. I held a position for most of the day, sold it near 80 and then bought back a 1/2 position just a minute before the close. My main concern at this point is the yellow channel. I love how the stock is acting so clearing that channel solidly to the upside will have me back to a full position.

Thursday, May 15, 2008

PKX - Follow Up

POSCO (PKX) has broken out as I thought it would. Unfortunately for me, it went without me as I was waiting on the volume to come in. In retrospect I should have picked up 1/2 a position or so when it broke through as there was a good likelihood that the volume would eventually come and when it did it'd ramp. The stock is in no man's land now so I have to wait for a bit of a base or a pullback before getting in at this point.

Wednesday, May 14, 2008

Trading Performance - Stepping Up the Accountability

Pasted below are charts of my trading account's equity curve. A year-to-date chart and a separate chart for each month are included. In posting these charts I'm looking to address one thing: Accountability.

There are two facets of accountability at work here. First, accountability to the reader. I'd love to see portfolio metrics on every trading blog I come across. I want to know if the person posting is full of it or not. So to you, my 9 faithful readers, I'll be offering up my equity curve. You'll be able to tell if I'm trading like crap and you are crazy to listen to me, or if I'm doing unbelievably well and everything I am touching is turning to gold.

The second facet of accountability is to myself. I'm an exceptionally competitive person and placing my results here for the world to see is very likely to cause me to have a much smoother equity curve than I have had in the past. 2007 was a year where I experienced massive gains, only to lose them towards the end of the year. I won't let that happen in 2008 and if placing my results on the internet for all to see plays a small part in that then I'm all for it.

Year-to-date Performance +17.44%:

January 2008 Performance +3.95% (+3.95% YTD):

February 2008 Performance -2.5% (+1.34% YTD):

March 2008 Performance +2.45% (+3.83% YTD):
April 2008 Performance +10.06% (+14.27% YTD):

May 2008 (May 1 - May 14) Performance +2.78% (+17.44% YTD):

Monday, May 12, 2008

MBT - Setting up for higher

MBT is starting to look nice - a move above 80 would have the stock above its 21, 50 and 200 day averages and it'd have just broken out of the declining tops.

GOOG - Kissing the channel goodbye or setting up for another run at 600+?

GOOG has long been a favorite stock of mine. I love their products and made some good money on its 3 year bull run. The question now is whether it is setting up to "kiss the channel goodbye" as the Worden's like to say (WEEKLY CHART), or is it setting up for another move higher as the daily chart seems to imply.

I'm long GOOG and betting that 600+ will come soon.

Update: Just saw that Brian Shannon at AlphaTrends took a look at Google just the other day.

Boone Pickens Talks Oil

Must see TV for anyone interested in oil and energy. The entire video is about 1:15 in length but well worth your time.

Boone Pickens on Oil, Wind and Energy at 2008 Milken Conference

Update: Removed the video as I couldn't figure out how to not have it auto play. You can view the video on Paul Kedrosky's site.

Thursday, May 8, 2008

The Mental Aspect of Trading - Linda Bradford Raschke

Linda Bradford Raschke on the mental side of trading: "The Mental Aspect of Trading"

OK. Realistically, every trader has made a stubborn, big losing trade. What do you do if you're really caught in a pickle? The first thing is to offer a "prayer to the Gods". This means, immediately get rid of half your position. Cut down the size. Right off the bat you are taking action instead of freezing up. You are reducing your risk, and you have shifted the psychological balance to a win-win situation. If the market turns around, you still have part of your position on. If it continues against you, your loss will be more manageable. Usually, you will find that you wished you exited the whole position on the first order, but not everyone is able to do this.

Tuesday, May 6, 2008

Linda Raschke's Basic Rules for Swing Traders

Linda Raschke is a trader I've followed since coming across her interview in Jack Schwager's Market Wizard series. Below is a snippet I've had saved in my email box for years detailing some of her rules for swing traders.

Basic Rules for Swing Traders

Because of the short-term nature of this technique, swing traders must adhere to some very basic rules, including:

  • If the trade moves in your favor, carry it overnight--the odds favor follow-through. Expect to exit the next day around the objective point. An overnight gap presents an excellent opportunity to take profits. Concentrating on only one entry or one exit per day relieves the pressure.
  • If your entry is correct, the market should move favorably almost immediately. It may come back to test and/or exceed your entry point a little, but that's OK.
  • Do not carry a losing position overnight. Exit and play for better position the next day.
  • A strong close indicates a strong opening the following day.
  • If the market doesn't perform as expected, exit on the first reaction.
  • If the market offers you a windfall of big profits, take them to the bank on the close.
  • If you are long and the market closes flat, indicating a lower opening the following day, scratch or exit the trade. Play for better position the next day.
  • It is always OK to scratch a trade!
  • Use tight stops when swing trading (wider stops when trading trend).
  • The goal always is to minimize risk and create "Freebies."
  • When in doubt--get out! You have lost your road map and your game plan!
  • Place your orders at the market.
  • When the trade isn't working, exit on the first reaction.

Monday, May 5, 2008

PKX ready to explode?

PKX looks very similar to DRYS and EXM just before they started moving. I'll likely get long PKX on a move through the declining tops with a short term target of about 145 and looking for 160+ over the course of a few weeks.

Friday, May 2, 2008

GFA - 5/2/2008 - Better to be lucky than good

I picked up some GFA yesterday on a canslim type buy as the stock had broken out the day before and looked good for a long term hold. Lucky for me the stock decided it'd gap up 10% today on no news making this just about the easiest 10% I've made in a while. I booked the gain and will get back in a bit lower.

Bought at 45.08, sold at 49.50 - Time in trade: 1 Day

Thursday, May 1, 2008

FSLR - 5/1/2008

If yesterday's FSLR was amazing, today's FSLR was a story of unrealized potential for me. I made money on the whole but boy did I leave a TON on the table. Always gotta remember that the trend is your friend. The last short in particular was at a perfect spot - should still be holding that thing.