The Day that Was - July 20th 2007

The day started out with Biovail (BVF) releasing bad news stating that they received a letter from the FDA rejecting their drug submission. I announced this morning that I was selling my position in the pre market trading to close out the trade. I got multiple fills on my sale but the average sale price I got was $23.35. Recall that the trade on BVF was started on 7/13/07 with a 1/2 position. BVF never made it to the next step where I would have added the remaining funds to the trade. This is one reason why I scale into a trade. You grab the low price upon the technical parameters for the trade being met, then you add to the trade upon confirmation the trade is working out. With BVF it broke above the buy point on 7/13/07 and I entered the trade with only a 1/2 of my normal swing trade funds. Then BVF started pulling back when the markets came back down. So my trade on BVF never reached 'full swing trade size'. By scaling into the positions I reduce the risk to my total capital until I see more evidence that the trade is going in my favor. Bad news from companies can't be avoided, it happens to all of them at some point. That is why as swing traders we slice up our total capital into pieces and never put more than 10% of our total capital into any one trade. Limit the risk to your total capital... That is the only way to win in the long run. Never put all your money into one trade!

Even with the 10.9% loss on BVF today the overall RebelTrader portfolio gained an additional 1.02% today. Not bad considering the market was terrible today. Good gains from WDC, NHWK, WWAT helped the portfolio stay green today in this otherwise bad day in the markets.

This morning I highlighted a small cap stock that had a technical setup which looked right for consideration as a swing trade. I set two buy points, the first at $1.55, and the second at $1.65. The first buy point was reached today and I scaled into FEEC with a 1/2 position. When FEEC moves up past $1.65 I will scale in with the remaining 1/2 of my swing trade funds. FEEC is a company in the foreign energy market and is involved in the exploration of natural gas. This stock may not move instantly upwards overnight but the chart was right for an entry. I will keep a close eye on this one. The potential for large gains is there as is the case with many small cap stocks however it comes with extra risk, and that is why one should never play small cap stocks with all of your money. You should only have one active speculative play at a time in your portfolio. WWAT is the other speculative play I did and that has paid off very well. Even though I still have half of my shares in WWAT it is now in self sustaining mode. I have a stop loss set and the trade will close itself out if the price falls (and that will still be a profit) or I will sell the remaining shares upon the next price advance. Note: Today WWAT started moving back up again and is still looking good on the chart.

In the late afternoon I added to my position on NHWK. After the large move up yesterday I was anticipating a low volume pullback today and would wait for the next ideal point to scale in the remaining funds. But NHWK defied the broad market today and continued upward today. I added the remaining 1/2 of my trade at $20.76. I see NHWK being a trade that will probably be a couple weeks to reach it's full potential. After a move like it has had the past two days there will be some profit taking in the stock but the chart is showing an increase in demand so I am looking for at least 10% total gain on this trade within the next couple weeks.

The broad markets were reacting today to the news from Caterpillar and Google. Both had less then perfect earnings and shock waves went through the markets today. In addition to that the financial/broker sectors continues to be an anchor on the markets dragging them down. We need to see a rebound in the financial sectors soon, otherwise this drag on the markets will start pulling harder on other sectors.

I want to thank Daniel and Michael for your nice comments today. Earlier in the month I said that I was going to post a series of articles on the basics of swing trading, a 'swing trading 101' based on my studies and experience. But time has been hard to find and I have not had a chance to get the first installment posted here yet. But I will indeed keep my word and in time you will see here my series of articles on how I swing trade, what do I use, what I look for, technical analysis, and money management.

I wish all a great weekend !

Chuck (Fp80)

Pre Market - July 20th 2007

The futures are down in the US markets this morning. And most of that in my view is on the bad news from Google last night(we also have options expiration today so that adds extra volatility). We also have Caterpillar (CAT) adding to the negative view this morning as they reported earnings this morning and they missed expectations by a fairly large margin.

I think Google sent their shareholders a wake up call. People have been buying up Google thinking they were infallible. But last night Google revealed that they are not so perfect as everyone (including analysts) have been touting. Google has been damaged and it will be a while before it trades back at the levels it was at. I see Apple doing the same thing. Everyone thinks Apple is perfect and they can never do any wrong. But one day Apple will have their own wake up call. It may come next week as Apple will release their earnings.

Earlier I had to sell BVF on news of a FDA letter telling the company that they were not going to approve one of their drugs. BVF has settled at support around $21.50 and already I am seeing some buying come back in as speculators are speculating that BVF will resolve the FDA issue and the drug will eventually be approved. But as swing traders we don't want to wait for something that may never happen. We take our money out and move on. BVF was a loss but that is why we divide our capital up into pieces and only expose one piece to a trade. The goal is to always protect the total capital. A loss in one piece is made up in the gains of the other pieces. It's all about having more winners than losers.

RebelTrader swing trade Western Digital (WDC) is trading up in pre market on upgrades and good earnings from SeaGate last night.

** Biovail (BVF) - UPDATE -

I'm selling BVF in pre market now. Biovail just announced it received a "non approval" letter from the FDA for one of their drugs they submitted for FDA approval.

Can't control surprise news. When a bad news surprise hits you close the trade and stem the loss.

A good day...

The market was a bit tempered today but I feel that was due mostly to the surge in oil prices today. In spite of that the market still registered more gains and the Rebeltrader portfolio has done well today.

This morning I posted a chart for PDGI. I posted the chart because it had a good technical setup and I also felt it could "go any minute" so I wanted to get it out to my readers in case it reached the buy point today. And it did. Late in the day I entered PDGI.

Also late today I took an entry on BVF. I mentioned last night that BVF was nearing the buy point and today it hit.

In the afternoon CNBC's Jim Cramer plugged my GRP pick and he called it the best oil play right now.

A full recount of the day when I post later tonight. Overall a good day for the portfolio.

BVF - Update

BVF has reached the buy point ($26.10) but the volume is light. I'm watching for any signs of the volume to pick up because the buy point is a new 52wk high and that usually brings attention to a stock.

I am going to modify the buy point slightly. I will wait for a move over $26.20 before entering. (1/2 position to start with due to the light volume). Then will add on signs of increasing volume.

The current watch list

A note about stocks which are on the existing watch list:

BVF is nearing the buy point

NGA did hit the buy point today but I did not catch it. Got away from me.

Keep the watch list stocks (the ones in my public charts list) that I provide annotated charts for handy, you may spot the move before I do and make the play. NGA is one of those that just slipped by me as I was watching too many indices today. If you did not get into NGA today then don't. May be too late to try and get in now, I'll get back to you on NGA.

7-1-07 New Watch List items

New watch list items:

AKS (updated setup)
BVF (updated setup)
ONT
JOSB
NGA
GRP
WDC

AKS and BVF are from the previous watch list but remain possible plays, charts have been updated.

Please see the public charts list for the explanation on each item. Some of the plays have split entries (1/2 at one price and 1/2 at another price): http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2147404

In the public charts list for Rebel Traders I will use the following format in the title of each stock:

Any chart preceded with ### is an index.
Any chart preceded with ## is a current open trade I am in.
Any chart preceded with # is a watch list item

With the events over the past two days in the United Kingdom we have to see how this will affect the markets. Because we are currently in a trading range in the major indices this may prolong this type of trading. We have to see.

You will notice that some of the new charts in the watch list are weekly charts instead of a daily chart. It is important to remember that all good traders will always check backwards to get the big picture of support and resistance levels. Looking at a daily chart for the past few months may give some clues about the current stock health but one always needs to look back in time much more to see what obstacles the stock will still need to challenge. Always study your own stock plays by looking at weekly and even monthly charts to get the big picture. Even swing traders need to do this. Just because we may hold a stock for a few days up to a few months does not mean we only need to concern ourselves with the daily charts. On the contrary, for us to benefit the most and have the best picks we need to see back in time where major events (support and resistance) are at.

Quick Summary.... Monday June 18th, 2007

No positions in the FP80 portfolio were sold today.

This was a very low volume trading day today. Almost like watching grass grow today.

One new addition to the portfolio was made at the end of the day. Matrix Service Co. (MTRX) reached the buy point today, long at $27.65.

Portfolio holding Arena Resources (ARD) was the big winner today. Added another 4.6% to the gains already made in this. Brings us to a gain of 12.1% in just a few days.

Align Technology (ALGN) was up another 1.35% today, as was Sturm Ruger & Co. (RGR) up 0.2%.

The recent addition to the watch list; Biovail (BVF) broke out of the triangle pattern I highlighted on the chart in yellow, but notice how it failed to clear the resistance above it. This is why I chose not to play the triangle breakout. Instead we want to see this move above the stronger resistance point before we make a play in this.

Other portfolio holdings had low volume pullbacks today, all minor. All holdings are still in play. A complete run down will be posted later.

Did you notice that the Dow Jones Industrial Average chart on my public chart list showed that we would have resistance to overcome in order to resume our bull run. Last Friday it hit the resistance and pulled back, today it pulled back even more. We need to see the major indices move above their recent resistance levels in order to bring back the confidence (and the big money) that we are continuing the bull run we have been having so far this year.

More later..

FP80

Watch BVF

Biovail (BVF) has had some good news recently with one of their competitiors being rejected by the FDA for a competing drug. This is good for Biovail.

BVF has a chart pattern which is getting tight over the last few sessions. Like it on a break over recent highs.. not before.

For the live chart the link is:

http://stockcharts.com/h-sc/ui?s=BVF&id=p71947087267&a=109550861&listNum=5