Market 12.12.10

Using the S&P 500:
Overall: Still up. Pr>50>200 (Price above 50 day Moving Average (MA), 50 day MA above 200 day MA.
Short Term: Daily S&P chart. Still up. Short term high 1240, short term low 1219, 50 MA 1217. 1220 is a solid support/resistance line, area of November highs and short term lows established in the past week or so.
Intermediate Term: Weekly S&P chart. Still up. Short term high 1240, short term low 1173, 10 wk MA 1199. The weekly chart is a nice cup and handle formation. The 1173 referenced here is the bottom of the handle.
Accumulation/Distribution days (by my count) in the past month (rolling number):
Accumulation: 1 day: 11/23
Distribution: 4 days: 11/16; 11/29; 11/30; 12.7.
Summary: Have to remain in the bullish camp, like it or not, until proven otherwise. The 4 distribution days are a concern. I am bearish in my own opinions on the market, but I work on making my system more objective. I try to trade my systems, not my opinions - it tends to work better that way.
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Model Portolio: Starting with $100,000.
Disclaimers: Nothing on this site is to be taken as recommendations or advice. This is for fun only. It is an attempt to demonstrate that little guys can be overall profitable with simple strategies, if they think for themselves and put in their homework. All decisions you make in your real-life trading are yours - you own them whether good or bad. Any buys/sells in this portfolio may or may not match anything I do in my real life trading. To illustrate this, in my real life trading I currently don't own any of the stocks being recommended to start this model portfolio. This is an exercise only.
Rules: I will attempt to publish the buy/sell strategies ahead of time. I find it irritating when folks talk about all their past brilliance and there is no way to prove it one way or the other. The stock boards I have run across are dominated in general by people who I think would lose their shirts if they were trading with real money. On one site I frequent, one of the self-proclaimed great traders had a business idea but needed someone on the board to come up with $10,000 to get it off the ground! - and he has been a prolific contributor and supposed great stock trader on that board for years.
I will try to give specifics as to what conditions will exist when a trade is entered or not. For example, I might say that I will enter the trade if the market is up and the stock is up, or if they are at certain points during the day. If those conditions are met during the trading day, the assumption is that the trade was put on at the best price that existed when those conditions were fulfilled. I think that is fair, and once again, is another reason why what I do in real-life trading may or may not match anything that may be going on in the model portfolio. In real life I am not trying to prove anything to anyone but myself, and do not have to operate under artificial constraints in order to make the results more verifiable. The bottom line in my trading account is verification, good or bad.
All that said, here is the basic starting strategy - although I reserve the right to change the strategies as my systems may change and as the markets change - different horses for different courses.
These initial potential trades in the Model Portfolio (MP) are intended to be trend trades. When Pr>50>200, we will normally be looking for trending trades with the intention of staying in them as long as possible until one of our exit criteria hits. When Pr>50>200 is not in place, swing trades are on the menu.
Anyway, here's the picks:
ENDP - If the market is up Monday, and is trading at 10:40 a.m. above the open, and ENDP is up, buy 200 shares. Initial stop point is 35.52, the last short term low. Unless stopped out by the initial stop, our exit point will be when the stock violates the low point of the previous week.
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DLTR - This stock has been on a consistent run for quite a while. Normally, a stock that has been running for weeks would look too extended to take a position, but in this case, DLTR has been basing for about a month. Same entry criteria as ENDP, for 100 shares in this case.
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MIPS - Lower priced than most stocks I trade and more volatile, but it looks to me like this is definitely being accumulated. Same entry criteria, 300 shares. This would also be my last choice out of these four stocks, since by my system it is extended about 5% from where it should have been bought.
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PCLN - Same entry criteria as above, 23 shares. This is a stock I have never owned, and is not at all the kind of stock I usually follow. But I am attempting to get outside my comfort zones in my trading, and this stock also looks like it is being accumulated. This appears to be at a good buying point. To me, a good buying point is when a stock has found a short term bottom. (Normally for me, a short term bottom is defined as a weekly low that has a higher weekly low immediately on both sides. That middle low then becomes a verifiable bottom and can be used as a logical stop. It is a three week pattern. If the stock has been in a clear uptrend and I like it, sometimes I won't wait for the 3rd week confirmation. I'll go ahead and make the buy, since I believe that the low of week 2 is a short term bottom. I use this tactic a lot more in swing trading than in trend trading.) The buy point in the three week pattern is when the stock trades above the high of the 3rd week. If I'm more aggressive, as explained above, sometimes I'll make the buy during the 3rd week when the stock trades above the high of the middle week. (And sometimes, more often in swing trading than trend trading, I'll make that buy during the 2nd week because I feel the bottom is in unless proven otherwise.)
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Other housekeeping chores: We will assume a $7 flat commission on trades. When we exit the trade, we will assume that we had an order in with our broker and got a good fill, so the trade was executed a tick below the point where the exit criteria was reached.
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