Year 2007 in review

2007 was a great year for my trading & investing account. It was a transformational year where I was able to identify my weak points and capitalize on my strong points.

Listed below are key items that contributed to my success. I hope this will be a useful guide to my other fellow traders as we navigate the stock market through 2008 and beyond.

* Very disciplined trading. No hopes and emotions. Losses were sold immediately without a second thought.

* Accurate and complete trading records with comments for each trade. The comment provided the reason for the purchase.

* Month-end summaries, where I had to provide the monthly performance -monthly gain/loss to my better half. Helps as you are answerable to someone and you would ensure that you complete the month on a gain. I also tried improving on my monthly gain each month.

*Strict money management principles. In the beginning of the year, based on the portfolio size, I determine the amount of loss that I can take in any stock. Then, before I buy a stock, I enter the following three details in excel: Buy price, Sell price and Stop price. Based on the stop price, and the amount of loss I can bear in a stock, the excel file calculates the number of shares of the stock I can purchase. So, the further away the Buy price is from the stop price, the lesser the number of shares I purchase.

*Strengthened my TA skills , learnt Elliott Wave theory from a great trader whom I truly respect. I believe his classes on TA and learning to count waves have set me apart from other TA traders. He goes by the alias name BT or BlackTruck and his email is black.truck@verizon.net. Please send him an email if you are interested in joining his class.

*Read and implemented the 2% Shark rule and 6% Piranha rule mentioned in Dr. Alexander Elder's Come into my trading room. This is an amazing book. I read this book in October 2006 and since then I have been able to view the stock market in a very different angle.

* Last but not the least, starting this blog and sharing my thoughts with all of you have helped me to streamline my thoughts and identify trends. If I have learnt something that makes a big difference, I strongly believe in sharing those thoughts and helping others.

Money flow data- Amgdata

I will be looking at this information on a weekly basis. This will help me keep track of BIG money. Trading/ investement decisions should always follow the BIG money. It is the path of least resistance.

Source: AMG Data Services
For the week ending 12/26/07
Including ETF activity:
Equity funds report net cash inflows totaling $12.645 billion
Domestic funds reporting net inflows of $9.970 billion
Non-domestic funds reporting net inflows of $2.675 billion;

Excluding ETF activity:
Equity funds report net cash inflows totaling $3.587 billion
Domestic funds reporting net inflows of $2.047 billion
Non-domestic funds reporting net inflows totaling $1.540 billion;

Domestic funds outperform Non-Domestic funds by a big margin.

2008 Thoughts- Tobias Levkovich

Posted on National Post:

Citigroup’s chief U.S. equity strategist Tobias Levkovich provided clients with eight key concerns, eight unasked questions and eight plausible and interesting outcomes to consider for 2008.

Key concerns:
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1. Stagflation
2. Global recession
3. Presidential elections in the U.S.
4. Energy costs
5. Counterparty risks in the financial sector
6. Plunging greenback
7. Sharp declines for home prices
8. Apparent ineffectiveness of the U.S. Federal Reserve’s action

Key questions:
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1. Everyone may agree that real estate prices in the U.S. are trending downward, but where is the value? Where should buyers be looking?
2. If oil is near US$100 per barrel, why are energy companies not earning more?
3. With at least 95% of equity mutual fund flows going international in recent years, why aren’t more people worried about this craze?
4. Why do hedge funds continue to attract money despite mediocre returns?
5. What ever happened to avian flu and will other global fears just fade away?

Key plausible outcomes:
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1. The Republicans could hold on to the White House and give the American people what they want – a divided government.
2. Oil prices could fall to the US$70-US$75 per barrel range on slower global growth
3. The U.S. dollar could hit $1.25 versus the Euro when the ECB finally cuts rates
4. The financials are the top performer in the S&P 500
5. China’s equity bubble bursts
6. Hedge fund consolidation rises.

Updated chart of QQQQ

Updated chart to Santa Rally chart.
We broke above the downtrend line (dotted green).
Now we sit right at strong resistance. Two more days left for the year. Future action will depend completely on how we handle this resistance.
Good luck !

Perfect timing

Timing is everything. I strongly believe in this adage.
This morning I perfectly timed the money flow from solars to chinese. This was even before any volume bars showed up on any of the Chinese stocks. Within few hours, huge volume bars across the screen. My BIDU, CHNR, CPSL are doing just great.

Great run with solars & now Chinese stocks

My prediction has turned true for both Solar momo stocks- CSIQ and SOLF.
SOLF won the race to 30s on Friday followed by CSIQ today. SOLF is now sitting at 37s and CSIQ at 31s. 40% returns in a few days.

My next focus group is Chinese stocks- BIDU, CHNR, CPSL, YTEC.
Have been holding BIDU from high 370s. Will be focusing on CPSL and YTEC today.
CPSL is sitting at nice BO point.

Enjoy the Santa Rally :)

Solars

Today, Solars were the strongest.
SOLF made a BO above the triangle posted here.
CSIQ, on the close heels followed with a BO.
The race to 30 nowbegins.

Market has sustained the strong rally from yesterday. Many people were caught off-guard with this rally. Actually I think many technical analysts missed drawing the correct trendline. They were connecting Aug lows with the Nov lows. The trick was connecting the highs and then extending into a parallel line for the support.