I want to focus on four stocks that are leading the way for this blog in 2007 and in my own portfolio. As I mentioned in my interview with Dave over at Stockticker, I look for new growth stocks (IPO’s within a few years) that show increasing earnings and sales with charts that are trending.
I aim to take gains of at least 25% within a few months with a maximum loss of 7-10% (or less). I risk about 1% of my portfolio in each position and typically trade a risk-to-reward ratio of 3-to-1 or greater. As you can see, the stocks below (with the exception of HWCC) have all blasted to solid gains within the first few weeks of the initial trade.
Don’t get me wrong, I do have losing trades this year such as PTR (poor entry), ANDE, NYX and TWLL (my worst trade). I am currently showing a slight loss with my NMX options so don’t think I am this great trader that never loses. I win and I lose but my expectancy and overall performance is positive. As long as I cut the losers quickly, my winners will cover drawdowns and then some; giving me a smile on December 31, 2007.
Anyway, take a look at some of the recent plays we have made on this blog:
Learning about New Oriental Education (EDU)
EDU has been trending higher in a smooth consistent fashion; the exact type of pattern I like to see when trading a trend. The stock is now up 35% in three months and hasn’t flashed any signs of slowing down. The stock is rated a hold with new accumulation areas near the trendline on the chart.
Is Mastercard Priceless
Mastercard blew past earnings and now has a 30% gain in one month on some very heavy volume. The stop has been placed to guarantee profits but I will look to ride this trend higher if it allows. Ride your winners and give them some room to breathe. Stocks like this can end up being one of the few home runs you should hit each year. Current rating is hold.
Baidu.com (BIDU) buy Opportunity
This stock was a pure speculation play prior to earnings and it worked as it is now sitting with a 23% gain in two weeks. This is a trade that I will close immediately if a red flag flashes to ensure a 20% gain and nothing less. I will not close the trade for “a lack of reason” and will allow it to grow if it doesn’t violate my stop area. The stock does seem to have potential but it worries me more than my other positions. My current rating is hold (protect profits).
Houston Wire and Cable Company (HWCC)
This stock is only up about 8% since the case study on the blog but it has consolidated into an area that seems to be ideal for adding shares. Looking at the chart, the $26 area seems to offer support on the long term trendline which sits just above the 200-d moving average. My current rating is “add-shares” for this stock.
I used to daytrade professionaly from 1996 until the end of spreads in 2001…we had a saying that in this market is appropo: don’t confuse brains with a bull market!
Ace,
What’s your point? I also know that statement and have been trading since 1998 but I am still trading (not “used to”). I guess I am on the “brains” side. Yes, this is an easy market but I have also traded tough markets.
just making a point for those who are new to investing that the past four years have made a lot of people feel they know what they are doing. Not taking a shot at you. I still trade, only, I had to supplement that with a job in finance since the gravy train ended in 2001.
Ace,
I thought you were taking a shot at me. What you say is very true. I admitted to this in my interview with Dave when I was trading in college in the late 1990’s. It was mostly luck and I was slammed hard when the bull stopped and the luck ran out. My gains from 1998 to 2000 were based on a strong bull.
My gains now are based nore on system development and knowledge. Risk and money mangement and expectancies.
Ive been trading since 98 as well. I got killed in the crash- it was awesome!, a great time to learn. I didn’t have much money to my name then so I didn’t have much in the markets, but I learned a lot! Now I too am more system based (keep improving mine anyway). I’m not so interested which way the market is moving as long as I know (or think I know as it sometimes turns out) what its doing- up down or sideways. Its strange, we didn’t have all these good traders blogging back then in the 90s (there was no Blogger), I cant imagine the market community without everyone doing it now…
Great call on Mastercard. The market certainly liked it.
I play caps and I didn’t like this one and it is killing my score cause I put that I didn’t like it. Caps sure does give you the opportunity to try things you wouldn’t in real life.
Do you play caps at all on fool.com?
And I didn’t like Bidu either, lol.