Second time in a couple of weeks this stock closed close to the 200 mda. Last time it went back down. Will it cross showing a new up trend or will it go back down and continue the down trend? How much are all you technicians willing to risk on the answer to this question?
I betcha made a killing on ENRN and WCOM that way...
You must be loading up on MO, too.
Look at MMM. Typical IBD stock. I bet you make more buying MMM than any "undervalued" Dow stock the next six months.
<<That will be the last IBD you ever read.>>
LOL. Actually, IBD has its uses (and abuses). In some ways it's just a TA version of Value Line, which is a service telling you where things have been up to now, but of questionable predictive value. I think IBD's approach on the technical side is sound, though. On the FA and momentum side, though, you have to find a way to get ahead of the curve, because IBD is definitely either a little behind or a lot behind the curve.
Best example would be our delightful homeboys. I don't have the issues with me (drat) but they were absolutely top rated through September, even though they peaked (and dropped) in May/June. By January the homeboys had fallen from #1 to #179 (out of 197 groups rated). It's made a recovery now, but a lot of that is the lack of movement where they have been since, say, December, and the continuing deterioration of so many other industry groups.
The way to use IBD, imho, is to try to identify the groups which are rated #50 today but were #120-150 3 months ago (look at oil & gas exploration and semi-equipment makers) and then begin to look for strength within those groups.
To find shorts you do the opposite, look at groups in the first row (#1-50 or so), and find something trending down. Computer Software Security was #3 3 months ago and is #45 today. There might be a crappy company in there worthy of a short or a put. CHKP doesn't look so hot; SFNT doesn't look too good, either; maybe NETE looks the worst. NETE Sept 5 puts on sale for 1.70 X 2.00, not bad for $1.30 of intrinsic value and just 30 cents for 5 months of time.
The major problem with IBD's 20 rules is it is based on finding the latest hottest stock. I tend to take a contrarian (sp?) approach looking for stocks that are currently out of favor. An example is it indicates you should look for stocks with an RS of atleast 85. I personally look for an RS of less than 50 because that tells me the stock is under performing. Basically I look for out of favor stocks and give then six to twelve months to turn around.
<<< IBD's 20 Rules....>>>
Man, I am glad I bought my AAR *before* I read the twenty rules. I don't think AAR qualifies for any of the stock-specific criteria enumerated therein.
SHORTY SEZ: I don't think my AES_PC qualifies either. Or my EP_PC.
SHORTY SEZ: These rules are momentum rules. If you buy 100 stocks, and trade aggressively, they *might* work. SHORTY SEZ: Go to the library. Get a copy of IBD dated 6 months ago today. Check on the performance of the #1 stocks during the intervening period. Do it again for 9 months ago today, and 1 yr ago today. See what would have happened. Go to two years ago and see how their "Corner" stocks worked.
That will be the last IBD you ever read.
<<<IMO, using IBD past earnings for investment is like driving and using only your rear view mirror.>>>
Agreed, that is why it is only one of six criterea. I look at it as an indicator of how competent the management is.
<<<Historically, HB's are better measured by P/S and currently it's above the norm. Keeping an eye on the cash flow is a better way to guage their future performance.>>>
I avoid the P/S because I know that just because you are selling something does not mean you are selling at a profit.
<<A stock with low PE or PB doesn't automatically mean it's a good investment. Just ask why it's low in the first place.>>
This is true which is why I dont automatically buy a company with a low P/E or P/B. My biggest success using this method was in the early 80s when I bought Ford with a P/E of 3. Everyone was saying that the Japanees car makers were going to put the american car makers out of business. The stock doubled in a year before I got out. If I held it another year it would havve trippled. The other example was in the late 90s. Every one was talking about a world recession so farm equipment manufactures were way down. This netted me a 70% profit in about 9 months.
Once again you misinterpret the concept of a MA cross. Particularly- the stock is not "crossing" the MA, its just trading around/through it. Had the MA flattened, and the stock built a base and then broke throught it, I'd cover in a heartbeat.
How much will I risk? I am short 4500 shares at about these prices. I am tempted to double up, but hesitate due to general market strength. By the first week in May the rally will be over. we will be in the weak 6-month part of the calendar. If BZh is still holding over 55 then, I'll probably double up.
You are probably right, I do not understand the concept of a MA cross. But the one thing I do understand is how to evaluate the underlying value of a stock. There are six criterea that I use when picking a stock and all six of those criterea say this stock is a good buy. Everytime I have implemented this crriterea I have seen returns from 25% to 100% in a six to twelve month period. For this stock, all six of my criterea says it is a good buy. Therefore, I say good luck on your short selling. I would never sell short on profitable company like BZH because overall the stock price of priftable companies will go up.
When BZH was at 52 a few weeks ago
why didnt you cover and go long?
You lost $45,000.00 since then rather
than making $45,000.00.
So in my humble opinion you made a
Please - do not try to impress me now with
how rich you are. I am just trying to
understand your trading strategy.