StockFetcher Forums · General Discussion · Do your DD<< 1 2 3 4 >>Post Follow-up
EWZuber
1,373 posts
msg #29109
Ignore EWZuber
10/6/2003 5:49:31 PM

Was feeling pretty good after selling some BCON this morning I bought at 75C last week.
So bought some LOOK today as it bounced up off of trendline support.
The company had excellent growth projections of > 100% next FY. PEG was not high when considering the projected growth. P/E was only 8.6.
Seemed too good of a find to be true.
Been watching it for several months off and on.
Think I traded it a few times.
Well, today after the bell my position was cut by about 60% so far.
Turns out they rely on MSFT for about half their revenues and MSFT is terminating their contract.
This one may wipe me out.
So there are risks with trading stocks that one relys heavily on the TA and basic company fundamentals.
To prevent this kind of unpleasant surprises one needs to go through the the 10-Q, the S-1 and all the financial disclosures because just going through the basic fundamentals is not enough.
There were a few red flags that should have tipped me off though.
Insider selling has been persistent.
The Forward P/E was too low for the estimated growth. It didn't add up.
This doesn't necessarily mean the stock was not good for a trade but the reasons for these discrepencies should have been uncovered before I traded it.

WDC was a similar situation with a low P/E and excellent growth but turned out to be a great trade.
Wish you all better fortune than mine.


JoeGrossinger
165 posts
msg #29111
Ignore JoeGrossinger
10/6/2003 5:57:17 PM

Two things here.

1. The Chart has been trending down for almost 2 weeks now.

2. A basket of 5 or more stocks would have protected you from disaster since even if you do have to take a 60% haircut it would not be that serious if you had a diversified portfolio.
60% / 5 = is only 12%


EWZuber
1,373 posts
msg #29112
Ignore EWZuber
10/6/2003 6:33:45 PM

LOOK was testing a 1 year trendline today. Both the stock and the trendline were in long term uptrends driven by 6 sequential quarters of EPS growth.
A position close to support seemed like a low risk situation.
The stock had good buying support today and was forming a typical morning star pattern near trendline support.
Even a trade to resistance at the 25 DMA @ $3.40 would have been worthwhile.
What you are calling a downtrend would have excluded a trade back on 6/27 when the stock gained +68% during that Weekly chart stochastic cycle.

As far as a basket of stocks is concerned, you need to realize that my vocation of 28 years as an electronic technician became extinct with the advent of disposable electronics.
So I have not had a real job for about 4 or 5 years.
I don't have enough capitol to have a 'basket of stocks'.
It's easy to have one of those on paper.
I have been trading penny stocks lately, which goes against my philosophy, in an attempt to diversify a bit. Even though it has been successful it gave me the creeps. ( for instance BCON has ABSOLUTELY NO REVENUES AT ALL. NEVER HAS, they have never sold anything )
Out of the frying pan and into the fire.


todddunning
31 posts
msg #29115
Ignore todddunning
10/6/2003 8:05:02 PM

Hey Zuber don't give up man. Your posts are some of the most insightful on the entire SF forum. You may have lost 60%. Big deal - you'll get it back.

I can beat your losses. I started out with $7,000,000 in excerciseable founders options from an IPO in Jan. 2000 (NEOF). One year and a 10 for 1 reverse later, I ended up with $60,000. That's right. It was my entire retirement fund; IRA and 401k. And the underwriter (Goldman) was saying all along to us to hold, that it would come back up.

I knew nothing about trading then, but resolved to just to get back at those Goldman idiots. You get back in there and trade, man - a bunch of us Muddies are doubling every 3 mos. or so, and I know you can of all people.

Keeping my fingers crossed for you....Good Luck!


txtrapper
548 posts
msg #29116
Ignore txtrapper
10/6/2003 8:18:11 PM

Zuber, I checked Yahoo and Insider Tranactions on LOOK...here is what I come up with.

Last 6 months.....

LOOK..

(0) insider share purchases

(23) 7,996,000 shares insider sells.

Sorry, but you will come back a better trader, good luck, we are all with you.

tx




EWZuber
1,373 posts
msg #29117
Ignore EWZuber
10/6/2003 9:04:24 PM

txtrapper
I know. I saw that after the fact. Sometimes when I am making a lot of trades I take short cuts and don't examine all the fundamental details.
Shame on me.
Am I alone on this??
I really doubt it.
Some of the stocks that people are playing on this forum don't even have revenues let alone earnings and many of these companies only lose money.
When things are moving fast sometimes there isn't time for me to dig through all the fundamentals if the position is going to be taken. Particularly when the internet connection is moving at only 26KBPS.
Thats one of the drawbacks with living in the woods in Alaska and trying to trade the market.
But no excuses, I will just have to try and make a major adjustment.
I can tell you that there were some big institutional buyers in LOOK today. So I am certainly not alone. It traded 2.7X ADV.

Really though, what are the odds of picking the biggest after market decliner out of what, 10,000 stocks? And to the day.
Uncanny.




jthehut
124 posts
msg #29118
Ignore jthehut
10/6/2003 9:21:38 PM

I feel for you.

I wish you much success for all your future trades and endeavors.

I can't explain it either, like I described before, RIM (research in motion, RIMM I believe on Nasdaq) is up like 400% or more for the year, and made their FIRST profit ever last quarter at only 2.5 million, yet banks I follow make hundreds of millions in profits, and trade MUCH LESS than RIM. Although I am always nervous trading "crap" companies that don't make money/have tangible assets, I am forced to do so (occasionally). I have stopped trading based on fundamentals, I have actually LOST money trading on EXCELLENT, friggin' FANTASTIC fundamentals, yet when the quarter results come out, I LOSE money?!?!?!? I have learned in the last 1-2 years that momentum swings with "decent" companies are best for my risk tolerance. I define "decent" as a company that trades x # shares, and x market capitol, and has been around for x years, and generates positive news consistently.

Man, I hope you can get back your losses...I know I recovered my losses and then some since I joined this group in the summer, I hope you do the same!

M aka j-the-hut


JoeGrossinger
165 posts
msg #29119
Ignore JoeGrossinger
10/6/2003 10:57:16 PM

Well, I'm with the "don't give up the ship" folks here but I do want to defend my post.

LOOK set a high of 4.80 on 7/30, had a mini crash on 8/15 down to 2.96, then failed far short of getting back up to the high and instead turned down after reaching 3.85 or a dollar short on 9/5.
It has been going down ever since.
Anyone that sees a bullish pattern there is going to have to take me to school because that is as negative as it gets.

NOW - OK, it might have a massive reaction to the bad news tomorrow but that does not mean 3 months from now it won't be back because it's not a fundamental failure it's a customer loss failure that can be made up.
Just look at the SOI chart to see what I mean.

Nah, don't give up, it's another lesson in life and another scar of character that we all get from the market.
Someone I won't mention by name tried to make fun of the fact that I lost 100,000 once. Well, I'm proud of that because I'm back! You will also weather this little road bump.
Any idiot can get knocked down. It takes a person of character to get back up.
Good luck to yah.




EWZuber
1,373 posts
msg #29120
Ignore EWZuber
10/7/2003 1:20:03 AM

Joe
Look at a one year chart and you will see that LOOK was testing a 1 year trendline that has never been violated. The trendline is intact ( until tomorrow morning ) and has been in an uptrend for a good while.

If the stock is in a downtrend the next cycle high and low will be below the last cycle high and low.
In your example there was a lower high but not a lower low.
It is still an uptrend until the lows fail to exceed the last cycle low.
If you look at a weekly and then the daily chart you will see that the stock was just finishing up a weekly and a daily distribution phase together in sync.

On the weekly chart it is easier to see that the lows are successively higher.
If it was in a downtrend then LOOK would have violated the trendline that connects the lows.
It was the combined weekly and daily chart stochastic accumulation cycles that were converged with each other that I was planning on working. When these converge then everything pulls in the same direction at the same time.

I appreciate your bullish outlook but I suspect this one will be really hurt for quite a long time.
I went digging through their financial reports and found this in their 2002 Annual 10-K Report.

'Microsoft accounted for approximately 66% of our paid clicks and 58% of our listing revenues in 2002. We are likely to remain significantly dependent upon MSFT for paid clicks and listing revenues in 2003.
Either party may terminate the distribution portion of our agreement with Microsoft for any reason on six months' notice and the agreement expires on December 3, 2003. If the distribution portion of the agreement is terminated or is not renewed on terms similar to those of the existing agreement, then our paid clicks and listings revenues would decline significantly and our results of our operations would suffer.
Revenues from our licensing portion of our agreement with Microsoft accounted for all of our licensing revenues in 2002.'

This was the reason for the low P/E.
It was too much like a one trick pony.





happy_as_a_lark
9 posts
msg #29124
Ignore happy_as_a_lark
10/7/2003 9:33:24 AM

Zuber,
I am sorry about the loss. It happens to the best of people, and you are one of the best.

I like the following intermediate term system for buying and selling(on prophet.net).

Long filter:

Buy when
Qstick(14) crosses above zero(can be replaced with Chande momentum oscillator in SF) and
ADX (14) is above 20 and and
DI+(14) is above DI-(14)

Close long position when
ADX (14) drops below 20 and DI+(14) is below DI-(14) or
ADX (14) is above 20 and rising for 1 day, and DI+(14) is below DI-(14)

Short filter:

Short when
DI+(14) is below DI-(14) and
ADX (14) is rising for 1 day

Cover shorts when
DI+(14) crosses above DI-(14)

Out of that security when:
ADX is below 20 and moving sideways or falling; or ADX is below 20 and rising for a day or more and DI+(14) is above DI-(14)

Any suggestions, comments or IMPROVEMENTS?
Thx

Hindsight is 20/20 but I tried that system on LOOK for the last two years. It generated following signals and profit of 2941% in 2 years(reflects closing price-neglects slippage and commissions).

Short

Short Cover shorts
1.13 .52
1.37 1.53
1.86 1.34
1.28 1.14
2.65 2.75
2.76 2.67
3.41 1.37(current)

Long

Buy Close long position
0.52 1.5
1.99 1.86
1.34 2.96
2.76 2.17






StockFetcher Forums · General Discussion · Do your DD<< 1 2 3 4 >>Post Follow-up

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