InvestingFreak.com

This is feeling like a monthly posting but I assure you I’m getting back into it as I have finally started making trades again.

I just made 10% of $1000 in 1 day.  (small position)
Bought GE yesterday morning at $20 sold at open today for $22.25.

After I bought it yesterday I went to class and never followed it. Today I just sold it. So in 5 min. work $100.  The market is still not stable and won’t be for a while so I will make plays like this often.

Earnings for Q3 have started and Bank of America blew it.  If more blow it then the market will be very volatile for a while. I love it.   How have you done recently?

Below is the Profit triangle I drew around my GE purchase.

Good Luck and I hope to resume regular weekly (at least) postings.

The only reason I have not posted much in my blog is because I don’t want to play with the August wild market and therefore watched Freddie and Fannie get taken over without saying a word.

I am still holding onto SKF and even bought more as the price dropped.

I do see energy stocks making a comeback at least in the short term.
One of the symbols I am watching is UGA (United States Gasoline)  stock fluctuates with the prices of Gasoline in the US.
With Gasoline beginning to rise thanks to hurricane Ike hitting Texas this is beginning to look good.

This is a short post but I should get back to posting more opinions and charts within a few days. Thanks for Reading and please feel free to voice your opinion in the comment box.

During hard times like the ones we are seeing now with the economy, one thing i am beginning to like is Ultra Short ETF’s. They are basically bets against certain sectors or indexes. There are also ProShares which bet for the market to go up.

One of my latest moves into ETF’s is buying (SKF) Ultrashort Financials on August 14, 2008 . As you can see from the table i have provided (hopefully it displays decent in most readers) I am looking at the Point & Figure Patterns for the Top 40 stocks market cap wise in the financial sector. FRE and FNM are not up at the top but have been talked a lot about in recent news.

Before i get you confused as to what the signals mean I will provide a brief description of each, courtesy of stockcharts.com

• The double bottom breakdown implies that the buyers who were supporting the price are no longer able to create demand that is more than the supply, and prices are breaking down.
• A triple bottom breakdown is similar to a double bottom breakdown except that the price at which the breakdown occurred is a price that the chart retraced from two times before. The breakdown below this level implies that the sellers are now creating more supply than there is demand and therefore the prices are breaking down.
• A double bottom followed by another double bottom, or three bottoms, each lower than the previous is recognized as an descending triple bottom breakdown. The idea is that supply is continuing to outstrip demand on an ongoing basis.
• A bull trap is a triple top breakout followed by a reversal. The breakout is possibly due to buy stops being hit just above the resistance level, and the quick reversal suggests lower prices ahead.
• The high pole warning is given when a chart rises above a previous high by at least 3 boxes but then reverses to give back at least 50 percent of the rise. The reversal implies that the demand that was making the prices rise has given way to supply pressure. The pattern is a warning that lower prices could be seen in the future.
• Bullish signal reversed pattern is a series of rising tops and bottoms that finally soaks up all demand and the double bottom breakdown at the end signals that now supply is outstripping demand.

Enjoy the table I have created. As you can see many bearish signals were given on August 13 so I went ahead and bought SKF on Aug 14 at $123.50.

This is the longest post i’ve written and I’m sure some of you want to ask questions or make comments, please let’s discuss.

I would like to thank you all the readers of my blog and to the recent google reader subscribers.
It seems like I don’t post regularly in this blog, I understand that being a new blog in town means I will need to write more and more to get my ranking up but that is not why I created this blog.  It is merely a place where i vent off or share my thoughts on the current market or economics situations.
I hope you can live with one or 2 quality postings a week instead of 12 crappy postings a day (like i see on some blogs) because i am not a full time blogger.
Hope you enjoy reading my thoughts and I encourage you to take a little time out of your busy schedules and write a comment or 2 in the stories so I know if i am attracting the right crowd.

Thanks
-The Investing Freak  (You can view my latest trades by following me on covestor )

Recently i began using the stop loss rule because this apple stock i own is driving me insane.

I bought DDM at 61.70  and i figured out it’s volatility through Average true Range (ATR) was around $2.40      61.7-2.4= 59.3

I decided to give it a little more space so i set $59.

with 15 shares i held at 61.7 i spent $932.5 ($7 commission included)
i sold with a stop rule in effect at $59  so that is  $878 after commission is deducted.

I ended up losing $54.5 or about 5.8%. I’m fine with that as long as it keeps me out of trouble.

Remember!
Disciplined Traders Use Stops and Never go against their own rules.

Almost a Month ago I wrote a post about how the dow had yet to bottom. See: The Dow Jones Industrial Index has not yet bottomed ,at that time the index was at 11,842.  A week later I followed up with a prediction that the Dow Jones Industrial would bottom at 10,800 (See:Prediction: Dow Jones Industrial bottoms at 10,800.)

On July 15,2008 the Dow Jones Index fell to 10,827 to make a new 52-week low. That new low came very close to my prediction and soon after it began rebounding. Since the weekend came and I found some time to go and revisit the chart for the dow I now think that the index has bottomed out and should begin to climb.

I believe the market will begin recovering because of a few reasons.
1. 10,800 is a very strong support zone going back to 2006
2. Oil prices have recently fallen from $146  to $128 (maybe that  bubble is deflating)
3. The chart shows that the sellers are moving out and more buyers are beginning to take over (green and red lines almost crossing. Green is buyers, red is sellers)
4. At the end of the chart is the amount of money being put in the market. Since mid May it was in a downtrend which meant people were taking money out of the market and now it has broken out of the trend.

As you will see in the chart below however, today’s action is within the downturn trend line and it needs to close above 11,500 or we might not have hit recovery period just yet.

Without further adieu i present to you… the Dow Jones Industrial Recovery Chart.

At this point i have invested in stock symbol (DDM) which has the top 30 Dow Jones Companies.
It goes mostly parallel to the Dow Jones Industrial Index. You can check out my current holdings at my Covestor page.
If you have any comments feel free to post them.

Many of you might have read my previous article where I question whether the oil bubble was ready to burst.

Previously: Is The Oil Bubble Ready To Burst?

Since July 7, 2008 until July 16, 2008, (DUG) has gained well over 20%. This is certainly not a burst of bubble but it is interesting to see whether it’ll sustain for a longer term.

If you invested on (DUG) or have any comments please feel free to comment.

Bubbles Always Have a Limit where they can no longer grow and sustain the hype.

I have seen oil run up like many of you have but without owning a car it hasn’t hurt my wallet yet.

I’ve been thinking of investing in an oil shorting stock (Exchange traded Fund in this case.)
Symbol: (DUG)   which bets that oil will go down. The ETF that bets for oil is (DIG) and the top 10 holdings are listed below.  DUG basically almost shorts all those companies and more.

Source: ProShares

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Here is my usual chart showing the trend reversal the past few days.

It broke through the 50 day moving average and might make a modest run.

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An interesting chart showing that the oil price has touched base with the total oil consumption just like the 1980’s bubble.
Source: SmartEconomy
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Disclaimer: I have not invested into DUG yet but it is getting very interesting.

From the way the market has been swinging lately even with any recovery time, the dow jones industrial has yet to bottom a week after i wrote about how it had not bottomed. Over 500 points down later i still think the dow jones industrial has a long ways to go (with some rallies in between obviously).  I feel like I am too optimistic by calling a bottom at 10,800 because if President Bush and his best friend Dick Cheney start a war in Iran my bottom call will look stupid.

And here is an updated chart.

The Dow Jones Industrial Average doesn’t appear to have bottomed out as of today.
The news that are coming are still not good and the technical chart all points to even lower market soon.