This is the checklist that I go through everyday when deciding whether or not to initiate any new long positions. They are in no particular order and I only buy when all of them are checked off.
- Is the $SPXEW (The S&P500 Equal Weighted Index) above its 20DSMA? : No
- Is the slope of the $SPXEW ‘s 20DSMA positively sloped? : No -0.30%
- In my universe of stocks which is comprised of stocks that have an average daily volume of at least 100k shares, trade above $5, and have positive sales growth versus the year ago quarter, is the ratio of new 52w highs to the sum of new highs + new lows 80% or greater? : No 35.85%
- Of the S&P500 stocks is the ratio of new 52w highs to the sum of new highs + new lows, known as the $RHSPX, 80% or greater? : No 19.05%
- Have you read at the last 10 press releases that the company you are looking at has issued?
- Does the company you are looking at have a CQGR of 3.75% or higher in their Sales, roughly equating to a 15% or higher yearly growth rate?
- Does the company you are looking at have a CQGR of 3.75% or higher in their Earnings, roughly equating to a 15% or higher yearly growth rate? (However, I am not dogmatic on this one, as sometimes stocks with negative earnings can still rip higher on the expectations of future profits)
- Have you listened to the company’s latest earnings conference call? Do you know what was/is their guidance for the next quarter?
- Do you know when the company you are looking at will report their next quarterly earnings?
- Can you name at least one, but preferably 2, of the company’s peers? For example Nike, Under Armor, Lululemon. Do you know when your company’s peers report earnings?
- Have you checked if this company history of beating analyst’s estimates? You can check here by typing in the ticker you want.
- Do you know what the short interest is on this stock? Both the number of days to cover and the percentage of the float.
- Do you know how many analysts cover the stock? How many are a buy, sell, or hold? Are there enough negative analysts to have future upgrades serve as positive catalysts?
I apologize in advance for this rant. I needed to vent 🙂
We’re basically entering a bear market. GDP growth is non-existent, several large corporations have announced sizable layoffs (which foreshadows a very bad NFP # this Friday), China is contracting, our genius politicians in Washington have just agreed to spend less (austerity), Europe is in the same “austeric” situation. I mean seriously, what in god’s name is going to cause this market to go higher? I don’t see anything on the horizon that makes me bullish on equities. Our Government is doing exactly the wrong thing. What we have is a demand problem , a growth problem, not a debt problem! For fuck sakes our borrowing costs for a 10 year loan is only 2.9%. No one, let me repeat, NO ONE, believes the US can’t pay it’s obligations. All of our debt is denominated in our own currency, we can ALWAYS print more money to pay for anything that we have to pay. In other words, the US can create an unlimited amount of money, it can NEVER default.
What Congress and the White House should be doing right now is hiring all of those unemployed people who are looking for jobs. There is always an enormous amount of work that needs to be done, problems that need to be fixed, questions that need to be answered, and solutions that need to be created. There is plenty of useful things that the Government could be hiring these people to do. Jobs that would be real work and would benefited society as a whole (infrastructure, adequate staffing at understaffed agencies like the SEC, FDA). To quote Nixon, “We are all Keynesians now”. Obama needs to direct the Government to spend trillions of dollars and invest that money in our country by providing work to our unemployed people. We need to create demand, we need to create growth. The new debt deal that Obama will sign into law tomorrow is going to cause deflation and more unemployment. By agreeing to this horrible piece of legislation he has assured himself that he will only be a 1 term President.
Corporations and Companies aren’t hiring. The Government needs to step in. Fuck! How are these people so stupid? [/Rant]
I got long $SPXU today. This market is going lower, much, much lower.