My Checklist for Wed. 8/03/2011 – We are not in an uptrend

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.

  1. Is the $SPXEW (The S&P500 Equal Weighted Index) above its 20DSMA? : No
  2. Is the slope of the $SPXEW ‘s 20DSMA positively sloped? : No -0.41%
  3. 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 19.10% (Wow, we’re below 20%)
  4. 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 2.63% (This is insane!)
  5. Have you read at the last 10 press releases that the company you are looking at has issued?
  6. 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?
  7. 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)
  8. Have you listened to the company’s latest earnings conference call? Do you know what was/is their guidance for the next quarter?
  9. Do you know when the company you are looking at will report their next quarterly earnings?
  10. 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?
  11. Have you checked if this company history of beating analyst’s estimates? You can check here by typing in the ticker you want.
  12. Do you know what the short interest is on this stock? Both the number of days to cover and the percentage of the float.
  13. 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?

Sold $SPXU for a 10% profit. I really enjoyed making that trade. That is the type of trade that makes you feel like a God because you basically went short the entire S&P500, times 3, and nailed it! Any idiot can make money on the long side in a bull market but it takes a very skilled trader to profit on the short side. And I nailed it, fucking nailed it! 🙂

We may have found a bottom today with that wicked hammer candle, the lower wick is so long it’s sexy. Of course the Jobs number is coming out this Friday and it is August, which means, if the NFP number is horrible (and I fully expect it to be horrible) it might just be bad enough to force Bernanke to initiate a QE3 at Jackson Hole. In other words, if the jobs number is horrible (and I mean Fugly) the market will rip higher in anticipation on QE3. We will probably keep selling off until Friday, gap down much lower after the print, and then rally for the rest of the day.

I love trading, this shit is so much fun!

PS: Buy a little $MITK before it reports earnings this Monday.

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