Trading Ideas or Investments for Shorter Time Frame

[clarkrl2]

I am not a qualified investment advisor but I like to study different trading and investment ideas. Mostly I consider myself a value investor and have a holding period of two years or less. When the stock reaches what I believe is a fair value I will sell. Sometimes that occurs because of share price increase but sometimes my opinion changes due to re-evaluation. I will also look for trading ideas and am going to start this thread with one of those ideas.

[clarkrl2]

A few years ago I subscribed to www.aaii.com/ and noticed they had a screen that tracked upward estimate revisions. Another good short term catalyst is a recent earnings surprise. I put this together and created a screen at what is now www.portfolio123.com which is a pay site that I use.

After screening for stocks with upward revisions and earnings beats I look to see if the stock is in an uptrend. I prefer a recent change to an uptrend. I have tracked the results for twenty-six weeks on the Pick of the Week thread. I would never recommend someone use a strategy of buying the open on Monday morning and selling the close on Friday afternoon. In fact I am not recommending anyone use my picks but here are the results of those 26 weeks.

WEEK	Symbol	Place	Return
1	BBRY	1st	14.76%
2	MOH	3rd	8.29%
3	MOH	4th	-2.54%
4	MOH	3rd	4.16%
5	TVL	1st	13.49%
6	NWLI	3rd	2.00%
7	BWS	11th	-2.03%
8	REX	2nd	4.41%
9	REX	6th	0.48%
10	ODP	2nd	11.93%
11	RAD	4th	6.67%
12	ODP	2nd	23.67%
13	ALJ	3rd	3.57%
14	RAD	1st	9.68%
15	VR	6th	0.47%
16	ALL	4th	1.82%
17	AHL	1st	1.95%
18	AHL	6th	-0.69%
19	AHL	3rd	2.48%
20	AIZ	2nd	3.11%
21	NXST	2nd	1.30%
22	AHL	7th	0.13%
23	AHL	2nd	-0.78%
24	AHL	7th	0.99%
25	AHL	5th	-1.45%
26	VG	3rd	3.06%

[clarkrl2]

You can easily check information on earnings at Yahoo and other websites for free. Here is the page for this weeks pick RAD

As with any strategy do your own research. It is my belief this strategy will produce good results in most markets but like with any strategy you will at times suffer periods of underperformance. I currently own positions in PDLI and HCI from this screen. Note the blue elder impulse bar on HCI when that turns red I will sell.

[ModE98]

I like this finviz site for a "double check" for short term info. Its a quick mouse-over to get a chart to go with stocks/trends that are listed. You may find that it may be somewhat useful. ..... for what it's worth, for free.
www.finviz.com/

[2kids10horses]

clark,

I took your returns from your list above, and plugged them in to an Excel spreadsheet.  Assuming an initial investment of $10,000, and reinvesting the full amount, your account would have more than tripled to $31,314.51 in 26 weeks.  This does not account for brokerage fees or taxes.

Your "win rate" is great!  Only 5 losing weeks out of 26, and those were small, with the biggest loser being 2.54 percent.

Edit:

Using an arbitrary $10 per trade, it would cost $20 to place those trades each week.  So, subtracting $20 from the account each week yields a new account balance of $30,470.54 before taxes.  Do this in an IRA, and you would have no taxes.

[2kids10horses]

Clark,

More thoughts:

There are several weeks where you played the same stock two weeks in a row.  The analysis I did in my previous post used your weekly figures, buying on the open on Monday, selling on the close on Friday.

No stocks are held over the weekend.

I don't know if the returns would be enhanced or impared if the investor held on to the stock over the weekend.  (There would be fewer brokerage commissions.)

However, if someone wanted to implement your strategy, they would be running scans over the weekend, and there is no way to know before the Friday close if the stock pick would change.

I know that Etrade offers a "Marketl on Close" type of order.  I've never placed one.  But it would make implementing your strategy pretty easy.  You wouldn't have to be logged on at 4pm on Friday, just have to place the "Market on Close" order some time during the day.

Edited: I originally typed "Sell on Close", when the Etrade term is actually "Market on Close" for an order to be executed as close as possible to the end of the trading day.

[2kids10horses]

One more thought...

In an IRA, you generally can't buy stocks on margin.  Technically, it takes 3 days for a trade to "settle", so in an non-margin (cash account) you're supposed to wait until the funds have settled before you reinvest.

Which would prevent you from selling on Friday and buying Monday morning.  If you sell on Friday, you have to wait and reinvest on Wednesday.

Unless...

You only trade with half the funds in your account.

So, if you have a $20,000 account, you could buy $10,000 worth of stock on Monday.  Sell it on Friday.  Then on Monday, you could use your settled cash balance (the money that wasn't used the prior week) to buy your stock for week 2.  Meanwhile, your week 1 trade settles, and you will be able to use that cash for your week 3 trade.

I'll see if I can figure out how your trades would have worked out under this scenario...

Stay tuned...

[2kids10horses]

Ok, I think I've figured it out...

It would appear that the new balance of the account in an IRA, only investing 1/2 the account and paying $20 per week for brokerage fees would yield a balance of $17,434.14 after 26 weeks.

[clarkrl2]

2kids10horses I think these numbers are so high because we were in an uptrend for almost the entire period. Obviously in a downtrend there would be more losing trades. I like to just use an averagre size position which for me is 1/10 of the equity portion of my trading account. I would not use a one week holding period. I think it makes more sense to hold a position until the uptrend is broken. I like using the weekly elder impulse bars but the 13-week ema should work as a stop loss point as well.

[The Virginian]

Not bad, but don't think this would work well in a downward market but of course you don't have to trade during those periods.

[2kids10horses]

I understand, Clarkrl2.

I like "mechanical" trading systems.  Ones that take the emotion out.

I've found that once I enter a trade, I feel like I'm married to it.  So, it's hard to terminate it, regardless of whether I have a profit or a loss.  Selling every Friday would "terminate" the trade automaticly, so there's no emotion, no second guessing, no justifying, etc.  And rerun the scan.  If the same stock comes up again as the best available, go another week.

[ModE98]

This might be worth watching.... might be good for short term, or long term as well.

Express Scripts (ESRX): Q1 results beat across the board as revenue more than doubled Y/Y. Net earnings rose 39% as the pharmacy-benefit manager's revenue surged, helped by its Medco acquisition. Gross margin widened to 7.5% from 6.9%, including retail pharmacy co-payments. The company raises its full-year earnings outlook by $0.03 a share, now seeing its EPS coming in at $4.23 to $4.33. Shares +2.1% AH.

[clarkrl2]

ESRX isn't showing up on my screen yet because it requires an analyst upward estimate revision. I really like the Elder Impulse setup.
ESRX chart

[clarkrl2]

Bought BAS @$13.90 as a trade. They beat last quarter and had a recent upward revision in earnings estimates. The price dropped below the 13-week ema earlier today but quickly recovered. This was the news that may have influenced the low open.

News

I'm not posting this as a recommendation but more as an example of what I look for in the trades I make. This stock looks to be in a new upward trend and is not overbought. Here is the chart.

Chart

I will watch the trend and if it appears to turn down I will sell. I do not use trailing stops but if the stock price fall back below the 13-week ema and stays I would consider that to be a negative.

The trades I have open in PDLI and HCI still appear to be uptrending. HCI went ex dividend yesterday and is up more than 5% today. I'm not sure why.

[clarkrl2]

Sold out of BAS yesterday @13/sh which is a loss of -6.5% excluding commissions and dividends. I haven't replaced this yet.

[clarkrl2]

I bought CGX using the earnings beat with recent earnings upward revisions screen.

[clarkrl2]

I mentioned PDLI in post #2. I sold this today for a gain of 3.7% excluding dividends and commissions. You can note the elder bar on the weekly chart is now red PDLI chart 

[clarkrl2]

Last Friday I bought some HCC off the earnings beat with recent upward revisions screen. The entry price was $44.99. The stock is overbought by the RSI measure. chart

[clarkrl2]

I picked up some shares of NCIT today @ $4.96/share. This was from the screen where I look for earnings beat with recent upward revisions I have talked about on this thread and use in the POTW. The chart looked really good to me for this stock. weekly chart I like the recent possible change in trend.

[clarkrl2]

I sold HCI which I mention back in reply #2 Chart

The weekly chart now has a red elder bar. Bought on Apr 3, 2013 and sold Aug 22, 2013 for a gain of 25.3% excluding dividends and commissions.

These trades with stocks that have a earnings beat and upward estimate revisions can be quite profitable.

[clarkrl2]

I sold out of HCC mentioned in post 17 for a loss of about 5.4% excluding commissions and dividends. I'm planning on waiting at least until next week before I make any new trades. Currently I am at about 30% cash.

[clarkrl2]

Bought HCI @ 36.34 from the earnings beat with recent upgrades screen.

[clarkrl2]

Post #15 I mentioned I had bought CGX using the earnings beat with upward revisions in estimates screen. There has been an announced buyout by R R Donnelley and Sons for stock at cash amounting to an estimated value of $62/share. I managed to get $64/share which amounted to a 35% gain in 5 months.

I also mentioned buying NCIT in post #18. I intend on selling this one because of weakened technicals. They beat on earnings today by $.01 so I am hoping for a better price tomorrow.

I will try to replace these before too long with new buys but so far I am not have any luck getting my orders filled.

[clarkrl2]

Sold NCIT @$5.30 per share for about a 6.9% gain. This may be a breakout for the stock but I wanted to replace it with a stock that had a more clearly defined uptrend.

EDIT: NCIT was mentioned in post 18 and my previous post.

[clarkrl2]

Bought PMC @ $14.75 as a short term trade from the earnings beat MRQ with recent upward estimate revisions screen. This is the screen I use for Stock Pick of the Week and for the short term trades mentioned in this thread.

[clarkrl2]

bought PVTB @ $24.32 and KEY @ $12.50 from the earnings beat MRQ with recent upward estimate revisions screen. I still have a little cash but will hold off buying anything else for a while.

[clarkrl2]

Bought Citi Trends (CTRN) as a trade. From the earnings beat MRQ with recent earnings estimate upward revisions screen. Bought at $16.81.

[uncle23]

....



good call clarkl2......CTRN closed 17.81 today...........

[clarkrl2]

Thanks I will post when I sell with the % gain or loss.

[clarkrl2]

I made a couple of buys from my earnings beat MRQ with recent upward revisions screen.

DEG (Delhaize Group - grocery store - Belgium) @$64.62.

RF (Regions Financial - Regional Bank Southeast) @$10.44.

If the market really turns bad I won't be holding on to these very long.