Random Rants and Market Ideas

I was a broker for a lot of years. If the majors put as much effort in training their brokers as this guy does educating prospects, they wouldn't be in the mess they are in.

The guy seems sincere, his information is timely, cogent, well supported by graphics.

It's a buffet. He's broccoli to some, filet to others. If you don't like broccoli, don't eat it. But I think there are people who are willing to invest in education, and I think he'll treat them well. Not that that doesn't always happen.............

Besides that, how much porn can you surf????????????? LOL
 
I just started trading two months ago, and ironically I have made money while everyone has been warning me I'm going to lose money at the onset.

I credit Brandon Fredrickson for at least 50% of my success right now. I believe I have been able to avoid a lot of n00b mistakes due to his advice (all free by the way).

I am also indebted to Alan Farley (hardrightedge) and for his book The Master Swing Trader which I am working through right now.

I feel very fortunate to be learning trading right now, despite hearing that 2005 is a tough year, and that June is supposedly going to be one of the toughest months.

Thank you Brandon! :)
 
On Wednesday the S&P500 lost 2.59 points, closing at 1194.67. Meanwhile the NASDAQ Composite lost 6.98 points and closed at 2,060.18. Volume pulled back on both exchanges. It was down 10% on the NYSE at 1.7 billion shares and down 13% on the Nasdaq at 1.65 billion shares. Advancers narrowly trailed decliners on both exchanges while NYSE new highs significantly led new lows, but on the Nasdaq it was pretty close.

Where do we go from here? Honestly I do not know. Most of the time as you know I have a strong opinion, however right here the market is, for the most part, in the middle of a range. When markets are in the middle of a range bulls get very bullish and the bears get very bearish. Me, if I get too active I just lose money and like Warren Buffett says "Rule number one of investing is not to lose money, rule number two is to not lose money and rule number three is to not forget about rules one or two". I am currently short a few stocks and I am going to manage those names, BNI, IBM and INTC. With the run up INTC has had over the last few weeks I still have a hard time trusting that they will make Wall Street happy tomorrow night, I could be wrong though. What you want to do in a time like this is look for strong and weak names both, and there are plenty of both. I will post several names on my blog.

Brandon
 
How do you find your stocks? Is there is scanner you use, or do you do it the old fashioned way and flip charts?" Well I think most people get scammed when they come into the markets. They think they can spend a few hours a week and produce stellar results, but nothing could be further from the trust in my own experiance and from what I have seen in others who do well at this. For most of us it probably borders on an unhealthy obsession..it might even cross the border. I work all day every day. My livelyhood depends on outperforming people who are smarter than me, so my only option really is to outwork them. I spend on average 14 to 16 hours a day Sunday through Friday. I take most of the day Saturday off but if I am really working on something then I will do the time Saturday too. I read everything I can get my hands on. Thestreet.com, Marketwatch, Money Magazine, Barrons, Wall Street Journal, Economist, Fortune, IBD. I also watch PBS's Financial Program at night. In the morning before the bell I have Bloomberg TV and also have Bloomberg and Reuters news. I look at these to see what is happening and how its moving stuff. I dont really think I get anything before someone else does, but the reactions can be important. For scanning I mostly do it the old fashion way. I look at every stock in the SP500, 400 and 600 every day. I also have Etables from Investors.com which allows me to look at the New Highs, New America stocks etc etc etc. I use dailygraphs each night to look at stocks. If I find something that interests me I will research it more, looking at the company, its products, its finances, key people etc. Sometimes I will get analysts reports but not too often. I spend too much time on message boards too just seeing what people are thinking and doing. Sunday is really my big day, I tend to spend at least 16 hours, Im usually up until Toni starts screaming at me to come to bed. I probably look at 5000 stocks charts on sunday. I also go over all the 197 IBD subgroup charts to see if there are any I want to really pay attention too. When I find a group that has a nice chart I will look at all the stocks in that group nad try to find some charts I like. Once I find some charts I research the company more to see if I really like it. If I really like it then I have to decide if I want to buy it. All this because I grew up trailer trash poor and wanted to have money when I grew up so I could get girls...and Im still with the girl I was dating when I was a senior in HS...probably because after all these years she is the only one willing to put up with me. Lucky for me she trades as well and is nearly as interested in the market as I am. Anyway, without laying out the entire process, which I wont do, thats the basics..and with that if your the obsessive type you can figure something out that will work for you as well.

Brandon


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Maybe it's because I grew up as a poor country boy, but I hate to
overpay for something. I like to spend money and reward myself for
my hard work, but I can't stand overpaying. I feel the same way
about buying a stock. I want to own the leading stocks in the
leading groups, but I don't want to overpay for them. The best way
to see the real price you pay for a stock is by looking at the Price
to Earnings Ratio. The core of my trading is based upon William
O'Neil's CANSLIM methodology, but this is one area where I do not
concur with his advice. I look at the PE ratio as an additional form
of leverage I can employ to my advantage in a growth stock, let me
explain. A stock's price can really go up (long term) for only a few
reasons. The major reason is an increase in earnings which makes the
underlying shares more valuable. If a stock has earnings of $1.00
per share and has a PE of 30 it will trade at $30.00 per share. If
the stock grows at 30% the earnings will be $1.30 the next year and
assuming the same PE the stock will trade at $39.00 per share. A
nice gain of 30% will be shown on your account. However, if you find
a stock that is under owned by institutions the same stock might
have a PE of 10 and thus it will be trading at $10.00 per share. It
is also growing at 30% per year, but you find it before Wall Street.
Once Wall Street does get turned onto the stock there is likely to
be a rapid inflation of the PE. By the end of the year perhaps the
PE is up to 18, and so having grown earnings to $1.30 you are now
sitting with a $23.40 stock. So here by focusing on the leverage a
low PE can provide you, you have gained 134% as opposed to 30%. I
will trade stocks with high PE's, I will not invest in them.
 
Intel's long awaited mid quarter update came out last night. They said they will beat the street which is what everyone expected, the stock is down slightly at this point - though the overall market is looking fine.

Thursday the S*P500 incrased by 6.26 points, closing at 1200.63. The Nasdaq Composite gained 16.73 points to close at 2,076.91. Advancers beat out decliners on both exchanges by 1.5 to 1 and we saw substanially more highs than new lows.

About a week and a half ago I started to talk about the need for a low volume pullback. Over the five days we have gotten exactly that. There was one distribution day in there, but the market is now holding short term support very well and seems to be ready to recover. I think yesterday was a good day for the market in that for the first time it opened lower and managed to claw its way higher. It also was able to continue its rally in the face of Greenspan saying rates are likely to continue to rise and higher oil prices.

Several stocks are on my list and look attractive. They include MRVL, PAS, WOOF, VTRU, L, CTSH, BLUD and HLEX. Please note that those who are subscribers to my FREE email list will get the audio bonus feature of this newsletter, which will include specific entry and exit prices on stocks as well as additional commentary. Today as a special feature it will also be available on my blog at http://www.brandonfredrickson.com/blog But, today is the last time it will be available while not being on my email list. In addition to the audio commentary and picks, by being on my email list you will get several free educational reports.
 
There is a popular game played at carnivals, the object of which is to hit the head of a joker as it pops out of one of multiple holes. Most people will "lose" this game by continuing to watch where the joker once was. When I watch many market players reacting to the markets natural coiling and uncoiling tendency, I am comically reminded of this game. After an explosive move to the upside (Think last Tuesday) everyone is all hyped up and ready to go. Unfortunately for them it is normally at this point that the market volatility cycle begins to coil, and in the process separates most traders from their money. After several days of chasing the joker (momentum), traders become disgusted with themselves and the market. They decide now is the time to play it safe, or stand on the sidelines. Its at this time that our joker will jump out of his box and make a surprise return.

Well this is just a heads up, the joker is still in the box and if you listen very carefully you can hear his giggle as he is preparing for his brief return. The market is currently coiling tighter than a mad Arizona Rattlesnake ready to strike. Over the course of this month the Dow Jones has had a range of 1%, you read that correct. The range between the high and the low on the Dow Jones Industreal's this month has been 1%. Additionally the daily ADX has crossed under 15, another sign of coiling. This is exactly the kind of action that drives most traders mad, they lose capital and confidence and finally decide to stand on the sidelines and try to rebuild. I can't count how many times I have heard that "the summer doldrums" are here.

Volatility in the market is mean reverting. If you learn nothing else, this might be the concept worth studying. I do not know which way the market will break, a compelling case can be made for the upside and the downside. My mom seemed to have psychic abilities when I was growing up, always knowing when I was causing trouble, so maybe I will ask her. If you put a gun to my head I would say up, but I might end up getting shot! What I do know though is that after periods of low volatility periods of explosive volatility follow. The next high volume day is likely to give us the market's direction for the intermediate term.

Current Positions.
I have done a lousey job of tracking things for this newsletter as I switched to the video format. I apologize for that. In the coming month I will start to keep a complete track record as well as offer guidance from start to finish on all trades.

Current Open Trades (if I miss some here please send me an email, I went through the videos and am doing the best I can from them)

ADVNB is long from $25.70. It is currently trading at $26.30. Keep stops under $26.00.
PGIC is long from $14.35. Its last trade was $14.47. Stops should remain
HET is long from $74.75. Its last trade was at $74.57. Stops can be held under $72.00.
PAS finally traded above $25.00 and is now a long from $25.05. It closed at $25.18. This is a very low volatility name. Stops can be held under $24.85.
GET is long from $43.10. Last trade was $43.77. Stops under $42.80.
WOOF is long from $25.10. Last trade was $25.38. My stop is now under $25.00 per share.

For video updates which include new idea's sign up for my email list at http://www.brandonfredrickson.com
 
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