With career hunting, wedding planning, and graduation all on my heels, I have too many things going on to keep the site moving, so this will be the last post.
It’s time I do a checkup of my suggestions for 2007. To better show how things are going I've created a simulated portfolio of $10,000 and split the money equally between each of my picks. Here are the results:
Grey indicates the position has been sold. As you can see I’m nearing my goal of a 30% gain for the year, mainly because of the leap ONXX took. I will keep trading and set a new goal of a 45% gain for the year. This should be tough but I’m up for a challenge.
Of the “Six Stocks for 2007” I gave at the beginning of the year, assuming you entered and exited when I suggested, you would be up on all six of them –although XWG by only a penny.
I’m happy with the way things are going, but we all know how quick a market can turn on you, so I’m staying diligent even with this early success. I'll take another look at the big picture in a few months.
-Chris
We had a profitable day today in every aspect of the word. Onxx pharmaceuticals gained 97% based on Nexavar, their Phase III liver cancer drug, which was stopped in order to get immediate approval. Here are two articles that sum it up: MSN & TheStreet. I will sell out of my position and I suggest the same. I bought Onyx based on technicals as quoted from my Jan. 2nd post:
Far be it for me to pick a bottom, but we do have a candlestick connoisseur’s doji star, coupled with a solid positive MACD.
It did end up a bottom, but this recent jump has nothing to do with technicals. The fact is I got lucky. Onyx could have just as easily found that Nexavar created a bad side affect, and it would have gotten hammered.
I don’t buy based on speculation, and I especially don’t hold based on it (some are saying to hold because Bayer may buy out the company).
A weekly chart shows resistance around 26, with a newly overbought RSI. This is somewhat negligible, however, as technicals will probably not drive the stock in the coming days.Pigs get slaughtered, so please be prudent. It’s not everyday you can say you doubled your money. Today is just our day.
If you bought Onyx Pharmaceuticals when I suggested at 10.70 then you would have a 125.70% gain.
-Chris
Here is a 14 month weekly chart showing that STP is reaching overbought territory. Although its MACD is amazingly still headed skyward, its RSI is touching 70, something new to the stock. Also there is major resistance around 42, and we are nearing an all-time high. Finally, for candlestick users, a daily chart shows a “hanging man” indicating a possible reversal.
No need to get greedy, if you bought Suntech Power when I suggested at 34 then you would have a 14% gain. (this includes the 1.97% loss after-hours)
Time is ripe for Amgen again. We sold last time at 76 and the stock is back down at 69. A strong 200WMA at 66.17 will prevent from major losses. As a bonus, a weak upside-down head and shoulders pattern has emerged. (I say weak because it is not in good form)
Worst case scenario, the stock breaks 200DMA support and falls to 68 or 66. More likely is another race to 76.
To put things in perspective, AMGN has a better chance of profit and less risk of falling than STP at these levels.
-Chris
Back on topic, I found a game developer who had been kicked in the head by Wall Street. Since December ‘05 the stock of Midway Games (MWY) has gone from $23 to $6. And yes, with a negative income and EPS, it’s a no brainier. Yesterday the stock closed at $6.90 and I’m buying shares for my personal portfolio. Here’s why:
As you know from my previous article on the Wii, I know what teens and young adults are likely to buy. This is my sort of specialty when it comes to investing. I know better than analyst XYZ what's going to be a hit and what's not. Lets take a look at Midway’s upcoming games.
Unreal Tournament 3 – This first person shooter is well known among gamers, right beside Halo and Counter Strike. This is the type of game that kids buy out of loyalty, even when an illegal version can be downloaded.
Strangle Hold – Not a blockbuster, but the type that will always be rented out because of its action.
Hot Brain: Fire Up Your Mind – This will be called PSP’s answer to the Nintendo DS handheld’s Brain Age (the highest selling game on DS). Smart idea, Midway.
Lord of the Rings Online – A new MMORPG with amazing graphics. Find me a series with a bigger fan base and I will call you a liar (minus Star Wars, which is overplayed in the gaming world).
Finally, I have to mention that Midway owns the licensing to Mortal Kombat… nuff said.
So what if Midway has some great games coming out?
We have three catalysts that I believe will make big money for Midway and us.
1. New consoles – We just got a fresh batch of new game systems, effectively ending the lag for game publishers of outdated PS2s, Gamecubes, etc.
2. MMORPGs – Midway did their homework on the PC market by getting into the online world. MMORPGs, or Massive Multiplayer Online Role Playing Games, are not a one time purchase for gamers; instead monthly subscriptions allow gamers to stay playing in the online world. This kind of income is new for Midway, and has been a Godsend for companies like Blizzard Entertainment (creators of World of Warcraft). These games capture a loyal fan-base and make a killing (when done right).
3. Great set up in charts - The stock is below the 50DMA which could cause some turbulence, but its MACD is about to cross zero, it has support right below it around 6.55, and recent positive earning from other game developers like ERTS could prove to be an added boost, getting derivative players to add positions.
Midway is adapting quickly to a smarter way of making money in the developer business. I have a lot of confidence in the company. Needless to say, buy MWY on Monday.
-Chris
No, I’m not shorting it or buying DXD, or even calling for a drop. I’ve learned my lesson. Today I would merely like to point out that from a technical standpoint, I would rather close my eyes. I'll use a 5 month chart to illustrate:
First, I’ve set 4 vertical areas showing bounces off of the mid-Bollinger Band. You can clearly see how the inclines slowly become less steep until they level off. This is normal and can happen with any stock, but when it coincides with a negatively correlating MACD, it normally spells trouble. As the inclines level off, the MACD gets worse, and we see downward slopes.
Second, I’ve shown were the MACD should be with a horizontal purple line, if the DJIA was at 12,200. But the DJIA is at 12,500, so the MACD should be even higher than the lower purple line—it’s not.
Third, I’ve shown with a green line that the DJIA keeps rising while the buying pressure weakens. This indicator, called the Chaikin Money Flow, shows a clear downtrend in buying pressure. We are not below the zero line yet but the trend is clearly down.
The one thing in the Dow’s favor is it's RSI, which is below 60.
There is much less information on the weekly chart, although we do curiously see a crossover on the MACD. This would normally coincide with a fall by now; make up your own conclusions as to why it hasn’t yet.
The message I’m trying to get across is not to short the Dow, but rather to trade carefully. I don’t like what I see, nor should you.
-Chris
