| gentilez |
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Gold User, Member, TeleChart
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| Registered User |
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| Unsure |
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| Monday, December 27, 2004 |
| Monday, June 1, 2009 5:34:08 PM |
15
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Imagine, you are selling apples on a sunny day. Just when you close your little stand, a friend comes up to you and states " I need a 100 apples for the school tomorrow by 7 am!!!. Can you get them?"
"Sure" you reply and you tell your friend that " give me 100 X $2,25 per apple and I get them for you tomorrow".
What happened here is that you sold apples you did not own (yet) and your inventory is literally "100 apples short" ...
You go to your supplier at night, just to find out that secondary to a shortage in apples, your supplier is now requiring $3.00 per apple.
Since you already sold the apples to your friend for $ 2.25, you lost $ 0.75 cent per apple.
That is the principle of shorting. Selling something that you do not own and are force to buy to deliver in the future. This is quite different from being on "margin", where you borrow money and use your holdings as collateral. Margin is a loan, and you pay a (more or less) fixed interest rate on the loan.
Other points of interest are:
- When short, you are responsible for the interest and or dividends of the holdings you are short for. You short a stock with a dividend payment of $ 0.25 / share per Quarter, you will have to cough up that payment. so, I don't short just prior to ex-dividend ...
- stocks do have a tendency to fall faster than they clim, and hence, short positions do have a tendency to be shorter term
- stocks with a high percentage of shares outstanding already short, ALSO have an inherent "demand to buy" build in. Hence, caution when your stock starts to move against you. This would be the "short squeeze".
There are ways with options to hedge your position. If you own a e.g. 25 Call, and you shorted a stock at e.g. 24 which moves consequently to 28 ... you still have the right to buy at 25. This way your maximum loss per share would be $1 + cost of investing.
Newbies ... paper trade first. Get experience below your belt. It "ain't as easy" as it sounds. Longer term, stock do have the tendency to rise in price and that could very well include the one you shorted.
best wishes,
M
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but, on a dial up connection it takes forever and got stuck twice after about 1.5 hours ... on some xxx.dat file.
will there be a disk available for installation?
i understand tc2005 is internet based and can be accessed on more than one computer. That would be very very nice.
thank you,
Marcel
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agreed,
however, i do also see support from the trading range dating back to Sep Oct 04 as well as Sept Oct 03.
the breakdown does not seem decisive looking at weekly volume. Certainly not a strong stock. There are better fish in the ocean, but I dont see it "tanking" until it decisively breaks down 17.50.
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Hi Craig
look here:
avgv10>1.3*avgv30.5 : average volume last 10 days is at least 30% higher than over the last 30 days (5 days back) .... increased volume
avgc3>1.1*avgc20 : average close last three days is 10% highesr than average last 20 days
HOWEVER
avgc3<1.3*avgc20 : average price last 3 days is lower than 30% increase over average of last 20 days.
Net result is: significant increase in volume and price has moved up a minimum of 10% but no more than 30%
make the PCF, sort all stocks if you like, and look at the moneystream. Very strong. And since price has moved, one would expect that the ideal entry will be on a pullback
Note that this simple scan often shows very good BOP and TSV's also.
(same can be down for down prices with a little adjustment)
comments welcome.
Gz
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here is a moneystream PCF that holds well for strong moneyflows.
Other criteria can of course be added to reduce search.
Moneystream criteria should show high volume (enthust buying)however, not much price movement yet.
here goes
avgv10>1.3*avgv30.5 AND
avgc3>1.1*avgc20 AND
avgc3<1.3*avgc20
results are very descent, and scan is simple.
of course, by altering the formula for average price <<<, you can scan for stock heading south under enthust selling ...
any comments are welcomed, like to hear how others scan.
Gz
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in reply to sunbird
"Has anyone done any statistical analyses to determine the relationship between fundamentals like earnings/sales/divedends and the FUTURE course of stock prices?"
This in itself is a very interesting question.
There is NO DOUBT that fundamentals do count.
Dot com euphoria:
So, prices skyrocketed, and plummeted. The fundamentals never changed. No balance sheet, no profitability, no longer with us. RIP.
YET
looking at potentially the best company in the world (GE)which had steady rising earnings at least from 1995 thru mid 2002, the stock dropped 60-ish to 22-ish along with the market.
The difference between Dot Com and GE is no doubt fundamentals AND that GE is still here.
That leads me to believe that fundamentals DO count, especially over time. Very short term, it does not really matter. After all, investors anticipate and in short timeframes, prices move far faster than fundamentals adjust.
So, having said that:
Go to TC 2000, scan for top 10% earnings and revenue growth.
Maybe even top 10% dividend growth.
The top 10% is your quality funda watch list.
do the same for the bottom 10%, this is poor funda watch list.
now you can back test the two groups for varying timeframes. My bet is that you will find that short term both groups will be mixed (hence technical analysis is more important than fundamentals) and that longer term (e.g . 5+ years) the quality names will prevail (fundamentals more important than technical analysis. and dont forget to add in the dividends of the companies)
Of course, high flying companies without earnings today cna very well become the earning quality company tomorrow. These are, however, in that "growth" spectrum a defined minority. How many companies failed next to the MSFT's of the world?
hope this is enjoyable. I will be trying to find a statistical answer.
Gz
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hi doug,
thanks for your reply. I copied a telechart and attempted to paste inside the note. This failed. Is there a way to do that. (i am not a TCNet user)
thank you,
Gz
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weekly chart (and also showing in other timeframes:
TSV(18): note the significant positive divergence since june 2004
BOP showing accumulation since october 04
and today the second breakout under high(er) volume.
so ... how do I place a chart in this note?
Gz
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IMHO, the VIX > 30 is indicative of uncertainty.
a VIX < 20 (and we are at ~14) is indicative of investors feeling the market is constructive.
therefore, I dont see anything special in this recent jump of the VIX
I dont see how it aids me in trading. I do like to hear how you use it for trading.
thanks in advance.
Gz
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IMHO, the VIX > 30 is indicative of uncertainty.
a VIX < 20 (and we are at ~14) is indicative of investors feeling the market is constructive.
therefore, I dont see anything special in this recent jump of the VIX
I dont see how it aids me in trading. I do like to hear how you use it for trading.
thanks in advance.
Gz
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