Friday, March 17, 2006

LifePost's thoughts


I work, but on my free time I sit in front of a computer and do technical analysis and research on the stock market. My goal is to make money. The goal of making money is for obvious reasons, but at this point in my journey it's more about being right and proving that I'm right with profits. What will I do with the money? I have no clue. I don't know what the point of life is, but I do know that if I'm going to stick around to try find out, I need money. I don't really want anything materialistic out of life, I just want to be dam good at something and enjoy what I do.
OK,,,,Back to the stock market,,,I'm investigating opening a Roth IRA to trade out of for tax purposes and of course I don't plan on drawing out of this account, its for retirement. Also, I've decided to switch back to trading stocks and options until I've become suberbly profitable trading futures, or until I develop my trading system with tradestation. I must say, IB sure kicks ass even though they have shitty charts. What it all boils down to is price, tape reading, knowing support and resistance, trends, and news.

I've found a statistically high probability trade that is a hell of a lot easier then ETF arb. Look for stocks with quarterly or one time dividends, trade them by shorting them at the open on ex-dividend day and place your limit cover at an easily hit target. Tell me, why in the hell the stock would not go down at all after the open on ex-div.? It always does, people are selling and taking the dividend profit, of course, the majority of the people doing this probably could have waited a day or week later to sell for a better profit, but they want to get in and out of the position with the least amount of exposure to risk. What I would do is buy 3-14 days before ex-div. and sell 1-2 days before, because there is a high probability on those big dividend payers that the stock will be going up before ex-div day. If I'm going to day trade, I better off go long on stocks nearing there ex-div days. Also you may notice 2 days before ex-div date, that the price declines, this is from guys like me that bought earlier and are cashing out, and also from people who want to stay away from the dividend. The best stocks this strategy works on are low volatile, highly liquid stocks with avg. volume over 1 mil and market caps above 1 bil. Also you should take note the current direction of the stock's trend and its corresponding index trend. There's one thing you must be careful of, and that is not shorting on ex-div day if the opening price is greatly lower than the adjusted closing price the day before. Example:Stock XYZ closes at an adjusted price of 15.00(16.00 stock minus a 1.00 dividend) and the next day (ex-div day)the stock opens at 14.50(0.50 below the adjusted price of 15.00), in this case, I probably would stay out of the trade. Here is a real example:
PCU-
Date Open High Low Close Volume Adj Close*
13-Feb-06 77.5 80 76.61 77.45 1,931,200 77.45
13-Feb-06 $ 2.75 Dividend
10-Feb-06 84.3 85.4 81.53 83.08 2,322,700 80.33


Careful shorting on Ex-div. here, the opening price is way below the closing adjusted price the day before.Although the trade still works, it has a higher probability of lower returns.

Here are good examples where buying 1-2 weeks out and shorting on market open on EX-div day works.
Examples: Buy 14 days out.
MSFT-
Date Open High Low Close Volume
23-Nov-04 26.52 26.7 26.4 26.53 70,459,696
22-Nov-04 26.75 26.82 26.1 26.65 92,410,800
19-Nov-04 27.03 27.07 26.84 26.86 85,808,600
18-Nov-04 27.13 27.17 27 27.07 63,249,900
17-Nov-04 27.25 27.35 27.06 27.17 58,830,700
16-Nov-04 27.33 27.34 27.05 27.12 64,522,600
15-Nov-04 27.34 27.5 27.2 27.39 104,468,000(short,max $0.14 P)
15-Nov-04 $ 3.08 Dividend
12-Nov-04 30.16 30.2 29.8 29.97 162,268,992
11-Nov-04 29.89 30.08 29.82 29.98 87,358,896(sell $29.98=$2.25 P)
10-Nov-04 29.92 30 29.69 29.73 84,097,696
9-Nov-04 29.43 29.89 29.35 29.77 100,401,000
8-Nov-04 29.18 29.48 29.13 29.28 112,802,096
5-Nov-04 29.21 29.36 29.03 29.31 95,337,696
4-Nov-04 28.38 29 28.38 29 87,867,696
3-Nov-04 28.65 28.65 28.31 28.47 79,666,704
2-Nov-04 28.26 28.47 28.03 28.24 89,417,104
1-Nov-04 28.16 28.28 27.96 28.08 72,930,896
29-Oct-04 28.12 28.15 27.8 27.97 80,010,096
28-Oct-04 28.11 28.54 27.9 28.01 63,059,600
27-Oct-04 27.86 28.35 27.58 28.15 72,392,600
26-Oct-04 27.71 27.9 27.63 27.9 76,966,600
25-Oct-04 27.67 27.77 27.55 27.63 61,529,500(buy $27.63)

AMTD-Buy 16 day before Ex-div.
Date Open High Low Close Volume
27-Jan-06 20.25 20.49 19.93 20.17 5,646,600
26-Jan-06 19.75 20.25 19.25 20 10,016,700
25-Jan-06 19.74 19.8 18.86 19.38 32,390,100 (short, max 0.88 P)
25-Jan-06 $ 6.00 Dividend
24-Jan-06 26.19 26.37 26.06 26.1 8,382,300 (sell 26,=$2 P)
23-Jan-06 25.81 26.01 25.7 25.97 7,782,500
20-Jan-06 25.61 25.9 25.09 25.51 6,648,600
19-Jan-06 25.78 25.9 25.35 25.65 4,483,600
18-Jan-06 25.49 25.53 25.05 25.33 4,992,800
17-Jan-06 25.97 26 25.5 25.62 4,537,200
13-Jan-06 26.2 26.21 25.8 25.93 8,026,100
12-Jan-06 26.1 26.25 25.86 26.04 11,929,800
11-Jan-06 25.5 25.93 25.5 25.7 9,022,500
10-Jan-06 25.58 25.58 25.16 25.21 5,867,900
9-Jan-06 25.25 25.71 25.23 25.52 5,416,400
6-Jan-06 25.35 25.35 24.95 25.01 9,867,100
5-Jan-06 25.22 25.45 24.76 25.11 7,238,700
4-Jan-06 24.86 25.26 24.75 25.06 9,608,300
3-Jan-06 24.15 24.64 23.86 24.55 5,510,000
30-Dec-05 23.98 24.15 23.58 24 2,932,900 (buy $24)

NAD- Buy 13 days out
Date Open High Low Close Volume
16-Feb-06 33.05 33.34 32.88 33.25 170,600
15-Feb-06 33.04 33.27 32.55 32.95 163,000
14-Feb-06 33.35 33.35 32 32.9 346,500 (Short max 1.35P)
14-Feb-06 $ 1.88 Dividend
13-Feb-06 35.71 35.99 34.7 34.76 451,600
10-Feb-06 36 36 34.26 35.68 596,100 (sell 35.68=$4.22 P)
9-Feb-06 36.35 36.92 36.05 36.29 446,600
8-Feb-06 36.5 36.5 35.6 35.98 383,000
7-Feb-06 35.85 36.81 35.2 35.6 1,211,400
6-Feb-06 32.95 34.34 32.82 34.34 416,800
3-Feb-06 31.8 32.5 31.66 32.49 157,800
2-Feb-06 32.2 32.2 31.55 31.65 219,500
1-Feb-06 32.28 32.33 31.75 32 137,900
31-Jan-06 32.15 32.5 31.87 32.06 179,100
30-Jan-06 31.68 32.36 31.55 32.05 276,300
27-Jan-06 31.38 31.8 31.34 31.75 119,000
26-Jan-06 31.66 31.94 31.04 31.38 181,800
25-Jan-06 31.95 31.95 31.01 31.56 263,500 (buy 31.56)

AIC- Buy 7 days out on first day up after down trend.
Date Open High Low Close Volume
3-Jan-06 6.46 6.53 6.26 6.42 513,400
30-Dec-05 6.48 6.48 6.35 6.46 457,700
29-Dec-05 6.55 6.62 6.5 6.51 549,200
28-Dec-05 6.42 6.56 6.33 6.56 552,000 (short max $0.09 P)
28-Dec-05 $ 0.34 Dividend
27-Dec-05 6.7 6.85 6.57 6.75 287,000 (sell 6.75= 0.94P)
23-Dec-05 6.49 6.73 6.49 6.69 168,000
22-Dec-05 6.36 6.48 6.3 6.45 159,200
21-Dec-05 6.25 6.34 6.23 6.31 393,300
20-Dec-05 6.1 6.23 6.07 6.23 377,600
19-Dec-05 6.13 6.34 6.1 6.12 305,100
16-Dec-05 5.86 6.1 5.85 6.1 740,400
15-Dec-05 5.67 5.82 5.6 5.81 1,460,700 (buy 5.81)
14-Dec-05 5.71 5.76 5.58 5.65 881,400
13-Dec-05 5.74 5.87 5.67 5.69 467,200
12-Dec-05 5.95 5.95 5.75 5.75 329,400
9-Dec-05 5.92 6 5.85 5.88 237,400
8-Dec-05 6.01 6.03 5.88 5.94 222,200
7-Dec-05 5.99 6.03 5.88 5.94 240,400

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