Wild, Wild West

Blog updating:

We got a few new friends from Thailand, Italy, welcome. But most of you are located in US (200 of unique visitors), every day we add 20 to 30 new visitors.

We have more than 400 unique visitors now, totally you have visited 1,498 times. Thank you.

Market picture:

Market found a bottom at August 16th, now the market tries to re-test the bottom. While anything can happen in the future, but most likely this is just like last a few times, buy on dip is the right strategy. Smart money bought NASD more than any other index. So next section up most likely be the technology. So be prepare.

Remember, when I say re-test, it does not require that we go down to all time low whatever Aug. 16th's tape created. It only requires that it goes down a little and finds a lot of support, the big guys jump in, print a heavy trading day, then we are done! There is a hole on the VIX index, when this hole gets filled, market soars.

Next two posts will be - Money Management and Big Pictures, so come back to check often.

I still reiterate buying ABMD and RZ. I bought a few shares of ABMD, it ran up nicely, so let's work on RZ:

This particular strategy is very aggressive, looking for strong stock got a recent dip. RZ went from $6 to almost $16 in 6 month and Aug. 16th got an exhaustion, dripping down ever since. Recent earning report was a positive suprise, smart money bought into it. If the big market turns around, it will continue to go higher. Similar to CFSG. It got a positive CMF > 0.10, getting close to 20 SMA, it has been it's support. When it gets close to it or touches it, it will fly again.

Again, investing involves risk, nothing is a sure thing, it can break through this time. So risk only certain percentage of your money, give it a few days to see what happen.

Good luck,

Swimmer

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Wall Street Actions Interpreted

Yesterday Dow went down 280 points presumably because investors found bad news on Fed Open Market Committee's notes. Then how do you explain today's action, up 240 points, did investors find good news when they read the notes again?

No, none of the above, the market has it's own little brain, it can go up or down without any obvious reason.

So how can we read the news to make any judgement of the market? It turns out that you don't have to, let the big guys do the readings and make their move and we just follow them, it's called following the smart money.

It turns out that big guys like to buy when we are all scared. In order to find out when we the small investors are scared, they compiled an index, called Fear Index VIX. Very, very smart money read all the news make a prediction and buy or sell the index. So how many of us know the existence of the VIX, let along trading the index by future options?

Now, even for the big guys they are still categorized into two groups: Commercial (very smart) and Large Traders (not so smart, trend followers). Because they are so smart and have so much money, SEC ask all of them to report their positions every Friday. Just to show you how smart the Commercials are, from July to mid-August, the commercial traders were big buyers of the VIX index. As you can imagine, in the middle of subprime turmoil the fear index grew from 10-15 up to 35, they made a lot of money. However, in the mid-August, the VIX peaked and the smart money reversed their position, start selling the index. How smart they are, indeed.

Now, look at the VIX index itself, it's very spiky, registers all the investors emotions, it has a distinctive characteristics: whenever there is a big jump, up or down, creating a hole, the hole will always be filled!

Okay, last Friday for some reason, investors extreme optimism pushed Dow to the overbought region.

Back to the market behavior, as I said, the big guys really like to buy when we are in panic selling. Mid-August's action was a violent selling followed by a big reversal, everybody knows that it was a bottom. But when it comes to buy stocks, the big guys are as shy as a three years little girl, they won't start buying until the bottom is re-tested. Because eventually the market direction is determined by supply and demand. If at that price level, there are more buyers than sellers, that is a bottom. There is only one way to find out, the MM is going to run the market down until it hits a point where a lot of buyers jump in, they are pretty sure that's the bottom, last a few days the volume is thin, so we are not there yet.

Tuesday's action actually created a hole on the VIX index, that's why I was pretty sure the hole will be filled. It came as a surprise that the hole was totally filled today and we enjoyed a bargain hunting session with low volume. Before Labor day the low volume is pretty normal. How will the market force unwinding in the future? We will keep an eye on the smart money. Please come back, I will put a link on the indices I talked about.

Good night everybody,

Swimmer

New Long Picks

I don't have much time, but I scaned through with one of my strategies, it came up with two candidates:

ABMD
RZ

My computer is slow, I checked RZ, it's interesting and I like it, I don't have too much time to look at ABMD. Please do a little DD to see which one you like.

The next post will be titled as "Wall Street Action Interpreted". Stay tune.

Swimmer

Pretty Pictures

Shanghai	"The Lake of Heaven"

Jim Roger - The Investing Guru - Quantum Fund Co-Founder - Author

Sell CMG

Here is some sense behind. Not long ago, I posted comments on CMG, the reason behind it was that if you look up at Yahoo you can find:

% Held by Institutions4: 125.90%

Okay, if a stock got it's stock owned 100% by the big guys, they started hype it, what is the consequence?

In this case, mutual fund managers own up to 125% of the company's stock, so regardless what Cramer say, I wouldn't buy it. When condition is right, I will short it.

This is some of the examples how do I follow smart money.

Thanks,

Swimmer

Tax Rebeling

I am impressed with all your comments and voting. Thank you for your confidence and encouragement. We also got a few new friends from Latvia, Saudi and Greece, welcome!!!

My duty is to try my best to give you the best advice, hopefully all we can make some money and keep you guys coming back.

Let me ask you one question: if we the people (doesn't matter which country you live in) decided all together one day that we are not going to pay any taxes anymore, guess what will happen?

Well, the answer is -- the government will not get any money, period! You see, if we all decided, refuse to pay taxes all together, the government can not do anything about it, they can not arrest all of us (no room in jail), even they can try, but they got no soldier to arrest us. Isn't that cool? That's the people's power!

You see, right now, we look at each other, individually we decided to pay tax because our next door neighbor is doing that, so on and so further, we ended up everybody is paying taxes.

By the same token, when we play the market, we can stay together, tell the house, we are not going to let you taking advantage of us anymore. We can watch the house's every move, if they want to bring the market down we sell shorts. If they buy at the bottom, we cover shorts become long again. This is the right way to swim in the heavily manipulated financial market.

I spent sometime to get short selling model to work, as some of you noticed, it's working very well. I previously thought I should not give more than a couple of stock picks per week. But your response to my posts and polls impressed me, so I decided to post another short candidate:

PCN - on the short side.

Invest carefully, good luck to all.

Mkt Swimmer

Market View

Comments for the week or days ahead.

In a way, we are bad investors. For Buffett, he just look at the economy, if the economy is okay, he just buy every dip and hold it for a long term. Over times, you will make a lot of money.

Look at DOW index, it was 100 at the turn of the 1900, now we are debating if it will break 14000 or not, so even it drops to 10,000, what's the big deal, you just buy more.

Well, if you have 10 billion dollars, you can just invest like buffett, you are pretty much gauranteed to get 10% returns. But for guys like you and me, we want to take a ride when market goes up, and we max out. When market hits, we don't have ammo's to buy dip any more, so we end up always lossing money.

Now, for the week ahead:

Smart money destination, unclear. Those guys added more positions on S n P. Mysteriously, sold off for Dow, Nasd and Russ. What happened?

They all predicted there will be some kind of pull back, and they know after that is a big up side. They waited, waited for the dumb money, small investors to sell, but nothing happened. So they are waiting. But most commentators expect a pull back, see below:

Tech Analysis

Reiterate: CFSG is a buy,
Look for a decline on EPR.

Enjoy,

Swimmer

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Happy Weekend

Hi Everybody,

I promised to put up a poll and I fulfilled my promise yesterday. Thank you for your support, I got more than 30 people checked with the poll and 9 of you registered the votes. It looks like most people want to see more comments, that's exactly what I am thinking of doing.

Do you prefer more Cramer stories, comments or stock picks?
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Market Swimmer, as digital bits of information, has lived in the cyber space for 2 weeks now. I just checked on the traffic meter, we have had 284 unique visitors and 1003 hits on the internet since I set up the meter ~10 days ago.

"Market Swimmer" is a searchable phrase in cyber space now, if you ever forget my URL, just google me.

More impressively, Swimmer has met 132 new friends in the following countries:

The US
Canada
Australia
India
Singapore
Germany
Netherlands
Portugal
Vietnam
Spain
France
Estonia
Brazil

I looked carefully on the pie chart, I found 3 more countries: France, Estonia and Brazil, thanks for coming!

What can be more fun than this? Just to show that Swimmer is not purely a virtual phenomenon (nobody wants to talk to a SIMON), I am going to give away some secrets of Swimmer's life little by little.

Swimmer learnt to swim in a hometown river naked at a very early age, but him wife just started learning swimming recently. Her fearful experience coincided with the market panic selling which peaked around mid-August, which inspired Swimmer to get on the internet to share his eccentric market views and trade "black humors" and laughter's.

After all, investing does not have to be dull, you can still have some fun.....

Swimmer is an idealist, he believes that in long term stock price should track the company's future earning potential, so buy the lowest PE if you can.

Swimmer is also academic, while in short term, stock price moves like a random walk, responding to any kind of news, rumor, hyping, fear, positive earning, insider selling. Charles Dow once said investors are constantly discounting stock prices based on the newly available information.

Even worse, Harvard professors believe "market efficiency" theory, which means you can not make an abnormal return (beat the market) by studying the numbers, watching the charts, the strongest form of the "efficiency theory" says you can not make extra profit even by using insider information! I am not sure I can believe that.

However, Swimmer is a big skepticism monger, conspiracy theory believer. He believes British Royal family killed Princess Diana, and there is always a big invisible hand trying to manipulate the market. So on a truth finding mission he does not trust Cramer, Herb Greenburg, Burnanke and any self-claimed fortune-teller alike. He is a confessed data-junky (he got a PhD in this country, he still has problem with grammar and choice of words, maybe computer-geek is more appropriate?), before he believes any thing or make any claim, he has to find some numbers to back it up. That's why he likes to chase smart money flow, and wants to know how the big players in the market puting their bets.

Although Swimmer warships Buffett, by no mean he is a buy and hold long term investor. He believes that even everything is wonderful for a company, the "big-hand" can beat up the stock to its death, keeping that stock price depressed forever. He believes play both sides of the market, going short or long, making profit from the trails of information the big-guys left behind.

Good news, Swimmer started a small model portfolio (with real money in a real broker) from last November, to date, the smart money portfolio has gone up 96%. Swimmer's goal is to double the portfolio every year, which the academia said it's impossible.

Swimmer is a big believer of Stockbee's methodology (I know most of you are Stockbee's fans as well), especially the way Pradeep deals with the numbers. Swimmer wants to get Pradeep's list, uses a computer algorithm to find 1 or 2 stocks per week, takes bold action, puts a stop loss right below the purchase price, moves the stop price every day, and keeps the stock until it trips the stop. This way, you take away the interference of human emotions (fear and greed). By the way, Swimmer is not afraid of bear market, in that case he is going to short stocks every day.

I wanted to keep my comments short, unfortunately it's too long again. Don't worry, I will shorten up a little tomorrow.

But for the mean time, have a nice weekend everybody.

Hope to keep you coming back often.

Swimmer

Market Moves

This morning some good numbers came out, but bears don't budge, the market is still dropping. Well, internally the market is doing not that badly, the smart money is pretty neutral right now. Well, the short stocks I picked are dropping very nicely.

Well, one of my prior pick CSFG is doing very nicely yesterday and today. But if you didn't pick up, I don't recommend you to jump in right now. But don't worry, you will have plenty good opportunities later on, I will give a bounch of picks for next week.

On the safe side, if you want to play short, here is another candidate:

SEAC

Enjoy,

Mkt Swimmer

Bear Trap

Today's volume was low, and the smart money flow back to sell positions now. Likelihood is that tomorrow will be a down day. The big boys will put some fears into the market, and set up a Bear Trap. So what do we do?

To protect ourselves, I fired up and looked for a few short candidates:

THQI
ABG
WM

Let's see how the market force unwinding and as we learning to swim.

Mkt Swimmer

Oversold market

Last night, one of my indicators pointed to a higher open for today, I didn't know what caused smart money to buy aggressively. They have been wrong lately. But this morning I saw the headline -- takeover talk sends future higher. Remember, there is always something they know we don't know.

I started my search engine and generated the following picks:

AL
ALTR

They are fundamentally strong, one of them is oversold and a rebounce is due.

Have fun.

Mkt Swimmer

P.S.:

For reasoning behind, see the link:

Financial Sense

"ANATOMY OF A BOTTOM"
by Puru Saxena
Editor, Money Matters
August 22, 2007


After going through all the technical and sentiment data available, I am more convinced than ever that a major bottom was formed in the markets last week. Below I present the reasons –

a. Volatility Index (VIX) which measures market fear surged to 37 intra-day on Thursday before reversing and settling at 30. On Tuesday, it fell further to 28 - we may have seen the top in the VIX.

b. On Thursday, over 1,000 US stocks recorded fresh 52-week lows and only 10 stocks hit new highs - this extreme reading is a symptom of a severely oversold market

c. The Put/Call ratio, which measures the number of put options (bets on the market declining) versus call options (bets on the market rising) reached 1.3 which is even higher than the level recorded at the bear-market double bottom in October 2002 and March 2003. The current reading indicates that the majority of market participants are positioned for a further fall and not many are betting on a rise. Such a high level of bearishness is a great "bullish" contrarian signal.

d. The latest survey done by Investors Intelligence shows that the level of bullish advisers has shrunk to 43% from close to 60% which is consistent with previous market bottoms

e. The Bank Index in the US (a leading indicator) also bottomed last Thursday and has been leading the advance off the lows

f. The Fed cut the "Discount Rate" by 50% and this is a sign that it will probably cut its Fed Funds Rate at its next meeting. Rate cuts are bullish for assets and negative for the US Dollar.

g. Finally, Thursday marked a "key" day reversal. In other words, after being down significantly during the day on massive volume, US stocks managed to close higher representing panic and capitulation.

So, you have to ask yourself the following question:

If the capitulation has already taken place as evidenced by Thursday's data and the majority of market participants/advisers are now stark bearish, who is left to sell???

Cramer, the King of Market Cheerleader

I don't mean to be picky on him. Look, we just published his Video of his CNBC show and made some comments about him (good or bad), today I can not help to notice that Barron's published an article about him, too:

Shorting Cramer




Listen, I like the guy, he is smart and he tried his best to make you money. I would suspect any other guy doing the show like his would take advantage of his audience and make a penny or two (imagine, he buys ahead of time, when you buy he sells), but I never expect him to do the same. And he didn't, the Barron's article confirms that. My wife is hyptical about his yelling and chair-throwing actions, I don't, I think he is funny. I indeed learnt a lot from him. He mentioned a few defensive stocks and speculative stocks, I made two indices on them. After half a year or so, I did see the expected effects (If you like more info, I will publish them later). That's not the point, the point is you can not take him recommendation as face value (should take some entertainment value first) and go to buy the stock the next day.

You must be so disappointed when you find out -- after saying all the "Booyahhh" or the like -- you bought the stocks you trust so much, that you are so sure it's going to explode, but soon to find out that a few hedge funds shorted these stock right after you bought them!!! You should blame yourself, you left the meat on the table!!!

So that went wrong????

As I mentioned in the earlier post, confirmed by the Barron's, that when hundreds thousands people are watching the show, when everybody rush to buy them the next day, it creates a nice "overbought" situation, that it's so hard for hedgies not to take advantage of. Even Cramer admitted that if he is running a hedge fund he would use this strategy. It does not mean those hedgies are bad (damn it, they are bad!!! They are stealing money from the innocent people -- I call them grandmom, grandpa, but some of them are so young on the show....).

Alright, that's enough for complaining. Actually I am writting this not to demonstrate I am smart that Barron's (as prestige as Wall Street Journal) agreed on my view points (my post was on Friday, by the way), I am writing this because there is a lesson to be learnt.

In the investing community, it's widely excepted that there are two groups of investors: one is value investors, the other is the technicians. Accordingly, when you look for your stocks two buy, you have to consider the market participants (find the beauty pageant that not you think, but everybody considers the prettiest), which means you have to consider both fundamentals and technicals.

If I can get my way, I would add the third important factor, that is investor sentiment. When my daughter got her training, the first course was statistics, the second course was behavior investing.

Even with the strongest fundamentals, don't buy any stock which is overbought -- This is the lesson of today!!

As I am waiting for Pradeep for his new list, may be we should put Cramer on consideration. No, not what you think, I am not going to short Cramer (especially I just cursed the hedgies really good). The Barron's mentioned (Cramer agreed) that if you wait for two weeks then buy some of his recommendation, you actually can make a nice profit. So the idea is get his stocks after two weeks of recommendation, put the list on my spreadsheet, find stocks based on Fundamentals and Technicals and Smart money ownership, it may be a nice strategy.

Here is the website of Cramer stocks: www.yourmoneywatch.com

Please make your opinion registered, I still need to make the survey to work.

Good night everybody,

Mkt Swimmer

The Poker Game

My daughter tells me that investing is like gambling in the casino, the house has tremondous advantage. She always tells me, dad, you should pick up a few good mutual funds, don't try to pick up your own stocks, you have no idea how the big guys trade against you and put you in the lossing position.

Well, I am not a gambler, but when I go to Las Vegas, I only play the BlackJack. That's because it's the only game you can actually beat the house. An MIT professor used computer to study the statistics of the game and published a set of rules called "Basic Strategy". If you follow these, lossing edge for you is about (I forgot exactly) 3% (now, it's confirmed 0.5%, check on this: Basic Stratety" ), that's probably better than any game in the casino. But if you are very smart, do the card-counting, you can actually gain a winning edge of up to maybe 5%!! That's why every casino has a list of people they don't want them in, if you are a good mathematician and on their list, they will politely ask you to leave, if you don't they will arrest you.

The whole strategy is based on the ability of looking at the dealer's card facing up.

Imaging, just imaging for a moment now (I am excited now, like Cramer, ), if you can peek into all the dealer's cards, face up or face down!!! Do you like to play the game?

What's the game where you can see all the dealer's cards, you may ask? That's the stock market!!!!

What happened is that there are various reporting requirements from the SEC, one of them is that the insiders (CEO, corporation officers, 10% winners) need to file a form called form-4 to disclose what they buy or sell within 2 business days of the actual transaction!

It drove Warren Buffett nuts, he always apply for exceptions, because he is such an investing guru and his portfolio is the most emulated one in the world. A little while ago when the stock market started going south, I was looking for a short, I noticed PTR -- a Chinese Oil company was overbought. I closed my eye and pulled the trigger (it was a difficult decision because I knew Buffett owns it), the next day, the news broke out that Warren Buffett reduced his holding of PTR (don't try to look for this one, he actually sold on Hong Kong market) and the stock got a nose dive from 150s down to 120s. I got a nice ride.

Smart money chase is not limited to form-4 which you can find them on EDGAR database. There are several other filing requirements for the big guys. For instance, the big guys are always heavily betting on the futures market. SEC also separate them into several categories such as "Commercials", "Large traders" and "small speculators", they need to report their positions every Friday. People organize them into various forms and if you are interested in you can click on the following links:

BuyTheBottom.com Nasdaq

Are you surprised when we are all panic and selling, the commercials spiked up to buy the NASD future? Are they out of their mind or they knew something we don't?

Another example:

ALL-INDEX COMMERCIAL TRADERS POSITION


This is what they called COT chart, Commitment Of Trade, from which we can see that the commercial bought heavily on SPX (25 billion! Oh, such a pig! They ask Cramer to do the show of crying, so they can be benefited from the whole situation, come on!!!).

Have fun everybody,

Mkt Swimmer

Cramer Got What the Street Wants

Hi,

Happy Friday!

We just had a great day on the market. I am really impressed by Pradeep's ability to get deep insights of the market and his prediction of the market turning around. That's why I think in order to avoid potholes on the road of investing, we can not let us be driven by fears and emotions. We need the expert's eye and the help of the computers, which can process the data much more efficiently (without emotions!) and give us the buying and selling signals.

If you listen to the Wall Street talking heads, you are easily scared and sell your value stocks just at the worst moment possible. Just give you an example, this was how Jim Cramer letting out his emotions on CNBC, I found the link on uTube:

Cramer is Making His Points

That was a few days ago when BSC was taking a hit. Personally I don't think FED should cut the rate to save those mortgage companies and hedge funds alike, just like they took the risk made the bad bet (made tons of money) when things go bad there is always the fed to save them. But on the other hand, FED indeed cut the discount rate today the market went up. Let's celebrate it!!!

Stockbee gives us a list, I want to help by selecting a few stocks every week, hopefully I can provide a starting point from where we can all do some DD ourselves. Digital community like this is wonderful, we can all share our ideas and hopefully we can learn to swim in the market place.

A side note, I have been on the blog for a little more than a week now, and today we passed 100 "unique visitors" mark (that means if you re-visit me in a certain time frame they still count you as 1 person, every new visitor is counted as a unique visitor), totally we got more than 300 hits (on average you have come back 3 times). I saw there were 5 searches from Google and AOL. I googled "marketswimmer", it's there! I feel gratified!!!. Here is the visitors break-up (don't worry about your privacy, that's all I can get from the traffic meter, I don't know anything other than that). We got one visitor from Singapore today, welcome. I am in Houston, TX, USA, I will update my profile later. You are the motivation which keeps me going. If you like this blog, you can put down your comments, put a link on your blog or profile, or let other friends know. I appreciate all the effort. If the traffic keeps going up, I will add a survey part, that will be even more fun! Every once a while, I will provide some picks along with some humor and laughter.





Today's pick: GTLS

Really appreciate your support and talk to you later,

Mkt Swimmer

Beauty Pageant Competition

First of all, any lucky ones saw my post and picked up a few shares of BAC, I salute you! I did myself and got rewarded.

Investing is a game, sometimes it's worth to follow the smart money. I checked on his portfolio, similar holding such as WFC is also breaking out.

I promised only to give one or two picks per week, I am violating my own rules now. I saw quite a few checked my website, some from Canada, India, Indonesia and Austrilia (majority from the US). I am motivated to do a little more.

Invest carefully.

Mkt Swimmer

The Smart Money

Market remains volatile and dangerous. The Dow declined 790 points in 5 sessions, amounts the biggest consecutive drop since March. Well, the street always wants to get 10% corrections before they can start buying (8% now, be careful on what you wish for!), is this time any different than March sell-off? Is this another hard to come by "buy the dip" opportunity? I give you both sides of the story and let you be the judge:

Housing sector is definitely getting worse, hedge funds, even big banks who made bad bets are in big trouble now. Sub-prime mortgage credit problem is spreading, a lot of Wall street talking heads are talking about recession. Herb Greenberg is excited, usually it's not a good sign. If you still have any doubt, please check the link: The Subprime Mortgage Market.

On the other hand, the investing guru I happen to admire, Warren Buffett recently bought shares of Bank of America (BAC). If we are heading to a recession, I don't think a smart guy like him would buy the worst sector (Financial) at this moment. Today was the last day of the hedge fund "redemption", those who made bad bets probably were force to sell their shares to satisfy their client's requests. Well, Friday is the option expiration day, I heard the hedge funds are selling puts heavily, betting the market will turn around. Are they making a big mistake again?

See this comment from Hard Right Edge.: "Many hedge funds sold puts ahead of options expiration, believing the worst was over. These folks are making the kinds of trading mistakes that rookies are taught to avoid in their first weeks of market education."

Please make your comments,

Market Swimmer

The Number Crunching Games!!

Good luck to some of us who bought KAMN! It's not a bad start!!

Being small individual investors, we are swimming in a water with many sharks around us. So how to avoid being their prey? We need to be careful, very careful. I am not the guy listen to Jim Cramer saying buy, buy buy!!! and then buy the stocks he recommended. With all the due respect, he is a good guy, both educational and humorous. I learnt a lot from him. What happen if you buy the stocks he recommended, because so many people are watching him, whatever he mentions, it will jump $5 in the morning, you buy at the exactly the wrong moment, you will be killed.

So if you don't listen to him, where do you get information for your investment decisions? I check with numbers, a lot of them.

There are several groups of people in the market, some of them called themselves as fundamental/value investors, some of them are momentum or chart readers. That means you have to look for fundamentals and technicals. That's not enough, remember what I said about sharks? These are hedge funds, short sellers, to certain degree the big firms like GS, MER. Their analysts provide with you with buy or sell "recommendations". Guess waht are their intentions, they want your money. That's why you thought you found the absolutely best stocks in the world, the next morning you would get tremendous amount of selling pressure. Guess who are doing the selling, the big guys who recommeded you the stocks. They got into these stocks long time ago, and their portfolio went up 100%, they need money to buy new stock, they sell them to you. They got a lot of suckers taking in the bait! Whoosh!! We got killed again!!!!

So what we gonna to? We want to watch the fundamentals, technicals and keep an eye on the smart money. Fortunately SEC required them to do a lot of filings, and we have the EDGAR database. You can get all sorts of information if you have the desire. If you want to find what GS is buying, which stocks they are holding? You can find them there. You want to know what Warren Buffett are buying or selling? You can find them there, too.

Nowadays, we have access to a great deal of information that we did not have before. So how can we make efficient use of it all? We are in the age when digital communities are so popular. We have you, me and Pradeep!!! We can find all kinds of information and share it with each other, we can trained to be good swimmers in this dangerous water!!!

If you are confused about which stocks to buy from Pradeep's list, I think I can be helpful.

I monitor many numbers, but they mostly fit into the following categories:

(1) Fundamentals
(2) Technicals
(3) Smart Money Flows

I created a file with 39 columns on it, covering fundamentals, technicals and smart money flows. I use them to build a model, try to use artifacial intelligence (AI) algorithms to automatically extract which parameters are important in determining the future stock price movement. Of course I need to calibrate my model often so that it's always reflect the current market conditions.

My intention is to find 1 or 2 good candidates every week and post them on this site. I don't expect every one of them will turn into a super star, because nobody can predict the market with 100% accuracy. You just can't, it can not be done! The market is filled with many emotional people, some of them are happy, scared, hopeless, nobody knows exactly what they are going to do with their money. The only hope we have is to check as many parameters as possible before we invest, statistically we will have higher winning odds than the fellows who don't do their homework.

My model can crunch all the numbers to find out if the big guys are buying or selling, then if I feed Stockbee's list, it will select the best stocks with strongest fundaments and enable us to buy them at the best possible entry points.

Let's see if this approach works.

Good luck to all,

Mkt Swimmer

Moment of Truth

Hello Everybody,

As the market condition improving, I used my computer program to select two buying candidates for next week. Here they are:

KAMN
USM

Please remember, these are the selections made by a computer based on various fundamental and technical criteria, in other words they are mechanically selected. So I expect you to do some homework and make your own decisions.

These selection were based on Stockbee posting on Tuesday, August 07, 2007, in the category of "up 25% plus in last 65 days".

Enjoy,

Mkt Swimmer

The Short Side Story

I fired up my computer, checked the smart money, it looks they all chickened out, it looks like a down day again tomorrow.

I used Stockbee's list, found this stock to short:

CMG

My, my, it's my favorite lunch place. I like their Mexican wrap. But business is business, the stock is overbought, due to a retrace, especially in current market condition.

Trail PE of 64, forward 43, too fat!! It's a successful IPO this year (better than BX), but I am going to sell, sell, sell !!

Gratified for your comments.

MktSwimmer

Swimmer's First Lesson

I checked it on another computer, it looks my blog is working, now I am ready to post something.

My wife is learning swimming recently, I tried to convince her that she can float, she was not convinced. She said every time she tried to release her floating aid, she felt sinking. One day, I bought her a Snorkel, the device she can put on her mouth to help her breathe under water, and she learnt to swim in 1 second!!

Why I am telling you this? Is there any parallel to the market? My answer is yes!

So, what drives the market, fear and greed? Fundamental and technicals? Rumor and insiders? Big boys on Wall street and small investors (grandma and grandpa) on their kitchen counters? All of these above!!

Yesterday Dow went up 300 points, and today it went down 380!! So you are talking about confusions, from the big guys to the small guys, nobody knows where the market is heading. Yesterday, Dow went up, people are screaming, market bottomed out, bottomed out, you need to buy, buy, buy, with all your money, until there was a rumor, GS will make some announcement, Dow crashed 300 points. Later on, GS said, there was no announcement, then in the afternoon, Dow recovered and went up 300 points. Every body said no problem, the worst is over, I am glad I bought 100 Call contracts of QQQQ, great!!!

Well, in this morning, a French guy said, US mortgage is in big trouble, blah, blah, (like we did not know this before) the morning premarket went down to 180 points. In the morning, every said no problem, a buying opportunity, Dow went up in the mid day. Then afternoon, okay we are tired, everybody is selling, Dow ended down 380 points.

Cramer went crazy, everybody went crazy, is that any Buffett, long term investors here? Come on, you are here for a long hall, aren't you!

Alright, that's enough for complaining, everybody is scared, okay everybody is a gambler, you tell me you didn't trade in the last a few days? Give me a break!!! Every trade made money?? Give me a break.

What I am trying to get here is, when I put down my bet, I have to base on something. I can not look around, grandma is scared, she is selling, that's why I am dumping all my portfolio. Okay you can not listen to your brokers either? Why? They are your worst enemies! Whenever they tell you to sell, guess what, they are buying. And vice versa. Why should they tell you the truth, after all, they have to make some money, too. Look how much GS's former CEO bonus was, 200 millions! Where do you think they came from? All from your grandma, my grandma's accounts. The truth is the big guys have the quickest computers, they look at your face, they take your pulses, buy all the stocks you scare to sell. Rob your bank, legally.

So as small investors, what can we do? Well, I am one of the dummies happen to believe that we can learn how to swim in the market. That's why I am a market swimmer.

Okay, cut the story short, nobody is listening to me anyway. My idea is whenever you put your money on the table, before your bet on one way or the other, you need to check on the big guys, how they put their money, it's called following the smart money.

Second, the information is the key, we need to check everything. Forget about P/E ratio, you can buy a PE of 5, and in the next morning it will fall like a rock! Well, I am a long term investor, the stock just had a bad day. Hold it on, hold it on for a long term. Close you eye, check it next year. Next month, you will get a letter, saying the company you owned just filed bankruptcy!

Okay, so the information does not stop at PE, cash flow, Buffett needs to know the money flow for the next 5 years. I am lucky if I know how the company will do the next day.

So this is the information age, we just need to follow a system, don't listen to the talking-heads on the street, you will loss your shirt if you do.

Okay what do we follow? I like to dig into the creepiest things in the world. But I can not follow everything, I have to establish some system. I am still experimenting, but I hope I can share with you something, and learn from everybody willing to share. Okay there is the story:

(1) Follow smart money
(2) Collect all the information, as much as I can
(3) Put the data in the spreadsheet, and find some parameters, let the computer tells me what to buy and what to sell.

So I like Stockbee's strategies, they make a lot of sense, here is what I do on my part:

(1) Based on the smart money I decide to buy or short
(2) Put Stockbee's list into my computer
(3) I use multi-dimensional criteria to select the stock to buy or to sell based on Fundamentals and Techs.

I will post my picks on this blog!!! Let's united together, otherwise we - the small fish - don't even have a chance!!!

Hope you are not too tired to read all the junk thought.

If there is anybody there, please let me know.

Good luck, MktSwimmer