Jon's Trading Points Blog Achives
Jube 2007
Fed Speak June 28th
Fed says, “Looking at economic conditions, Fed officials said readings on "core" inflation, which excludes energy and food prices, have gotten "modestly" better in recent months.
In noting this improvement, they abandoned language in previous statements that described underlying inflation as "somewhat elevated."
Even so, Fed policymakers continued to identify the "predominate" risk to the economy as inflation's failure to moderate as they now anticipate. "A sustained moderation in inflation pressures has yet to be convincingly demonstrated," according to the statement.” This explains why stocks went up, went down, back up, then reverted back to flat. The FED basically is saying we are going to wait for something to go wrong either way, before we make a move, while hoping things work out just perfectly. I think this puts earnings back in as the primary focus, and hopefully we will run up in anticipation and sell the news.—Jon
High Risk Play MED in Focus June 29th
Headline,” Kristy Swanson of Buffy the Vampire Slayer Movie Fame Joins Emmy Award Winner, Genie Francis of General Hospital Fame as latest Medifast Celebrity Spokesperson.” This stock is flying under the radar so far, but a big TV campaign and push by Hollywood could soon change that. March 2006 to June 2006 this one ran from $6 to $20 in a hurry. Keeping our eye on this one.—Jon
Daily Set Up in Focus SNCR June 27
Headline, “"IDay" could be a big payday for Synchronoss Technologies. The Friday iPhone launch already has helped the stock price soar.” The stocks in our portfolio are researched and there for a reason. It will help ones trading if time is spent getting familiar with the companies and seeing which ones peak your interest. One that might benefit from the I-Phone, for now has my interest, which is why they are on our list. Good for $2 today from the Daily Setups.—Jon
Playbook June 27th
The current environment is very negative. Even though the averages are holding up, underneath stocks are slowly crumbling. I am looking for the FED to provide much needed fuel for the bulls to charge with. Even though our Reit CNS is down about every single day, on the under $10 stock list, a new REIT pops on the scan. So seems clear that investors are jumping ahead of the Fed and still predicting a rate cut. I for one am also in that camp. This housing decline, along with additional hedge fund blow ups calls for a Fed that is ready to inject some cash into the system quickly. If we still get language that is hawkish on inflation, we could see Dow 13,000 in a hurry. However if that language is softened, we will be knocking on the door of Dow 14,000. I know we are feeling some pain right now, but its important to take an honest assessment of ones self in order to win at this game. I trade differently than any book one might read on the market that tells us to never be down on a stock. The reason this sounds good on paper, but is flawed in the real world is the human bent on error. The reason we are down is not because we forgotten how to trade, the reason is we are momentum traders and currently the market is fresh out of momentum. If we were to quickly exit the stocks we are in, and not have a clear understanding of why our trades are not working, we would only find ourselves jumping back into to something else, and getting the same result. Soon enough, small losses, and broker fees, turn into to large loses. My trading style says remove the human error of over trading, realize for now that momentum is dead, and leave our cash tied up in A+ rated stocks, that will move higher once the momentum returns. This style of trading, has consistently delivered many great returns year after year. Its takes patience and a little bit of an iron stomach, but always rewards in the end.—Jon
Focus List Stock in Focus VMSI June 26th
Headline,” Shares of Tucson-based Ventana Medical Systems Inc. skyrocketed by nearly 50 percent Tuesday following news that Roche Holding AG had initiated a $3 billion hostile bid for the company.” Good for 24 point gain today. We will be in one of these when the news comes out, one day.—Jon
No Set Ups for Tuesday June 26th
We are not bearish, just no reason to make a move tomorrow. Really need to see some buying come in tomorrow in order to give us a few good set ups.--Jon
Good Day for Golf June 25th
The battle lines have been drawn. The bears have successfully defended DOW 13,500, the bulls have defended DOW 13,000. When we see whip saw action like this, with sucker rallies and trap door bottoms, best to sit tight and play some rounds of golf, otherwise we will only be making our brokers rich as we jump in and out. I think the bulls have a big closer we are going to bring out on Wednesday, to help send this thing higher.—Jon
Using the Daily Set Ups Pullback Box June 24
"Why do you look for consecutive down days for long positions or consecutive up days for short positions?"
This was the basis of an email that I got from a trader the other day. I realized that I never really explained why I think it is important for swing traders. The reasoning behind it is simple.It is MUCH easier to see the transition between buying and selling pressure when looking at consecutive up/down days. Here is a chart: 
This stock had four consecutive down days (highlighted). On each of these days the sellers were stronger than the buyers since they were able to close this stock to the downside. So far so good for the sellers.
Now look at what happened on Friday (green arrow). All of a sudden, there is an up day. The sellers are no longer controlling the direction of this stock. The buyers have taken over.
This doesn't mean that the stock is definitely going to go up. But at least we can see the transition happening right before our eyes. It's almost like cheating!
Now look to the left on the chart right around April 16th. See all of the consecutive down days? Things were looking real good for the sellers but then, all of a sudden, there was an up day. The buyers took over and it was off to the races!
So this is really the whole point of swing trading. You are trying to identify the "transitions".
Looking for consecutive down (or up days for short positions) makes it much easier.—Craig
CNS Asset Management Sector June 23
GHL a direct competitor of CNS found itself locked in a vicious sell off but broke the down trend on an analyst upgrade on Friday. 
CNS is gap filling right now, but with this correction, maybe some new buy coverage is in the cards.--Jon
Additions - Subtractions Portfolio June 23
Ok, research is complete and I am very please to announce that 21 stocks were removed from our list, but I was easily able to add in 18 stocks. This is not the kind of thing you see in bear markets, so I am sticking with my call for Dow 14,000. Here is the info-removed from list: AET,CNI,CSX,CVS,DADE,DLLR,ETFC,FLA,NILE,NSC,RRC,SLGN,SPAR,WAB,CBI,CP,EXM,HON,PPD,PCU,FWLT.Stocks added: TWIN,CMTL,TX,GME,SCSC,CLC,FTEK,ARD,DK,FTK,GTLS,RDC,LNN,PDA,ACN,ROC,AYR,FMCN
Daily Sets GES Set Up in Focus June 23
 This one was a repeat on the list, set up on Anthony Scale, Power Rank and had formed a Bullish Engulfing Pattern on Cadlestick formation. Good for $1.73 or 3% gain on a big down day Friday.--Jon
Long Term OEH in Focus June 22nd
Headline,” Hotel real estate investment trust Equity Inns Inc. said Thursday it has agreed to be purchased by an affiliate of Goldman Sachs & Co. for about $1.26 billion in cash.” We have been waiting patiently for Orient to get taken out. I know this is boring because it is taken so long, but being a trader is boring. If your one looking for daily action, being a trader is not the job for you. Traders are at times like Lions, stalking our prey and then pouncing when the prey gets in our buy range. And other times we are opportunity hunters, such as the case in shares of AQNT. When its time to play defense, we look for a situation like this, where we know a 10-15% upside is a done deal. If one needs a high octane, daily action fix, I suggest a Casino or race track. Anyone attempting to get that type of daily high out of trading stocks, will not make it in this chess match between the Bulls and Bears.—Jon
Nice Day for Trademechanics – Looking Ahead June 21
GROW continues to recover and squeeze the shorts. This one has a very small float and it wont take much to send it into orbit. HOS finally starting to base up at $40. I am surprised with oil hitting $70 that this stock is struggling, but we can expect that to correct itself soon. Still looking for $44 a share. ACH continues to power higher as a result of higher Aluminum prices, higher demand, and more so of the limited amount of stock available to Chinese investors. More money, with few places to go, is great news for us. So far we are up $1300 on 100 shares in our long term position. OEH and CNS continue to struggle, but our filling their break out gaps, before moving higher. OEH is a take over target, we are waiting patiently. I still look for a buy out offer between $65-$80 a share. Looking to add 3 more high risk plays into the mix, just have not gotten there yet. I expect the market to reach DOW 14,000 by mid July. Somewhere in that time frame, we are looking at a continued rise in interest rates, another leg down for housing sales, and decreased visibility for US company earnings. All these combined will not be the reason for the market sell off, they will be the excuse everyone uses to pull the sell trigger. The real reason will be and is always, simply that all the money that is going to be invested, is already invested. Nobody else will be willing to commit big money to DOW 14,000, thus we have to go lower. Now, lets do some math. Traders will look at 6%, 10% and 12% correction for support levels. Markets always flirt around with zero numbers. So, if we go down right at DOW 14,000, a drop to 13,000 would be just above the 6% mark. That would be a nice easy number, but seems to clean. If we take DOW 13,000 x 1.10, we get DOW 14,300. So traders know if we can push the DOW to 14,300, then we can get a cleaner sell off down to 13,000, zero number being a nice floor. This seems a more likely scenario. However, a sell of at DOW 14,000 down to DOW 12,800, might be scarier and really shake out all the weak hands, which is the goal. Keep these targets in mind as things begin to play out. For sure a sell off at DOW 13500, down to DOW 12,150 seems too bearish in a Presidential campaign year.—Jon
Nasdaq Resistance June 20th
 The Nasdaq is now approaching its longer term 38.2% Retracement Level near 2645 (point A) calculated from its early 2000 high to the low made in late 2002. It's certainly possible this area may act as a significant upside resistance area in the days ahead. However back in early 2004 when the Nasdaq reached its 23.6% Retracement Level it did briefly rally above it (point B) before eventually going through a multi month pullback (points B to C).--Jon
High Risk Stock in Focus CRNT June 19
Headline, “Shares of Ceragon Networks Ltd. soared Monday, hitting a 52-week high on the heels of an upgrade and positve notes from analysts predicting solid growth for the Israeli communications equipment company.” Shares added to the Portfolio at $7.88 per share, up 38% since then.—Jon
TM Portfolio Stocks GROW & ENG June 19th
GROW has been added to the “shortsqueeze” trigger list on several web services that monitor the point at which shorts will begin to cover. This has helped us recover 50% of our loses, and I expect our negative position to begin to turn positive very soon. Shares of ENG moved 1.50 today or 13% on no news that I can find. Remember to purchase an equal % of shares for each trade, in proportion to your overall portfolio total dollar amount. That’s the great thing about these High Risk plays, we can own 5 of these on average, for every 1 swing trade. This makes moves like we got in ENG today, that much more profitable.—Jon
Set Ups June 19th
There are not any good set ups for Tuesday. The market feels like it wants to move lower and I strongly recomend not putting additional money to work tommorow until we get a less cloudy picture. Checking all industry sectors, I am getting some buy triggers on the 10 year bond, but that is it. In lite of this, looking to make a trade in one of the Ultra Short ETFs or a bond ETF.--Jon
Playbook HOS June 18th
Headline, "Oil Industry Scales Back Refinery Plans, A push from Congress and the White House for huge increases in biofuels, such as ethanol, is prompting the oil industry to scale back its plans for refinery expansions. That could keep gasoline prices high, possibly for years to come." Lets hold to our intial price target of $44 for now, then review. Looks like we might even need to add another oil swing trade.--Jon
Subtractions and Additions June 17
These stocks were removed from consideration for purchase: CNS, EPIQ, FARO, RS, SCHNThese stocks were added for purchase consideration: APC, NVDA, LXUAs you can see, our universe of stocks to consider continues to shrink. This is what we usually see as markets get top heavy, and the leadership that is taking the averages higher continues to shrink.—Jon
Focus List Stock in Focus PENN June 15th
Headline, "Penn Natl Gaming agrees to be acquired by certain funds for $67.00/share:" Had this one on the Daily Set ups last week. Nice gain for Trademechanics!--Jon
The Gift That Keeps on Giving ACH June 15th
Headline, "Shares of Aluminum Corp. of China Ltd. (Chalco) (2600.HK: Quote, Profile , Research), the world's No.3 alumina producer, jumped more than 12 percent to an all-time high on Thursday after Goldman Sachs upgraded it to buy from neutral, citing accelerating aluminium demand." Looks like premarket the stock is bidding up another $3, which will give us a 40% return in the long term holding, not counting the 25% return on the swing trade portion. I had a question some time back asking if I really think its possible that Trademechanic can beat the average stock market return. Considering we are up 70% on the year so far, I dont think that will be a problem. The ACH trade alone has paid for 2 years of subscription to Trademechanic. Stick with us, and tell your friends who are frustrated at small to no gains in the stock market. The answer of course is yes, we will beat the averages by a Long Shot, every year, without exception, no mater what the market conditions are.--Jon
Oil Trade June 14th
Headline, "Domestic crude oil closed above $67 a barrel Thursday for the first time since September on continuing concerns that the refining industry is not producing enough gasoline to meet summer driving demand." Right now we have one swing trade HOS in the mix. I think the oil trade is moving very smoothly, with the volatility at a low. This points to an explosive move either up or down. At this time we dont know which for sure, but I am placing my bets on higher.--Jon
Long Term Portfolio Holding ACH June 14th
Headline,"Aluminum Corp. of China Ltd. topped the list of Biggest Percentage Price Gainers on the New York Stock Exchange at midday on Thursday." Purchased at $29 a share, we think the stock is worth no less than $50.--Jon
Out Of Office June 11th
I have been on the road the last 2 weeks and thus far able to update the web site. The next two days, I will not be in a position to get any research done. For now market momentum is non existent and our current trades are holding up well. I will be able to make further updates starting Wednesday night, and will be back in town next week. We apprecaite you trading with us.--Jon
Additions and Subtractions June 10
Stocks being removed: ATW, CHAP, CPA, DV, EDU, EGN, FRPT, GCO, GMRK, GR, HUBG, ICLR, IDC, PWR, SCA, SGMS, TCKStocks being added: GES, MCD, ETFC, CMCO, TNCAs the market continues to make a top, we are reducing the number of stocks for consideration. If we are not looking at them, then we are not tempted to trade them.—Jon
The Magazine Timing Indicator June 10th
With the declaration of forever low interest rates by BusinessWeek Of course came the break of the long term downtrend in T-Bonds 
However, now that everyone is on this band wagon, together with a nice mini correction in stocks already done, I think the death of the bull is over stated for now.--Jon
Playbook June 8th
No set ups for Friday. The market is searching for buyers and is unlikely to find them going into a Friday before the weekend. No reason to risk getting into a position at this point. We are momentum traders, and for now, the momentum is on the bears side. We are still looking for this market to exhaust into its final high. We appreciate you trading with us, have a great weekend!--Jon
Sleeping Dragon June 6th
I thought we would take a look at the current Shanghai Market Chart:
 Then followed by what will probably happen in the US when things finally change direction.
 .
Interest Rates on the Rise June 6th
Global interest rates are rising as cost to the consumer in everything from steel, milk, gas, etc threaten run away inflation.
The Iraq war also plays into the equation as it is 100% financed with borrowed money. Attached is a daily chart of the T-BOND 
As you can see, the Bond is approaching a level that clearly points to a inflation boom. While I dont think the last two days point to the market top,
It would be a mistake for us to discount the inflation rise that will for sure end the bulls party very soon.--Jon
Gold Check UP June 6th
Gold has been marking time the last 4 weeks, flying under the radar of Wall Street. Many have left the Gold trade for dead. At Trademechanic that is not the case of course so, lets look at the charts to see where we are today. 
As we can see by these charts, GOLD is once again on the move. With interest rates going higher, and the markets looking top heavy, a flight to GOLD is not our of the relm of possiblity.--Jon
Press Playing Both Sides June 5th
Here are the headlines this morning, each about 2 min appart.
"U.S. futures slip as Bernanke holds inflation view."
Then we get, "Bernanke upbeat about U.S. economic outlook". This is the usual set up by the press to make the headlines fit what the market does, not the market acting on the actual news. Its important for us to not look at headlines and TV programs as they rely on drama for ratings, yet look under the hood at the nuts and bolts to make our trading decisions.--Jon
Audio Jon June 4th
I apologize for the lack of audio reports, we have had some trouble with electron Jon working properly. I think everything will be back on schedule tomorrow. Looks like our lone wolf set up today CCJ, was good enough to give trademechanics $1.45 return on a day that saw the markets down for most of the day. The Anthony Scale predicted this one would move higher and it did. Even thoughs it is a Nuclear play, which is all the buzz, the analyst price target is $50 a share and the p/e ratio is way above market norms. So, a next number rule at $54 would not be a bad idea if you own these shares. Lets dont leave out our high risk holding NM. Almost reached our price target today. Good bet we will see $12 tomorrow, with the markets closing in the green. Next price target will move to $14 for NM. I belive we are within a few weeks or days of reach the top for the summer. However, that could take us up another 200 points or more on the DOW before all the bets are in. When I give the signal, we will start adding in the down side protection.--Jon
Playbook June 1st
With the market making new highs, and an 11% profit on the table for the week, we will be looking to exit shares of DRYS into the weekend. Remember the first 30 min of the day is no mans land, stocks are easily moved higher or lower. With luck, the shares will move in our favor, at which point we will watch for a change in direction. We are playing this one tight, so want to defend $41 a share. If stock moves lower on the open, but the market is not bearish in nature, then see if the stock can recover $41 before exiting, but make sure to exit no less than $40 a share. If the shares a running higher, let them run into the close before pulling the trigger.—Jon
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