MDVN Update

This is an update to my original breakout post of 10-4-07 (see below "older posts"). MDVN price action continues to strengthen due to company prospects, as well as recent action in the biotech sector. There is no denying that the stock was on a parabolic tear over the past week. Volume was great, stock clearly broke out of its consolidating channel (click on image below), earnings are coming up and test results are right around the corner for the company. All of this means that, at a minimum, speculative money is willing to nibble and see what it can pocket through earnings season. The next event is the October 11th Bio InvestorForum, which MDVN will participate in - thus begins the 2nd leg of its journey.

Stock Performer for the Day - AVNX +5.06%

The past couple of days have seen long term holds and underperformers move to the forefront. Yesterday was MDVN with a 5%+ day, today it's AVNX. For those not familiar with this low cap optical related tech company, click on the link and educate yourself.

http://www.avanex.com/Aboutus/thecompany.htm

This global company achieved non-GAAP profitability last quarter and recently divested itself from France, which is allowing it to go after significant growth prospects here in the states. Restructuring is completed and now the company can add to the bottom line. Market for AVNX will grow significantly due, in big part, to video traffic on the internet and the increase that video traffic is experiencing. If you haven't figured it out yet, video, video, video is where it is at on the internet.

Volume today was 2x average and price climbed out of the box and never faltered. Not bad for a small cap on a Friday. What we see from the weekly chart below is your typical wedge consolidation that occurs after uber volatility in price movement. What is significant here is the double bottom that was formed day before yesterday. We got a 11% bounce off that bottom on fairly heavy volume, which confirms that level as solid support. This is significant because price needs to be goosed to get through the wedge - this double-bottom is exactly what will do that.The next test will be the top of the wedge, which will most likely happen next week. Then it's off to the last swing high where I hope it blows the lid off of it. I know a lot of us have been waiting and got a bit frustrated on its last push to those levels, only to falter and come back.



This is a great entry point for those that have not yet gotten in here. As can be seen from the sidebar, I have a full position so am not adding here. For newbies to the stock, you can simply place a stop below the double bottom, which is 20% away. My rule is that I exit a stock if drawdown is 25% from my initial purchase, so this is a great entry point if I was flat looking to get in.

Futures Roundup

Had a busy afternoon session at the start with buys hitting for both the ER2 and YM at the same time right at 10:30 (Cali time). Got chopped in ER2 on two trades for -10 total ticks. I then realized that it had essentially run 2% for the day, while the YM had run only 1% for the day. This results in a great arbitrage setup where you can go short the ER2 and long the YM and then hold to bring them back in parity. However, the ER2 has been running its own show recently, so I just decided to stop with the ER2 for the rest of the day because 2% is a monster run and we would probably just see chop for the remainder. In the end, I ended with +36 ticks on the ER2 for the day.

The YM was another story. I actually had 2 separate signals to go long, so I enter with a boat load of positions and tried to figure out what the exits were going to be and then get them in some logical order. It moved slow at first, but there was no significant draw down, so I maintained my positions. It then gave me some ticks as it steadily climbed up for the next 1 1/2 hours. I locked in +88 ticks in the afternoon session. No trades were entered in the final hour due to toppy activity in the ER2 and lack of follow through in the YM.

Summary for day is below:

YM: +122 ticks (equal to $610 per one contract position)
ER2: +36 ticks (equal to $360 per one contract position)

Days Range: 179 points (as defined by YM)

MDVN up another 5.4% today.......

That little biotech company is up another 5+% today. That is over 17% for its 3 day run. No news but we do have the biotech index up over 2% today. Will MDVN be one of the speculative leaders in biotech as money rolls over to this sector? I am banking on it. The addition to my MDN position yesterday has been validated. Volume today again on fire. It's under accumulation boys and girls. Nut up and pick some up for the portfolio.

Bought 2000 CNTF @ $7.09

Nice to buy it back at a sweet 8.5% lower price from where I sold it yesterday. The purchase was triggered when it came to my target price as defined by the 200 ema on the daily chart.

Morning Futures Trading

Jumped in right off the jobs report. I let the futures react up and then come back to a long entry point. Was able to easily get my initial 20 ticks, but the market stalled a bit and I only walked away with +2 ticks on the second position. First trade = +22 ticks. The market then stalled and was a bitch to trade. I was chopped around until 7:40ish (Cali time). During this time, I dropped 32 ticks leaving me at the -10 tick level. My thinking was "oh shit, here we go again - gonna get chopped up again". It's at times like this that you just want to avoid other long or short signals and sit on your hands, but you can't do that in this profession. You need to man up and take em as they come. My indicator then roared with screaming buys and I then reluctantly enter my long positions on both the ER2 and YM. Finally, a goddamn move. I was able to pull out +44 ticks on my ym position and +50 ticks on my ER2 position. Not bad for the morning. End result for the morning is below:

YM: +34 ticks (equal to $170 per one contract position)
ER2: +41 ticks (equal to $410 per one contract position)

I was able to find an appropriate momentum indicator last night. I applied that this morning. More on that in another post.

Bought 250 BWLD at 41.15

This takes my position filled from 1/2 to 3/4. I am liking the fact that this place hasn't begun to expand. Tis the perfect season for buffalo wings. We have the confluence of two seasons baseball and football. Is a long position into the new year. Will be sliding some off the table here and there as the charts warrant.

Futures Techniques

I am testing a new intraday system for my futures trading. The tough thing is to stay with it in actual trading for the next 2 months even though I know that it doesn't do well in non-trending environments like today. I need to get the data points to confirm the hypothesis that it is in fact a trending tool. I began using it this month and the small sample size thus far shows that as the days range narrow, so do my profits. Monday was a fantastic day for the system when we had a 235 point range on the YM, but todays 64 point range absolutely destroys this system. What is needed for those days, obviously, is a fade the highs and lows system such as using pivots. But even though one knows this, the trick is to define the type of day early on so that the proper system can be employed. Traders do this various ways such as looking at the range on the advance/decline line, whether ticks are exhibiting an "inside day", the size of the first 15 minute bar of the session, etc. Other traders develop "chop" indicators or use the ADX indicator. Well, I am off to re-create the wheel.

Star Performer for the Day - MDVN

Kind of strange to say that my star performer today is a low cap biotech company when I hold those other Chinese stocks. IBB was flat today, so it wasn't a sector driven rally. No news to speak of, but the volume was stellar at greater than 2x daily average. Shorts have been throwing their weight around on this stock for some time. The current short interest of 23% of float is starting to feel the heat with the recent 10% run and will continue to feed the push up as long as high volume stays with us.

For those of you that don't know much about this company, click on the link and educate yourself (I'm not going to waste valuable space here describing what I already know). http://www.medivation.net/pdf/MDVN_Factsheet.pdf

I am a technical guy with fundamental frosting. The fundamental story is intriguing, but as is the case with any biotech company, it takes time to develop. So then why in the hell am I focusing on this company when my initial lead in blog said that I would not focus on these long term stories? Because the goddamn price is trending - that's why. The perfect storm exists here: (1) trending stock, (2) high short interest, (3) breakout on high volume, (4) low cap, and (5) long term story.




The daily chart above shows the breakout move that began yesterday on high volume and was followed through with today on high volume. No doubt that this is something to pay attention to. The chart below clearly shows the breakout move for MDVN following the resting/ consolidation period from the move that began in September 2006.

I picked up my initial block (1/2 position) during the first leg and have waited several months for this second move. I added to it today with a 1/4 increase in shares. I will now site back and watch this second leg play out and consolidate. It will be after the third leg pops that I will add a final position. Obviously, the company cannot significantly dissapoint moving forward.

Afternoon Futures Trading

Futures trading today was brought to a rather swift stop. I use a trend following approach to futures trading, so I get quickly stopped out for the day when there is no trend. I limit my losses for the day to a cumulative 2% of futures trading account size. That was nearly hit when I got several false trend signals in a row - this shit happens. Not to worry, my futures trading account is a fraction of my overall trading account for obvious reasons. It happens frequently when we have days like today. But when we get market movement, I have coins and bills falling from the sky. The trick here is to limit the down side while destroying the upside. In the spirit of the blog, I open my books to you the reader below:

Market Range (as defined by the YM futures): 64 Point Range

YM Tick Summary: -111 ticks (-$555 if using a one contract position)
ER2 Tick Summary: -3 ticks (-$30 if using a one contract position)
ZG Tick Summary: -25 ticks (-250 if using a one contract position)

Me and the family are eating cheese tonight. Wait! I banked coin on CNTF and MDVN just shot up 6.5% today....ahhhhh, life is good.

Bought 300 MDVN $23.05

After holding onto MDVN for many, many months with 1/2 position, it is finally breaking out to the upside. Past 2 days has seen a nice 10.5% gain. Many would be selling at this point to bank coin - not me. I like to add to my position on upmoves and then let a little go once I have a full position. So, with 1/2 position and a nice 2 day move, I am adding here. Overall position is up 6%.

Sold 1,000 CNTF at 7.76

Decided to take 1/4 position off the table to take advantage of the 82% run up I have on the books. This leaves me with 1/2 position, which I will hold with a stop at 25% from entry. I don't want to get burned holding onto too many of those Chinese stocks come Friday or Monday. I will be picking some more up if the upcoming news calms the nerves and we get a little bounce off the daily 200 ema. Been a nice trade thus far and I need to bank a bit so that the family eats tonight.

Morning Recap (10/4/07)

Equities: Only action on equities this morning was the sale of a partial ALVR position. Half of my holdings are up, while the rest are down, which is in line with market activity today. Range of Dow futures is a paltry 63 points low-to-high. Best acting stocks include LACO with a 5% pop, HALO nutting up with 2.8%, and AVNX chiming in with 2.3%. The downside see CNTF off 2.21% and VMC down 1.24% - basic profit taking based on their run the past week. I only have a third position on both CNTF and VMC; however, I like to add on strength rather than weakness. So, I wait on those two. I already have a 100% position with LACO, but only a 50% position with HALO. I will post when I pick up another 25% of this position.

Futures: I have been bounced around a bit by the futures market and Tradestation today. I originally caught the pullback in YM for 33 ticks, but then got chopped for -24 ticks on the follow up trade. Two subsequent trades resulted in -12 ticks on the YM. Just plain choppy after the initial dip. So, I am -3 ticks on the YM for the morning. (another words -$15 if you measure your positions by 1 contract)

I just pulled in +10 ticks on an ER2 short for the only Russell play of the morning (+$100 if you measure your position by 1 contract).

I got myself into a revenge trade of sorts this morning with gold. The battle resulted in me giving up -25 ticks in the end (-$250 if you measure your position by 1 contract). It was brutal and was based on my inability to walk away from the initial loss when my signal did not pan out. So, I man-up and live to trade gold another day. The worst thing I could do is to turn the trade into a swing or position trade after the daytrade did not work. No worries.

I am currently in a YM short and will update the blog of its outcome in the afternoon session.

Dow: -1.95
Naz: +0.33
S&P: +1.30

Futures 101

You will see many posts from me re: stock index futures. I trade the e-mini products offered by the CME and CBOT. My posts will refer to "ticks" of profit or loss. Each tick has a monetary value as defined by the product. For example, the Russell e-mini future tracts the Russell index and moves in 1/10 tick increments. It takes 10 ticks for the e-mini future to move one full point. Each tick is worth $10. Below is a list of the contract tickers I use and their tick monetary value:

Dow E-Mini Future: Ticker "YM", $5 per tick value

Russell E-Mini Future: Ticker "ER2", $10 per tick value

Gold Futures: Ticker "ZG", $10 per tick value

If I mention that I captured 5 ticks on the ER2, that translates to "I made $50 on each contract held of the Russell e-mini future".

Sell ALVR - partial position

I am going to take advantage of my 40% profit position in ALVR and take some off the table here. Still carrying 2/3 position, but want to allow it to come back in a bit since it is overbought here and is looking topsy. Still believe in this little wimax company from Israel. It was recently upgraded but I thought it was overbought at the 13.90 level. Will have no problem if it keeps running given the position I retain.

Welcome to Everyone

I am creating this blog to assist others as well as myself in world of trading equities and futures (hence the name). I also trade currencies, but I couldn't fit that into a catchy name. Matter of fact, I have been short the Yen (CME future) for the past seven days. So, visitors will see various posts dealing with all markets. As a trader, I will trade just about anything that moves.

I base my entries and exits on technical analysis together with fundamental analysis. I am not a hard core technical or fundamental trader. I think arguments made by both sides are initially interesting but they quickly bore the crap out of me. Trends are made out of substance. It's great that this or that company has the best widget in Asia, but it doesn't mean jack if there isn't a trend to jump on. I do get geeked out by the newest projector that fits in a cell phone, but will pick it up once there is a sign that it is ready to move or trend. I will fill this blog with great ideas for the trading community, but I will not do it 5 years before the rest of the world finds out about it. My hope is to do it just before or just after it begins to move. My trading money is intended to grow as time goes by, not sit there and gather dust.

On that note, my trading style consists of the following:

1. Day Trading (DT): I mostly daytrade stock index futures, gold futures and currency futures. The entries and exits are based on technical analysis consisting of price movement, moving average crossover, Kelner Channel and the Commodity Channel Index Average. My daytrading style is to catch a trend and quickly peel off contracts thereby reducing my risk in the trade. I will then hold the final contract(s) position to attempt to catch "runners". I do not use strategic stops per se, I use catastrophic stops designed to risk only 2% of my account. I have found that daytrading stops are designed to stop you out just before a run is made. Trading includes volatility, and the trader needs to be accept volatility while not accepting too much risk. As long as my signal tells me the trend I'm on still is in effect, I accept the volatility.

2. Swing Trading (ST): My swing trading strategy includes holding positions (either futures contracts or equities) from a period of 1-day to a few days. It really depends on how quickly my profit objective is hit. My finds are made initially from technical analysis coupled with an assessment of the sectors de jour. Once the correct sectors coupled with technical analysis reveal worthy prospects, I will drill down to determine which ones have movement potential based on news, volume, etc. Again, catastrophic stops only are used (2% of equity). I accept volatility.

3. Position Trading (PT): I use my swing trading strategy to get into longer term equity positions - no future trading here. I will scale into full positions 1/3, 1/3, 1/3. If, after I enter the first 1/3rd position, I am down 25% of my investment, I will cut and run to never look back. Once the position moves in my favor a pre-defined amount (as defined by my technical analysis), I will add another third position. The final third is added once we are off to the races.

My objective is to make filthy lucre - plain and simple. I do not get geeked out by the newest technology or gadget unless I can bank coin. It means nothing to me if it will take 3 years for someone to find the stock. It has to be ready to move or I will shut the door on it. I leave the long term stuff to my retirement accounts.

I will make stellar calls and make very nice profits. It is during those times that I can be found at my butchers counter ordering rib eyes and then scour the wine racks for a nice Bordeaux. Then there will be those times that I make bad calls and lose money - welcome to trading. It is during these times that I am still devouring rib eyes because I banked coin on previous trades and am using money management techniques to ensure that my loses are not account threatening. I do not subscribe to the "Custer's Last Stand" approach to trading. The key here is to quickly recognize when an incorrect call has been made and cut its throat.

I hope the site is useful to visitors from a number of perspectives. Number one is to make money on a consistent basis in an up or down market. Another is to gain insight into the mind games that are entered as one ventures into the trading world. You are your own worst enemy in this pursuit. And lastly, a location that traders can go to share thoughts, ideas, frustrations and excitement.

Enjoy.