Skip to main content
No. of Recommendations: 17
Okay everyone,

Per the request of NeuronNorth and Comptche (Anne), we are going to follow three stocks RMBS, CREE, and AMCC using my TA system. I'll plan on posting these TA charts weekly, unless one of our stocks nears a buy or sell short recommendation from my system.

Here's our first look at RMBS. You should note that RMBS was below it's 50 day EMA from Feb 1st (at about $50.00/share) until late Sept. when it barely broke above it's 50 day EMA at about 8.00. We would have either been out or short during that time period.

http://finance.yahoo.com/q?s=RMBS&d=c&k=c3&a=m26-12-9,r14,v&p=e50&t=1y&l=on&z=m&q=l



First let me review my buy and sell signals. To buy a stock, I require the stock price to rise 3% above the 50 day Exponential Moving Average (EMA), the volume to be 40% above the Average Daily Volume, the Moving Average Convergence Divergence (MACD) to be positive, and the RSI to have risen in the past month. All these conditions must be met on the same day. To short a stock, I require the stock price to fall 3% below the 50 day Exponential Moving Average (EMA), the volume to be 40% above the Average Daily Volume, the Moving Average Convergence Divergence (MACD) to be negative, and the RSI to have fallen in the past month. If a stock is bouncing up and down but staying near the 50 day EMA, I will usually stay away. So I prefer a stock to be below the 50 day EMA for awhile (2-3 weeks) before I will buy it, unless the buy signal is extremely strong (strong price rise on very high volume). The same philosophy holds true for shorts.

So lets look at RMBS. First, here's a closer look at the past three months.

http://finance.yahoo.com/q?s=RMBS&d=c&k=c3&a=m26-12-9,r14,v&p=e50&t=3m&l=on&z=m&q=l

I had a buy signal on Oct. 15, at about 10.50 intraday. I set a stop loss at $9.24, because the beta is above 1.4. (Note: beta less than 1 is 8% S/L, 1.0 to 1.4 is 10% S/L, and beta >1.4 is 12% S/L).

Here's a price chart for the past 3 months.

http://table.finance.yahoo.com/t?s=RMBS&g=d

After the buy signal on Oct. 15th, the stock closed Oct. 16th at 11.72, which is more than 10% over my purchase price. My rule is that once a stock rises at least 10%, I'll never let it drop below my purchase price, so I adjusted my stop loss to 10.50. I got stopped on 10/17 at 10.50 and am now out of RMBS (except for my LEAPS which is another story).

I am now waiting on RMBS to jump 3% above it's 50 day EMA, which sits right now at about 8.75. The MACD is negative, and has been negative for about 11 trading days. The RSI is actually about the same as it was 30 days ago. The ADV is now 2.5 Million shares, so we would need about 3.5 million shares for a buy (or sell short) signal. We are now in a wait mode for either a buy signal (Price, Volume, MACD, and RSI would all have to rise), or a sell short signal (RSI would have to drop and volume would have to climb to 3.5 million shares on a selloff).

Let's just watch it and see what it does.

NukeJohn
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.