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New York Investing Meetup http://investing.meetup.com/21 Proven Money Making Tactics Robert Rubin February 21, 2007 Copyright 2007 All Rights Reserved Buy Momentum Stocks With High Short Interest • Must meet three criteria – – Above 200-day moving average for at least three months – P/E > 50 – Short interest > 15% of float • Short squeezes keep price rising • Violates “fundamental” rules, but shorts lose by fighting the market • Use Big Charts (Big Reports - Stocks With Largest Short Interest) • BIG a good example – Up 86% in last 8 months – 20% short interest, P/E 52.7 Buy to Fill Gaps • Must meet three criteria – – Above 200-day moving average for at least three months – Market cap at least $1B – Price fell 5%+ in one day • Probable over-reaction to negative news – Make sure no crisis, scandal, etc. • • • • Gaps up 5%+ work too, but less sure Gaps tend to be filled over next few days/weeks Use Big Charts (Big Reports – Stocks With Largest % Loss In Price) CAT is an example: – 10/19/06 close 69.02; 10/20/06 close 59 – a 14.5% loss – 10/26/06 close 62.35 – a 5.7% gain since 10/20 – Caterpillar’s earnings shortfall temporary Buy Splits • Prices usually rise immediately after split announcements – Buy ASAP – Get free split alerts by e-mail at http://www.investmenthouse.com – Check your broker’s site for intra-day announcements • SSI an example: – 01/08/07 close 19.75 – 01/09/07 announce 3 for 2 split at 6:00 AM – 01/09/07 close 22.03 – an 11.5% gain • Prices may drift further up – strong companies Buy (or Sell) Stocks Bouncing Off Their 200-Day Moving Average • The 200-day moving average is a critical price for both support and resistance • Prices test the 200-day moving average and often pull back, continuing their long-term trend – May be the bottom of a price decline – May be the top of a price rise • Use http://www.stockfetcher.com/stockdb/fetcher for $8.95 per month (150-day MA) • Or look at stocks that cross their 200-day MA and wait to see if they bounce back • JNJ, UPS, WDC recent examples Buy First-Time 52 Week Highs Sell First-Time 52 Week Lows • 52 week highs signal an up-trend, and 52 week lows signal a down-trend • Large profits follow the first 52 week high or low • Use Big Charts (Big Reports – Stocks Hitting New 52 Week Highs or Lows) and then check the charts • HMC is an example: – 02/14/2007 close 40.78, a first-time 52 week high – Look at two-year charts Trade Short-Term Trend Reversals • Must meet four criteria – – Trading at or beyond upper or lower Bollinger Band – W%R signals overbought or oversold – One “trigger” day when opening and closing prices are similar, and both are near the bottom (“tombstone doji”) or top (“dragonfly doji”) of the day’s range – One “confirmation” day when the range between opening and closing prices includes that of the trigger day, and prices fall (“engulfing bear”) or rise (“engulfing bull”) • • • • Use candlestick charts to see “dojis” and “bears” Use http://www.stockta.com to screen for dojis and bears Stock or options for short-term profits On 2/16, DRS near lower Bollinger Band, dragonfly doji, oversold W%R – confirmation to follow?