FREDAlert!
Volume 6, Issue 3
December 16, 2014
Here is our Tax Loss bounce list for 2014. This list is shorter than last year’s list, with only six names. It is published a bit later as well – December 16 vs. December 9 last year. This is because the market looks a bit worse than last year’s market going into yearend. One of the technical problems we see going into yearend is a weakening advance/decline line on both the NASDAQ and NYSE. Unless this improves, fewer stocks are participating, and fewer still could participate in a rally going forward. So, holding to some sort of trading discipline is important when buying weak stocks.
We have found that the best way to do this list is one of two methods. The first is to simply buy the stocks in the last two weeks of December. The second is to buy a half position the day the list comes out, and then add another half on the last trading day of December if the stock is below our buy limit. We will use method 2, adding ½ positions on December 16 and the rest on December 31st. We give each symbol at the end of this article, with stops, buy limits, and price targets. The target date to close out the list if any stocks are left is the last trading day of January – January 30, 2015. Stops will be 20% from each fill price. Your choice if you want to try and trade the same stock twice if stopped on the first position but we will track the position.
As always, we BUY in three ways.
- One, if the report is issued before the open, we use the opening price as our buy price. A market order placed before the open will enable most advisors to get this price.
- Two, if the report is issued after the open we use the closing price on the day the report was issued. A market on close order should enable most advisors to get this price.
- Three, we use a limit order. In this case the stock must trade at the limit plus one cent. To clarify, an example would be a limit at 60. The low for the day would have to be 59.99 for this to execute and be on the list. In the case of limits we may use a time qualifier – an example would be to buy at 60 only if the price trades at 59.99 within three days of the report date.
We SELL in the following four ways.
- One, we use a price target. This is elected only if the stock trades through the target by at least one cent. Advisors can get this price by having a resting sell in the market.
- Two, we use a target date to sell. An example would be our tax loss bounce list, where we instruct advisors to sell positions on the last trading day of January on the close.
- Three, we sell on a stop loss using the standard stop loss rules. This is not a stop limit – i.e. Stock closes at 11, has a stop at 10 and opens at 9. We use 9 as the price, even if the stock trades up from the open.
- Four, we issue a “FREDALERT” instructing advisors on how to sell. We also communicate changes to selling instructions in our Weekly and Mid-Week reviews, and these comments are in bold print in either the stock section or summary.
Symbols are:
- AUY buy at 4 or below, price target 5.
- NE buy at 15 or below, price target is 18.
- TWTR buy at 38 or below, price target 42.
- HMC buy at 29.50 or below, price target 33.
- RGP buy at 25 or below, target 29.
- AMD buy at 2.80 or below, target 3.80.