GROW is the new #1 on the IBD100

[mystiky]

Well, just got a hold on the new IBD100 list, and GROW (nasdaq) is debuting on it as #1. That's the first time ever for the stock.

Float is only 5.7 million shares, out of which 500,000 are sold short (10%). That's before the big runup today on the earnings.

Could be a major squeezer come Monday.

[ParkTwain]

IBD rankings are based on stale data. By acting on their data, you end up chasing the market, rather than anticipating it.

[Louetta]

IBD rankings are based on stale data. By acting on their data, you end up chasing the market, rather than anticipating it.

The data is right up to date. It may not be based on data which will help predict future price advances nor do they claim it is. At least not explicitly.

[ParkTwain]

EPS data is inherently not up to date. I would also encourage everyone to dig into how IBD computes its RS numbers. STALE! By the time IBD finds a stock, you should have already bought it. My advice: learn to read a stock chart.

[Louetta]

EPS data is inherently not up to date. I would also encourage everyone to dig into how IBD computes its RS numbers. STALE! By the time IBD finds a stock, you should have already bought it. My advice: learn to read a stock chart.

GROW's IBD EPS number was 79 on Thursday night, 99 on Friday night based on the earnings released that morning. Can't get more up to date than that. You can eyeball the RS line on the IBD charts and see it tracks the current price line.

[IIC]

The data is right up to date. It may not be based on data which will help predict future price advances nor do they claim it is. At least not explicitly.

I disagree Louetta...IBD does claim that their backward looking numbers are predictors of future price performance...Remember the baseball batting avg. example?...I've heard their stories a million times...Personally, I use some of their data...but not necessarily the way they intend it to be used...Best, Doug(IIC)

[IIC]

EPS data is inherently not up to date. I would also encourage everyone to dig into how IBD computes its RS numbers. STALE! By the time IBD finds a stock, you should have already bought it. My advice: learn to read a stock chart.

Their RS numbers are based against their database for the past 52 weeks...Dave likes a much shorter time frame...and I agree with him although I set up mine on a year basis...I'm thinking of changing it to 3 months...but it won't come cheap. It might be easier to just subscribe to Dave's fave site...HGS...In fact, I'm thinking about trying them out.

DAVE...Can you run these things(like RS) in different time frames at HGS???

IBD's EPS formula is a little more complex...But it still puts too much weight on 3-5 year old data...Sure the old data carries less weight...but who cares what happened yesterday...I wanna know what's gonna happen tomorrow...I don't bother w/ their EPS rankings...Best, Doug(IIC)

[Louetta]

I disagree Louetta...IBD does claim that their backward looking numbers are predictors of future price performance...Remember the baseball batting avg. example?...I've heard their stories a million times...Personally, I use some of their data...but not necessarily the way they intend it to be used...Best, Doug(IIC)

Its a good source of potential ideas. There's lots of stock listings with lots of data you can sort thru.

I've always maintained the premise behind IBD is based on a logical fallacy. O'Neil said, I believe, that he went back and looked at what happened to stocks which had huge gains, studied chart action as they were breaking out and concluded one should then look for a repeat of those circumstances. The problem is there is no proof that those circumstances do not also occur in stocks which do not go on to large gains (i.e. lots of breakouts fail). Its like studying famous baseball players, seeing they all played in the minors before they came up and concluding that minor league experience presages major league success. But we all know most minor league players never achieve anything like major league stardom.

[Louetta]

snip...

...I wanna know what's gonna happen tomorrow...I don't bother w/ their EPS rankings...Best, Doug(IIC)

Therein lies the rub. How best to figure out what happens tomorrow. Methinks all you can do is try to turn the odds in your favor a smidge.

[billyjoe]

Its a good source of potential ideas. There's lots of stock listings with lots of data you can sort thru.

I've always maintained the premise behind IBD is based on a logical fallacy. O'Neil said, I believe, that he went back and looked at what happened to stocks which had huge gains, studied chart action as they were breaking out and concluded one should then look for a repeat of those circumstances. The problem is there is no proof that those circumstances do not also occur in stocks which do not go on to large gains (i.e. lots of breakouts fail). Its like studying famous baseball players, seeing they all played in the minors before they came up and concluding that minor league experience presages major league success. But we all know most minor league players never achieve anything like major league stardom.

Louetta,

O'Neil also believes that what has worked in the past will work in the future. Increased volatility seems to have messed up his 7-8% stop loss rule. The market is not the same as when O'Neil ran his nest egg from a few thousand to millions. Mutual Funds , Hedge Funds , who knows what else has changed since the 60's.

---------------billyjoe

[ParkTwain]

O'Neil said, I believe, that he went back and looked at what happened to stocks which had huge gains, studied chart action as they were breaking out and concluded one should then look for a repeat of those circumstances. The problem is there is no proof that those circumstances do not also occur in stocks which do not go on to large gains (i.e. lots of breakouts fail).

This is the beginning of wisdom. Look at most/all (depends upon how much data you are willing to view, or buy) of what has actually happened, for a given set of circumstances that you are interested in. Distinguish the interesting cases from the uninteresting cases. Try to determine what was different about the interesting cases (i.e., develop a hypothesis). Dig further into the interesting cases. Refine the hypothesis. Make a few trades based on your refined hypothesis, with the knowledge that even the best traders only bat a little over .500 as to frequency of profitable trades. (Or maybe you figure out a way to find trades that produce a great return but do so much less than 50% of the time, so you size your trades accordingly.) So you can't put too much of your bankroll into any one trade. Try to improve your success rate, keep notes for yourself, and learn as you go. Understand your own degree of risk aversion. Over what timeframe do you prefer to see a successful trade develop? Etc. You'll eventually have a trading plan. Oh, by then you should also have read Van K. Tharp's book "Trade Your Way to Financial Freedom" for some really good stuff.


"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong."
---Bernard Baruch

[Runner]

This is the beginning of wisdom. Look at most/all (depends upon how much data you are willing to view, or buy) of what has actually happened, for a given set of circumstances that you are interested in. Distinguish the interesting cases from the uninteresting cases. Try to determine what was different about the interesting cases (i.e., develop a hypothesis). Dig further into the interesting cases. Refine the hypothesis. Make a few trades based on your refined hypothesis, with the knowledge that even the best traders only bat a little over .500 as to frequency of profitable trades. (Or maybe you figure out a way to find trades that produce a great return but do so much less than 50% of the time, so you size your trades accordingly.) So you can't put too much of your bankroll into any one trade. Try to improve your success rate, keep notes for yourself, and learn as you go. Understand your own degree of risk aversion. Over what timeframe do you prefer to see a successful trade develop? Etc. You'll eventually have a trading plan. Oh, by then you should also have read Van K. Tharp's book "Trade Your Way to Financial Freedom" for some really good stuff.


"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong."
---Bernard Baruch

Park has hit the nail on the head. Those who understand risk management and position sizing will exceed if they apply this to a high expediency system. Most people on these Internet forums only give a rip about stock entry and pay very little attention to how much to buy and where they exit. Including when they get a profit. We all feel like we are in control when why buy but after that it is where we sell that affects our bottom line. Very few traders have the discipline to follow a plan because they allow emotions to get involved and they sell a profitable position to fast and hold a losing position to long.
They will say they have a gut feeling the market will crash. They change with the wind. Fact is one would be much better off following the plan for better or worse. For the most part I think most traders have stops much to tight. They get wiggled out for losses and this in turn drains their account. Many who watch every little tic will be quick to lock in a small profit and never capture huge gains. They somehow feel they need to do something. They micro mange each position and wonder why they can’t get ahead.
Most paid services on the Internet have to be right and so they always need to be in the markets all the time. They talk about stops and trail stops but never get much in details. Those who watch the talking heads are being misled IMO. Those jokers are nothing but misinforming you. If you watch that BS try shutting it off and make your own decisions what is happening. You will be better off in the long run.
Most people get information constipation and can’t think for themselves. They need to check out 50 million sites per day and get so overloaded with crap they can’t make any sense out of anything. This distorts the brain and could be a sure set up for failure.

[IIC]

Some good points made by everybody.

Personally, I use IBD and DGO for their info myself...But not for the CS plan.

However, Runner...a plan can be very short sighted; e.g. Day Trading...and be successful...The last 2 years my DT % has far exceeded by longer term holds...True, In 2+ years I don't remember getting a DT over 19%...And it is rare that I even get one over 5%. Is that bad when when my overall DT gain was +198% last year?

Now it is true, I don't put as much $$$ in DT's as I normally do in longer term holds...If I did then I would most likely be more emotional about my DT's which in turn would lower my % gain no doubt.

As far as "Changing w/ the wind"...When DT'ing and even Swing trading I think one has to change with the wind if circumstances are not as you thought they would be. Does it bother me when I sell a DT and it turns around and races up? No way...because I am simply trying to play the odds as I see them to paraphrase Louetta.

I think that it is very important to trade in your comfort zone whatever that might be. But one of the most important things I tell people is NEVER try to make it all back right away when you make the inevitable screwup.

Also, be FLEXIBLE as circumstances warrant...All too often I see people with ONE PLAN that doesn't really take the market as a whole into consideration(Of course a plan should)...or external factors...They just buy a stock that meets all their parameters and hold it for better or worse. I'm not talking about you on this Runner...Just throwing out some ramblings...Best, Doug

"Don't look at things the way you want them to be...Look at things the way they are"

[spikefader]

Excellent thoughts in this thread.

GROW in a 5th up it seems. Might be a good short soon...


But a great example of bullish behavior. 13.00 & 18.00 were good areas to buy....now's a good place to be taking profits. Is this bagholder material at these levels?

[Websman]

Excellent thoughts in this thread.

GROW in a 5th up it seems. Might be a good short soon...


But a great example of bullish behavior. 13.00 & 18.00 were good areas to buy....now's a good place to be taking profits. Is this bagholder material at these levels?

Excellent post Spike! Shorting this dog could be fun.