Weekly Stock Challenge (with trading DVD prize) - 7/3/09

[Thierry Martin]

OnlineTradersForum.com Stock Picking Challenge

Pick the highest percentage mover and win your win will be recorded next to your name in the forum.

Choose any stock that trades in the US market that closed at $2.00 or over with at least 100,000 share volume as of the Friday close before the contest starts on Monday.

Your entry price will be the market open price on Monday.

A brief rationale for your pick makes the contest more fun.

This week we are awarding a prize for first place - the winner gets a trading course DVD - "Bollinger Bands: Construction & Implementation" by John Bollinger. The DVD will be mailed out to the winner on the Monday following the win. Good luck!

[1960vw]

Man, my Imax came on strong Friday. I'm going to keep riding that train! :p IMAX long, thanks! :D

[richmondsatellite]

AKS short

[madcowdisease]

Still waiting for CLN9 to break down.

ERX short once again please.

[Mastajab]

UBS (short) Hopefully it doesn't gap down monday and hopefully more bad news comes out for them.:ridinghorse:

[Patrick01]

HOKU long

[okrobie]

Hi all, this is my first visit. Wish me luck. Jim

SMN long

[simpletradesnet]

OnlineTradersForum.com Stock Picking Challenge



OXGN short

[arov]

GBNK long

[golfdock]

faz please

[timsummit]

EGLE long

[Wonder]

AXL Long again

[useless]

FITB please

[Horace Kent]

GNW long

[Florida]

DRL long

[MoreYummy]

AES Long

[two_iron]

MDRX long

[Bama Nation]

STZ Long

[Horace Kent]

I like Florida here - cute reversal. I don't scan for these type plays, but, I like it for the contest. Also, I hope simpletradesnet get smashed for fading my late runner from last week. But, I understand the pick, and, I must say; it is a cheeky pick at that. Assuming he gets a nice opening gap - which looks likely.

For live trades this week - I really dig SGP this week - not gonna win this contest, but for low risk break-outs - you could do considerably worse....

[orogato]

My first time here, and I think CTHP has a chance this week.

[mo_dingo]

UTA long again. Yay for another ride!

[Horace Kent]

I'm gonna be the first one to step out on this, and, I know its going to be unpopular. Hell, I won "trading" one of these things.

I think we should ban the levered etfs from competition.


Its not that I don't dig the trade. That's fine..........

But, after reviewing my narrow win being long ERY - I would've made it a no competition had I been short ERX. ERY was up around 15% that week, while ERX was down 19% that week. We've all read Aiki's discussion on these things. So we know the drift is automatic to the downside.

Golfdock - you would be better off shorting FAS as opposed to being long FAZ.
Okrobie - you will do better shorting UYM as opposed to being long SMN
Madcow - is all over this - he's short ERX instead of being long ERY..........

these are the exact same trades.... if someone would've shorted ERX while I was long ERY - I would've lost easily, hands down. But, we both would've had the same "basic" trade. I infer that this goes against the nature of this contest. This is my personal opinion.

I don't care if these are banned from the contest - I'm just trying to start a discussion - let the community decide is my opinion, however, just know that being long these isn't the way to go.

So, if you wanna play these monsters for these contests - trade with the natural "drift" these bitches have and short them.

I understand that making a profitable directional play on any of these sectors is indeed a skill. However, I can see the day when this contest evolves to the point where everybody is shorting one of these. And that doesn't require the amount of skill this contest is "supposed" to foster. Again, as I infer the nature of this contest.

There is an "end around" to this too. If you're bullish or bearish on a particular sector - just buy or short the highest beta stock within that sector that has the most favorable set-up for your liking. That will, in most cases, match, or better the 3x etfs. Just do a scan on finviz, for example, and sort based on beta.

Anyway, like i said, i want to start a discussion on these. I like the competition and hate seeing picks wasted. I say let the community decide. But, I don't want to see anymore people long these names. Cause its unfair. If I'm late to the deadline, and have the same opinion as someone else, like golfdock or okrobie - i can just short the inverse levered etf and beat them easily.

I've said my peace.

[useless]

Might be interesting to see the ratio of ETFs picked / ETF picks winning, say this year?

[intowin]

GMTN long

[Ragewizard]

ADM Long

[okrobie]

I'm with Useless. Lets do the math and see if they indeed have an advantage in the contest. However, I'm not volunteering to do the math. That would be a horrendous task.

[Mastajab]

Horace Kent is right. I recall when it was like a race to pick FAS or FAZ before other people and then if you missed FAS you would short FAZ. Picking these ETFs is like a cop out, and I wouldn't be surprised if one day they are outlawed in real life. Because as Aiki has said their natural trend is always towards zero. Seems like a scam, for anyone going long.

But while they are still allowed in real life I would definitely short them.

For this game they should be outlawed.

[stideas]

GS Short

[Thierry Martin]

GS Short

Your pick must be in before market open on Monday.

[Thierry Martin]

CTHP.OB is not eligible to win because it opened under $2.

These are the results for Monday end of day.

4521

[dochesgriff]

In regards to the ultra ETF's...as of last week Edward Jones does not allow clients to buy the leveraged long or short ETFs. They also don't allow options so basically they see the risk of these ETFs on the same level as options. The Advisors were told that these securities should not be held more than a day and since their investment model is for holding for 5 years they will not allow any more buying of these ETFs. They must have realized that in 5 years all these ETFs will be worthless.

[okrobie]

Horace, I followed your suggestion and screened on Beta, and I found some very interesting stocks, but I also found that out of the top 200 high Beta stocks, there are only 2 ETF's. Fourth on the list is NUCL Global Nuclear Energy Index, and ninety first on the list was SCO the UltraShort Crude Oil ProShares.

I haven't checked the history but I wonder if these are among the ones that have played a significant part in the contest.

If the contest is based on skill, then it would seem to me, as difficult to pick an ETF that will go in the desired direction with amplitude as it would a stock that is ready to move.

I know, I am a newbie but I say these things with all due respect for your experience and knowledge. Please give these ideas your consideration. I am willing to learn.

Jim

[golfdock]

I agree that 3x efts might not be right for this game.

[Thierry Martin]

4523

[Horace Kent]

Horace, I followed your suggestion and screened on Beta, and I found some very interesting stocks, but I also found that out of the top 200 high Beta stocks, there are only 2 ETF's. Fourth on the list is NUCL Global Nuclear Energy Index, and ninety first on the list was SCO the UltraShort Crude Oil ProShares.

I haven't checked the history but I wonder if these are among the ones that have played a significant part in the contest.

If the contest is based on skill, then it would seem to me, as difficult to pick an ETF that will go in the desired direction with amplitude as it would a stock that is ready to move.

I know, I am a newbie but I say these things with all due respect for your experience and knowledge. Please give these ideas your consideration. I am willing to learn.

Jim


To the ETFs on your scan - While I have not looked at the funds particular holdings....I would assume that NUCL doesn't have a lot holdings, and they are probably either heavily weighted towards a handful of large companies - that would make the etf work more like an individual stock than a diversified index. or it could be more diversified, less heavily weighted towards on a few large companies, and more weighted in more volatile smaller companies.

As I said in my original post - I don't deny that clocking a sector correctly is indeed a skill. However, to win this contest you need a return close to 20%. That's not going to happen trading a sector etf. Normally, a "big" move for a sector in any given week is around 5-10%. Multiply that by 3(its less than that actually) and you've got the makings of potentially winning this contest.

Just to clarify. What I proposed as an end around....for example - you're bullish on oil stocks. So, look at all the oil stocks, and filter those based on beta - the stocks that are expected to move more than the general market (up and down) on a given day. Now, this is charateristic of a beta scan.....a lot of high beta stocks are low volume and high volatility - basically sporadic weird moves. so a lot of times they won't match your expectations. The higher you go in market capitalization while looking for higher beta the closer you would expect a given high beta name to move more than the market....that's a general rule, certainly not a given. So, that's where you could look for high % gains for this contest to replicate a 3x etf move since it will move more than the market.

[okrobie]

I did a little research and found the following:

Out of the first 26 weeks of the year, ETF's won only 6 times. This represents 23 percent of the winners. If they indeed had a significant advantage, I would expect to see at least a majority of ETF winners.

If this represents an unfair advantage in the contest, then the rules should be changed, but at least we have the data to make an informed decision.

I for one believe that the rules should stay the same.

Thanks for hearing me out. I'll go along with the decision whatever it is. :)

[Thierry Martin]

4525

[useless]

I did a little research and found the following:

Out of the first 26 weeks of the year, ETF's won only 6 times. This represents 23 percent of the winners. If they indeed had a significant advantage, I would expect to see at least a majority of ETF winners.

If this represents an unfair advantage in the contest, then the rules should be changed, but at least we have the data to make an informed decision.

I for one believe that the rules should stay the same.

Thanks for hearing me out. I'll go along with the decision whatever it is. :)

Uhm, thanks for that. :top::top::top:

You , I think, also need to consider the ETFs picked in total.. Many weeks there are 3-4-5 picked. vs regular stock picks.

Of the ones that won, how many were shorts?


I feel what Horace is saying, it is kind of an easy pick to just short any ETF...pretty good chance to get decent return. You pick one that is bigger, 80 - 90 , short it, it could drop like a stone...

[simpletradesnet]

4525
whats the untitled column to the left of gain/loss ?

[okrobie]

Useless, of course you are right about my analysis, but I simply didn't have the time to what would normally be required. Not having competed in the contest at all, I simply wanted to get a feel for how serious the problem really is and I met my goal. My interest is simply that I would like my entry in the contest to reflect what I am doing in real life.

The points are well taken about the negative bias of all ETF's. I won't be going long any more.:)

[Thierry Martin]

4532

[madcowdisease]

Nice tumble in the markets today. Guess the markets aren't impervious to the anemic volume everyone kept talking about all week.

If we're still allowing leveraged ETFs I'll take ERX short once again. IMO, CLN9 should be in the upper $40s with 29-year highs in stock piles but I doubt it'll get that low again anytime soon for manifold reasons.

Hope everyone has a good holiday weekend!

[simpletradesnet]

Nice tumble in the markets today. Guess the markets aren't impervious to the anemic volume everyone kept talking about all week.

If we're still allowing leveraged ETFs I'll take ERX short once again. IMO, CLN9 should be in the upper $40s with 29-year highs in stock piles but I doubt it'll get that low again anytime soon for manifold reasons.

Hope everyone has a good holiday weekend!

I think the triple and double return ETFs should be eliminated from the competitions. I lost anyhow, but ERX went from in the red Weds to a huge profit Thurs.

[madcowdisease]

I think the triple and double return ETFs should be eliminated from the competitions. I lost anyhow, but ERX went from in the red Weds to a huge profit Thurs.

Crude also was flatlining all week when it rightfully should have been falling. Again, my thesis is crude in the 40s-50s is fundamentally a sound price given the macros. It just so happens the best way to play it is shorting a leveraged ETF rather than a non-leveraged ETF or ETN such as USO or OIL.

Really looking forward to the DVD "Bollinger Bands: Construction & Implementation" by John Bollinger

[Thierry Martin]

My modem died so I need to get to a Mac to upload the results. madcowdisease won. Thank goodness for my iPhone.

[Thierry Martin]

Congratulations madcowdisease - pretty tight contest this week.

4533