Rebel Traders – Analysis Without The Hype

I like the price level here for ON2 Technologies (ONT).

ONT moves wildly at times being a small cap as they are. But this price looks attractive for a long term play. Not adding this to my swing trade portfolio here. But for a multi month play I see this price as being good. Stop loss would be $1.55

Sub Prime made the headlines again after the market closed. It is being reported that a comment made by Bear Sterns is that two of their hedge funds with ties to the sub prime mortgage business are now essentially worthless. Reportedly now worth less than 10 cents on the dollar. I said last week that we have not heard the end of the sub prime woes and I’ll say it again here. The sub prime problem has yet to fully propagate into other areas/sectors. There will be more headlines concerning sub prime in the months to come.

The financial sector needs to be watched closely as it is a heavyweight in the markets. Where the financials go the rest of the market follows in time. We must get some good earnings reports from the big finance giants in the coming days and weeks to lift the sector. Today there was profit taking ahead of what I see to be apprehension on the part of the traders of more bad news on the financial sector front.

Today On2 Technologies (ONT) hit my stop and my trade was closed automatically. I sold my shares at $2.55. A shame too, because I am still bullish on ONT. But rules are rules, discipline in trading is the ONLY way you will survive and win the game for the long term. If you never set limits (stop loss) for your investments then you are on the road to a financial disaster, for you are relying on hope and not a plan. All winners on Wall Street will tell you the same thing, they have a plan on when they exit their trades/investments, no ifs, ands, or buts. Preservation of capital comes first.

Remember that you have to earn more gains to make up for your losses. Lets say you have a stock that you bought at $20 a share last year, and the current price is $10 a share. You have lost 50% of your money on that investment. Now in order to get your money back (break even) that stock now has to increase 100%. That is why the experts and pros always cut their losses quickly and within a set limit. It is easier to make up for the loss if your losses are kept small.

RebelTrader portfolio swing trade BIG (retail sector) is lagging. But looking at the sector chart I’m seeing what is looking like a bounce coming soon. So I’m still bullish on BIG as long as the sector is still bullish which it is, just in a pullback currently. The $RLX chart is telling me a rebound is near.

RebelTrader portfolio swing trade Western Digital (WDC) is in a good spot right now as that sector is in a breakout mode. Will keep WDC for as long as I can squeeze a gain out of it. NetGear (NTGR)is also on a good run and will keep an eye on it so as to not let the gains slip away if the broad markets turn sour.

GRP, the oil service sector company is set to rebound according to the oil services sector chart. I’m watching the $OSX and I see a bounce from the moving average to be the most likely event to happen.

The remainder of this week will be wild in the markets I anticipate. Be sure to have a seat belt on! Any bad earnings reports from large companies are going to be felt in the markets more than usual.

Most of my open swing trades have opened to the upside this morning. NTGR is performing very well.

BIG has been basing around the original buy point. This stock is not catching the retail wave yet. I’m sticking with it until I see a signal that says it is not going to make it.

ONT has pulled back to the support range. Each time ONT pulls back to around the $2.60 area then some big trades go through on an uptick. Other traders are seeing this $2.60 area as a key support as well. I’m holding onto ONT

WDC is catching the beginning of a tech rally (albeit still weak). My entry on WDC could not be more perfect to take advantage of a tech rally. If Intel reports good numbers when they release their quarterly numbers then expect to see WDC and NTGR to be lifted up as well.

ONT has pulled back to the support level. There are many whipsaws going on this morning in many stocks. I am not concerned with ONT’s pullback at this time. Watching the tape I see large block trades with an uptick going through so others out there are seeing this as the buying opportunity. I am holding my ONT position.

BIG – the retail sector is weak so far this morning. BIG is consolidating again just above the original buy point. Seems to be some confusion in the market as to which sectors the large money want to tackle. I watch some oil plays go from red to green and back to red again this morning. Seems as if the large money is re-adjusting their underwear to get ready for the next rally if it comes.

The big winner so far today in the rebeltrader portfolio is ONT. It is up over 10% today so far. A good bounce play this has become. That was why I changed the setup conditions for ONT from the original game plan. When I identified the pullback to a key level the play changed to a buy on signs of a bounce (remember, we don’t buy on the way down, we buy after it hit then catch it as it comes back up).

The metals sector is good today and AKS is slowly making upward movement. Oil Services GRP also doing nicely again today, BIG is another big winner today as the retail sector is hot today.

The only bad play in the book right now is JSDA. Has not been able to keep itself above water as the word of the CEO’s conversation on CNBC has made the rounds and has let the shorts take over control for now. Too bad, without the CEO this could have been a good trend reversal play. It still might but I won’t leave my money in there and risk it. Took my 1/2 position off the table when it hit the stop at $16.90.

The sectors that are doing bad today are biotech & restaurants.

Now, the biggest news of all is that the DJIA has broken out of the trading range (see the DJIA chart on my public chart list: Public charts.) Right now at this time we are above the top of the trading range. If we close above that trading range then we are one step away from returning to a bull mode.

Added to my ONT holding @ 2.75

Add remaining 1/3 on the move over $2.90

Rebeltrader portfolio holding ONT is set to open higher. Current pre market activity has ONT up a bit. Watch for the second buy point if this trend continues after the bell.

Today AKS is up nicely on the strong metals sector, NTGR is up on a breakout into new highs, ONT is accumulating here and is ticking up ever so slowly but looking good so far, BIG is still above the original buy point and is still collecting large buys going through the tape, GRP is also trading up and I am still bullish on the oil services sector, WDC is also holding on even after the big fall yesterday. The tech sector is doing fairly well considering the overall bearish worries of the markets right now.

Only holding not doing well this morning is JSDA. Down 3.7% on what I can assume is a lack of confidence in the company from comments the CEO made on CNBC last night. I was prepared to sell early and not wait for the stop loss point if I saw any panic selling on JSDA. It is down but I don’t see any panic, and it is holding above the stop loss point through the morning. So I am giving it a chance.

Yesterday I took a position on the bounce from support at $2.65. In pre market trading there is some small amount of buying and the BxA is up a couple cents. If there is more buying up today I will add to my position on the move over $2.75.

Currently in with 1/3 of a swing trade position @ 2.65

Today I posted that I liked an entry in ONT on the pullback, and subsequent signs of a bounce from support. I took an entry on ONT today at $2.65 with 1/3 of a normal swing trade position. The chart analysis of ONT has good support at the 2.55 to 2.60 range. And today I observed a good bit of volume working on keeping the price from falling below that level. I wanted to get my toes wet at the bottom and took the entry at $2.65.

The reason for the 1/3 is money management. I want to get a bite of the stock at the cheap price but I don’t want to risk a whole 10% swing trade position just yet. So I scale into the trade. The more the trade works in my favor the more I add until I have the entire 10% of my trading capital in the trade. By scaling into the position the risk to my total capital is less as I wait for further signs of buying pressure before adding more. This way if I am in only with 1/3 and the stock takes a dive for some unknown reason before more buying comes in then my risk is limited because a stop loss on only 1/3 of a 10% swing trade is minimal.

My stop loss for ONT is a 10 cent window from the break point I suggested to buy in at. Stop loss is $2.54.

Will advise on the next level to add to this trade as the market makes its next move.

Late in the day I took an entry on JSDA @ $17.85 (1/2 position). Remember to always check the watch list items in the right side column of this web site to see what the recommended entry points are for the stocks on the watch list. The trading on JSDA was healthy most of the day even in spite of the overall market. Stop loss is $16.90. The CEO was a guest on CNBC Fast Money tonight. We will see tomorrow if the market likes what he said or if they feel there is no fiz left.

Note: If JSDA exhibits signs tomorrow of any high volume selling I will not wait for the stop loss to be hit and will sell before that. A sign of any high volume selling early may be an indication that traders and investors did not hear anything they liked from the CEO and may want to exit. In which case I will also. And come back another time.

My stop out point for ONT is 10 cents below my entry. Stop loss $2.54. Only went in with a 1/3 to get my toes wet at the bottom. Will likely see it move around down here but this is a good support area and stands a good chance of holding.