DJIM 1st Edition, 2007
Tuesday, January 2, 2007 at 12:42PM First of all, we'd like to wish every one of our DJIM members a Happy New Year. As we are kicking off this new year with our first DJIM weekend edition, we'd also like to thank each one of our members for their continued support of DJIM and making it a very unique and special place to be.
Toward the end of last week, we had a little pullback from some of the momentum favourites from the early part of the week, especially Friday from Thursdays runners. We'd think it has had a lot to do with the fact we were heading into this weekend with a 4 day rest, and also the fact that some of those runners just had a way too big of a run-up in such a short period of time. This was actually widespread come Friday in the markets. As you are familiar with us, you know we've been very vocal and adamant about taking profits. This is especially true starting off the year, as it is now about 'new' points and adding them up through 2007. Some of these plays such as FFHL GROW, just cannot continue their run-up without pauses, assuming they are still in play. Nothing goes straight up, so bear that in mind, we take profits as the play pauses. If we don't take profits when they pause, we might be looking at a 10 to 15% pullback and a very useless alert that was once very profitable. This is very common when dealing with small caps and momentum plays. Because we never assign any artificial price target or predict long term direction, we never have to worry about catching the top, nor we have to worry about making a perfect trade. What we are really trying to achieve here, is to capture every trading opportunity that is presented to us, early, and sometimes very very early! When you start trading those potential 25%+ gainers early, you are almost ensured some good gains even if your trading skill isn't as experienced as some of the others. In time though, the more trading you do, a more improved trader you'll become and better you'd be at mastering this game.
here are some stocks of interest from last week.....
FFHL, in our opinion, this play last week really highlighted what DJIM is sometimes all about, catching the momo early and often. Most of you have seen it through 2004-2006. A couple of these plays a year, if attacked properly can make your entire year or at least give you a nice cushion to trade/invest off. This is not saying that we'd be getting a play like this every week, but when it comes, we'd be there first to give members a heads up. From the look of its action near the end of the week, we'd be looking for another entry point next week. At this point, we are looking for $17.50 as potential b/o point with good volume for a possible entry. So you'd ask why not buy it now if we think it's gonna go back to mid $17s? The point is, we don't know when it'll happen or if it's going to happen. Last week, we couldn't wait for the entry we were looking for as all the stars lined up at a lower price. We just want to make sure when it happens, with a crystal clear sign, we'd be there and play it again. Judging by its prior move, when it moves, it just doesn't settle for a buck or two. At this point, we don't want to risk anything and only want to play the "sure" or "high probability" money. This can be either viewed as stubbornness or discipline, but we just like to think of it as a smart way to play these momo stocks.
HMIN, this one gave us a good pop last week and it looks like it wants to consolidate for a bit. Unlike FFHL, we think HMIN is definitely a more legit play which has alot more staying power. You can say that HMIN is a pure China economy play and we like the sound of it. As long as the trend is pointing up and shows no sign of reversing, we'd be buying on dips.
The Asian markets, ones that are open today were hitting new highs today. The Shanghai(China) is closed but the chance it might play a little catch up is probable when it opens. In this case, DJIMS Pacific-Asia stocks like the above and JST, MR, EDU still might catch a bid early tomorrow.
FSYS, the increase in volume last week, and with corresponding price action, caught us with a slight surprise and we are definitely giving it more attention in the coming days.
Most DJIM stocks you can review in charts are in the 'hub', they've flown long haul and now are back on the ground waiting for a flight plan to continue on. Basically, most have seen some distribution, profit taking yet look no worse off as most are near their highs. It is best we let the market find a remedy for the hangover from late 2006. In the meantime, we will seek out new plays if these are not ready to lift off again.