How To Invest - How To Buy Stocks - Big Wave Trading » Best of 2008

GOOG 1-4-08 to 3-10-08

Josh Hayes — Sun, 30 Nov 2008 01:37:37 +0000

GOOG was a nice short but due to the low volume I was unable to “load up” and really make the short worth my while. However, the price rollover and breakdown, with the bear market starting, was a near-perfect short setup price wise. The stock subsequently fell 37% from my short to the ultimate low of the downtrend and even if you held until the gap higher on strong volume over the 50 DMA, you still walked away with a 17% gain. Even though it would have been impossible to hold, for me, the stock is now down 60% from my short to the low in November. This short was taken during a time that everyone was saying to go long RIMM, AAPL, GOOG, GRMN, and BIDU. I said that the tech “horseman” were all shorts and even published a column about their topping patterns on Realmoney.com. When the bear is done with AAPL and RIMM, we will go over those shorts. GRMN has already been posted and my BIDU short was botched completely.

the short:

the low of the move:

CBEY 1-7-08 to 3-10-08

Josh Hayes — Sat, 29 Nov 2008 22:44:41 +0000

CBEY was a great short but the huge gain in a short time was not expected. What is worse is that, once again, I mismanaged this one and instead of waiting for a HUGE volume surge over the 50 DMA and/or a move above the 200 DMA, I did cover with a move over the 50 DMA. This was a mistake but still despite this mistake CBEY produced a wonderful 61% gain from breakdown to the low of the move. However, had I waited for a move over the 200 DMA, I would still be short and would have had a 76% gain by 10/27. No matter what it was still a nice 61% move in three months.

the breakdown:

the low of the move:

SIGM 2-19-08 to 4-15-08

Josh Hayes — Sat, 29 Nov 2008 07:16:36 +0000

SIGM was a fabulous short that was mismanaged by myself in this bear market. I should still be short and would have a 80%+ return at the lows in November from the time I first went short. However, I had to admit it was still very nice to be short a stock that managed to fall 61% in just a little under two months. A lot of profit was taken in there and shortly thereafter I was covering all my short with a close over the 50 day moving average. Since I thought the market might be ready to start another uptrend I thought this was a smart move. However, this has taught me to never fully cover a short with over a 50% profit until it closes above the 200 day moving average. Then and only then should I full cover. The other exception is a HUGE volume surge above the 50 day moving average. That did not happen on this stock thus instead of a 61% gain I should still be short and have a nice 80% gain. Still it was a great short.

the short:

the low of the move:

GRMN 1-8-08 to 4-30-08

Josh Hayes — Sat, 29 Nov 2008 04:05:35 +0000

I decided to start this series off with a recent winner from the start of our current downtrend. Why I want to start with this is to teach you how to not mismanage a short. This short in a short three months and two weeks returned a very impressive 49%. This was a nice return for a short. However, this stock was handled poorly. I covered my final shares on 5/16 when the stock closed above the 50 day moving average. I should not have done this and with a near 50%+ gain should have used a close above the 50 DMA on HUGE volume or a close above the 200 DMA. If I would have handled that correctly from the time I went short to 11-20-08 the stock has fallen 81% which would make it my top current short holding at the time of this publication.

The key to going short this stock was that it was a former “high-flyer” from 2003 with a gain over 600% from the proper breakout to the top in October, the stock rolled over with heavy distribution, it broke down below the 50 DMA, and then broke down below the 200 DMA on strong volume. On the day of the breakdown the stock closed near the low of the day and BOP went red making it a very strong candidate. It worked out but it should still be a short as of November 2008.

the short signal:

the profit taking low:

XCO 5-30-08 to 7-1-08

Josh Hayes — Sun, 17 Aug 2008 22:54:57 +0000

Event though I knew oil was topping (review my comments in the market commentaries when oil topped) soon, I know that some of the best big winners are the late stocks that make big surges. XCO bounced right off the 50 DMA, had strong fundamentals, and as you can see was preceded by a ton of accumulation and strong green to max green BOP along the way. Right before the bounce off the 50 DMA you will notice volume contracted. This is what made this a clear easy stock to go heavily long. Sadly, like I have been saying, the VIX is too low to give that 200-300% pop that used to come from patterns like this (those returns will return after the bear is done) but I still knew we could possibly have some big gains (remember returns in 2008 are nothing like they were in 2003) out of this Featured quality long. If you went long, which most platinum members did, you received a nice 52% gain in only one month. I know it was short and that the stock gave few signs of topping but still it was nice to get some normal return in a market that has rewarded nothing. Your only key that it would be topping (but no one could no it was going to be the ultimate top) was by looking at a weekly arithmetic chart. There you can see the stock raced up the chart quite fast compared to past rallies and that was your clear sell signal. Especially with this happening in a bear market. I know it isn’t easy to learn when to sell but AFTER TIME AND HARD WORK you figure it out.

the buy:

the top:

DGLY 4-16-08 to 5-14-08

Josh Hayes — Mon, 14 Jul 2008 03:32:50 +0000

This stock is nothing short of a disappointment and sums up 2008. This has been BY FAR one of the best setups and one of the most correct executions of a new long since the consistency stopped in early 2007. However, after ONLY one month, the move that APPEARED to be the start of a big run-up was actually the top. So to say that the full 50% was gained is far from the reality. I was able to sell 20% around 50% based solely on the discipline of selling stocks as they rise in this market. Most of the gains were realized within the 20% to 30% range anywhere from 5/12 to 7/3. I sold my very last 10 shares with only a 15% gain. Considering I was up almost 55-60% in one month from 4/15 to 5/14 this was a clear disappointment. This is 2008 neatly wrapped up into a simple yet sad package. Luckily there was PDO and a few chemical, oil, metal stocks with high Featured quality stocks in late 2007 and early 2008 that has made the late 2007 and early 2008 “lack-of-HOT-charts” period tolerable.

the first big buy:

the second buy:

the top (sad so soon):

PDO 5-9-08/6-5-08 to 6-24-08

Josh Hayes — Mon, 14 Jul 2008 03:06:22 +0000

PDO was an easy one for me to get very long and many subscribers had no problem getting the signal across either. From the first buy to the top, the stock gained 371% in one month and three weeks. However, I only got crazy about getting long the stock on the 6/2 and 6/5 buy. From June 5th to June 24th, the stock gained 110% in thirteen trading sessions. I made it clear how much I liked this one and I think a hindsight review of the chart will help some of you know what to buy a lot of the next time you (I) see it.

the first small buy:

the big buy:

the really big buy:

the top: