Another Way to Profit TABLE OF CONTENTS
Transcription
Another Way to Profit TABLE OF CONTENTS
TABLE OF CONTENTS Another Way to Profit Q The Cheat Sheet 4 Q The Internet Review Stocks 7 Another Way to Profit The markets are obviously having a rough time, with the latest wave of heavy selling attributed to the Middle East crisis. During a bear period like this, we don’t want to just wait for our Internet picks to recover with the rest of the market. We want to take action and make some profits now. Last week, I outlined one long-only strategy for doing this, and this week I’d like to introduce another: the QQQQ Crash System. I started writing about the QQQQ Crash System in 2003. That year, it worked all 40 times the conditions for it occurred. I also discussed it in my book, Trade Like a Hedge Fund. Here is the system in a nutshell: Buy Rules: If the Nasdaq 100 Trust (QQQQ:Nasdaq), or QQQQs, close 1.5 standard deviations below the 10-day moving average, then buy the shares at the open the next day. Those unfamiliar with standard deviations can use Bollinger Bands set to 1.5 standard deviations and a 10-day moving average. Most stock quote software allows you to chart Bollinger bands. Sell Rules: If the QQQQs close higher than the buy price, sell them. OR If 20 days pass, sell at a loss. An Example From Dec. 20, 2000 Late 2000 was a nonstop slaughterhouse. The fallout from the tech bust plus the uncertainty over the presidential election and the final interest rate hike were keeping everyone away from the markets. Still, even though it seemed like the world was falling apart, there was money to be made by taking long positions. On Dec. 20, 2000, the QQQQ Crash System triggered. In the chart below, the green line represents 1.5 standard deviations below the 10-day moving average. On Dec. 20, the market closed below that green line, triggering a signal to buy at the open the next day. Two days later the system made a 5% profit. July 17, 2006 TheStreet.com Internet Review July 17, 2006 As of now, this system has been successful 61 times in a row out of 62 occurrences. But I must warn you that it had its first failure recently -- its last occurrence, during the period from May 12 to June 13, when the Nasdaq lost 8%. Still, one failed trade does not ruin the system, and even after that failure, the average return per trade is still 1.5% and the average holding period is 2.5 days. Below is the chart of the past three weeks on the QQQQ: 2 TheStreet.com Internet Review July 17, 2006 As can be easily seen in the chart, recent sessions haven’t been pleasant. Almost every day has been negative from open to close (the brown bars), with only two small days that were positive from open to close (the white bars). On Thursday of last week, the QQQQ Crash system triggered a buy for Friday's open. Friday was then down 1%. I believe that right now, Monday morning, is a decent time to buy. I'm extra cautious with this trigger because the last trade didn't work out so well. But now we have a 1% cushion. Perhaps a prudent way to play it is to enter a partial position today and enter a little more if the QQQQ goes down further. Another way to play it is just to add to some of the positions in the Internet Review model portfolio, perhaps some of the larger-cap but still volatile components of the QQQQs, such as Microsoft (MSFT), Yahoo! (YHOO), Palm (PALM), NetEase.com (NTES), Copart (CPRT) and RealNetworks (RNWK). 3 TheStreet.com Internet Review July 17, 2006 Internet Review Cheat Sheet The coming week is a huge one for earnings reports from Internet Review companies. See below for specific dates and times. I'll try to provide some coverage during the week. APTM Aptimus announced Thursday that it will report its 2006 second-quarter financial results on Tuesday, Aug. 8, at 5 p.m. EDT: http://biz.yahoo.com/iw/060713/0143926.html AV Avaya announced Wednesday that it will report its 2006 third-quarter financial results on Monday, July 24, at 5 p.m. EDT: http://biz.yahoo.com/prnews/060712/nyw016.html?.v=60 CLCT Collectors Universe announced Wednesday that it has purchased Expos Unlimited for $2.4 million. Expos Unlimited operates coin, stamp and collectible trade shows in California: http://biz.yahoo.com/ap/060712/collectors_universe_acquisition.html?.v=1 CPRT Copart Thursday reiterated its policy of providing no financial guidance for itself, its affiliates or its equity investments, including lanelogic. The company said it had provided no guidance to any financial analysts: http://biz.yahoo.com/bw/060713/20060713005582.html?.v=1 ELNK EarthLink’s opened its second temporary retail store in San Francisco. The first, in Seattle, is set to close this Friday. The temporary stores sell the company’s broadband services: http://money.cnn.com/2006/07/13/technology/earthlink0713.biz2/index.htm?source=yahoo_quot e Tuesday, EarthLink said that it will report its 2006 second-quarter financial results in a conference call scheduled for Thursday, July 20, at 8:30 a.m. EDT. http://biz.yahoo.com/cc/1/70301.html GSOL Global Sources announced Monday it has been included in the newly created Nasdaq Global Select Market: http://biz.yahoo.com/prnews/060710/hkm001.html?.v=28 HRAY On Wednesday, Hurray! signed a partnership with MTV Music Television China, a unit of Viacom (VIA), to provide wireless value-added services in China: http://biz.yahoo.com/prnews/060712/cnw013.html?.v=15 INSP InfoSpace announced Wednesday it will report its 2006 second-quarter financial results in a conference call scheduled for Wednesday, Aug. 2, at 5 p.m. EDT: http://biz.yahoo.com/cc/3/70353.html IUSA InfoUSA announced Wednesday it will report 2006 second-quarter financial results on Friday, July 21, at 4 p.m. EDT: http://biz.yahoo.com/cc/0/70460.html 4 TheStreet.com Internet Review July 17, 2006 OneSource Information Services, a unit of InfoUSA, said that Timothy Brandner had rejoined the company as vice president of North American Sales and Services: http://biz.yahoo.com/bw/060710/20060710005742.html?.v=1 KEYN Keynote Systems reports its 2006 third-quarter financial results on Tuesday, Aug. 1, at 5 p.m. EDT: http://biz.yahoo.com/cc/0/70270.html MCHX Last week, Marchex announced it will report its 2006 second-quarter financial results on Tuesday, Aug. 8, at 4:15 p.m. EDT: http://biz.yahoo.com/bw/060713/20060713005634.html?.v=1 MSFT Microsoft plans to report fiscal fourth-quarter financial results after the close of the market on Thursday. On average, analysts predict earnings of 30 cents a share. http://www.thestreet.com/_yahoo/markets/marketfeatures/10296988_2.html On Wednesday, the European Union announced that the fines Microsoft owes the EU for disobeying its 2004 antitrust order now total 280.5 million euros, or $357 million. The EU also threatened to increase Microsoft’s fines to 3 million euros a day starting July 31 if Microsoft doesn’t start obeying the order: http://biz.yahoo.com/ap/060712/eu_microsoft_chronology.html?.v=2 Microsoft and Yahoo! are joining together to make their instant messaging services interoperable. They conducted public beta tests on this program last week. Although the program will allow both companies’ users to communicate with each other and compile contact lists, it won’t be interoperable with America Online’s AIM service. http://biz.yahoo.com/indie/060713/92_id.html?.v=1 PALM Palm shares are looking very attractive after positive earnings reports from Sony-Ericsson, and after the announcement of a partnership with Britain’s Vodafone (VOD) and Microsoft. Through the collaboration, Palm is going to release to Vodafone’s European customers a new version of the Treo smartphone that will run on Microsoft’s Windows mobile operating system: http://www.forbes.com/2006/07/13/palm-0713markets17.html?partner=yahootix And another story on the move: http://biz.yahoo.com/ap/060713/premarket_movers.html?.v=1 RNWK On Thursday, RealNetworks announced an enhancement of its Rhapsody Web Services. This improvement includes new APIs and 300,000 RSI feeds: http://biz.yahoo.com/prnews/060713/sfth050.html?.v=64 On Tuesday, JMP Securities initiated coverage on RealNetworks with a market underperform rating: http://finance.yahoo.com/q/ud?s=RNWK SSP E.W. Scripps announced Monday that it will report its 2006 second-quarter financial results on Monday, July 24, at 10 a.m. EDT: http://biz.yahoo.com/cc/0/70160.html 5 TheStreet.com Internet Review July 17, 2006 TEAM TechTeam Global announced a global managed service provider agreement with CA Inc. http://biz.yahoo.com/prnews/060710/dem009.html?.v=46 TWX On Thursday, the Federal Communications Commission approved the $17.6 billion sale of assets of bankrupt Adelphia Communications to Time Warner’s cable unit and Comcast (CMCSA): http://biz.yahoo.com/ap/060713/fcc_adelphia.html?.v=2 UNTD On Thursday, United Online announced it will report its 2006 second-quarter financial results after the markets close Thursday, Aug. 3: http://biz.yahoo.com/pz/060713/102037.html MySite.com, a United Online Web site, now makes it possible for more than 40 million classmate.com subscribers to create and display personal Web sites: http://biz.yahoo.com/pz/060711/101882.html VRSN A Morgan Stanley report Tuesday predicted that VeriSign will expand its network and have significant revenue growth: http://www.forbes.com/2006/07/11/verisign-0711markets09.html?partner=yahootix YHOO Yahoo! plans to report its 2006 second-quarter results this coming Tuesday. On average, Wall Street analysts predict the company will earn 11 cents a share. http://www.thestreet.com/_yahoo/markets/marketfeatures/10296988.html?cm_ven=YAHOO&cm _cat=FREE&cm_ite=NA Yahoo! is considering partnerships with several newspaper publishers to provide Web classifieds and local news: http://biz.yahoo.com/rb/060713/yahoo_report.html?.v=2 News Corp’s (NWS) MySpace.com overtook Yahoo! Mail to become the No. 1 most-visited Web site for the week of July 8: http://biz.yahoo.com/fool/060713/115281923519.html?.v=2 6 TheStreet.com Internet Review July 17, 2006 OPEN POSITIONS INTERNET REVIEW MODEL PORTFOLIO Coding System: SB, for strong buy; B, for buy; SP, for speculative buy; N, for neutral and S, for sell. Company Name/Ticker Aptimus APTM Avaya AV Collectors Universe CLCT Copart CPRT EarthLink ELNK E*Trade Financial ET Global Sources GSOL Hurray! HRAY InfoSpace INSP Intersections INTX iPass IPAS InfoUSA IUSA J.C. Penney JCP Keynote KEYN KongZhong KONG Liberty Media LCAPA Liberty Media LINTA Marchex MCHX Microsoft MSFT Netease.com NTES Palm PALM RealNetworks RNWK Shanda Interactive SNDA Greenfield Online SRVY E.W. Scripps SSP TechTeam Global TEAM Technology Investment TICC Tom Online TOMO Time Warner TWX 7 Date Initiated Rating Code Initiation Price Current Price Simple Return NASDAQ at Initiation Date NASDAQ Return 03/20/2006 SB 5.22 $ 6.69 28.16% $ 2,311.80 -11.87% 03/20/2006 B 11.90 $ 10.62 -10.76% $ 2,311.80 -11.87% 12/06/2005 B 14.67 $ 12.73 -13.22% $ 2,267.09 -10.13% 01/06/2006 B 23.98 $ 25.53 6.46% $ 2,289.87 -11.03% 04/11/2006 SB 9.16 $ 7.48 -18.34% $ 2,336.52 -12.80% 10/14/2005 SB 16.28 $ 20.53 26.11% $ 2,055.78 -0.90% 11/21/2005 B 7.45 $ 8.50 14.09% $ 2,225.74 -8.46% 04/25/2006 B 9.40 $ 5.30 -43.62% $ 2,338.06 -12.86% 03/13/2006 B 24.94 $ 20.95 -16.00% $ 2,269.92 -10.25% 03/06/2006 SB 9.19 $ 10.11 10.01% $ 2,306.42 -11.67% 10/17/2005 B 5.48 $ 4.86 -11.31% $ 2,064.90 -1.33% 02/22/2006 SB 11.32 $ 10.16 -10.25% $ 2,265.59 -10.07% 06/05/2006 B 64.35 $ 64.84 0.76% $ 2,211.28 -7.87% 10/10/2005 SB 13.05 $ 10.67 -18.24% $ 2,092.03 -2.61% 02/13/2006 SB 11.91 $ 6.54 -45.09% $ 2,251.14 -9.50% 05/15/2006 B 78.88 $ 82.29 4.32% $ 2,234.03 -8.80% 05/10/2006 B 20.25 $ 16.39 -19.06% $ 2,332.24 -12.64% 11/14/2005 SP 20.00 $ 13.93 -30.35% $ 2,203.10 -7.52% 10/13/2005 B 24.31 $ 22.29 -8.31% $ 2,033.28 0.20% 11/14/2005 N 15.63 $ 20.90 33.74% $ 2,203.10 -7.52% 12/05/2005 SP 13.57 $ 14.75 8.74% $ 2,269.00 -10.21% 10/18/2005 B 7.52 $ 9.48 26.06% $ 2,068.61 -1.51% 12/13/2005 B 15.94 $ 13.15 -17.50% $ 2,255.90 -9.69% 05/30/2006 SB 7.76 $ 7.20 -7.22% $ 2,202.17 -7.48% 10/20/2005 B 46.34 $ 41.69 -10.03% $ 2,087.80 -2.42% 02/03/2006 B 9.90 $ 8.49 -14.24% $ 2,268.46 -10.19% 10/19/2005 B 14.73 $ 13.77 -6.52% $ 2,048.46 -0.54% 11/14/2005 B 20.74 $ 13.81 -33.41% $ 2,203.10 -7.52% 10/10/2005 SB 18.01 $ 15.97 -11.33% $ 2,092.03 -2.61% TheStreet.com Internet Review United Online UNTD VeriSign VRSN Yahoo! YHOO July 17, 2006 01/03/2006 SB 14.20 $ 10.96 -22.82% $ 2,216.60 -8.09% 10/11/2005 SP 20.62 $ 21.84 5.92% $ 2,084.90 -2.28% 11/14/2005 SP 38.04 $ 32.08 -15.67% $ 2,203.10 -7.52% INTERNET REVIEW PERFORMANCE Average Return Open Positions Average Return Closed Positions -6.84 % 0.89 % Total Average Return -5.14 % 2006 YTD Return -8.97 % Performance results listed here reflect values of stocks as of the close of the most recently completed trading day. They do not factor in dividends paid, interest earned and actual commissions paid. Results are updated overnight and posted prior to the market open the following business day. The YTD Return figures reflect changes since the first trading day of the current year. The Total Average Return figures reflect changes since inception on 10/10/2005. NASDAQ COMPOSITE Nasdaq Composite (COMP) 8 Portfolio Inception Open Level Current Level % Gain/Loss Since Portfolio Inception 2006 YTD Return 10/10/2005 2,092.03 2,037.35 -2.61 % -8.09 % TheStreet.com Internet Review July 17, 2006 CONTACT INFORMATION Reader Feedback and Questions Please email James Altucher directly. Please direct all account-related inquiries to customer service. Subscription/Account Info Please email [email protected] or call 1-866-321-TSCM (8726) Mon. - Fri. 8 a.m. to 6 p.m. ET; or outside the U.S. and in Canada, call 1-212-321-5200 LEGAL INFORMATION James Altucher, writer of TheStreet.com Internet Review, is a managing partner at Formula Capital, an alternative asset management firm, and a contributor to TheStreet.com’s RealMoney. TheStreet.com is a publisher and is registered as an investment advisor with the U.S. Securities and Exchange Commission. Mr. Altucher is restricted from transacting for his own benefit in securities discussed in TheStreet.com Internet Review. Formula Capital and its affiliates may, from time to time, have long or short positions in, or buy or sell the securities, or derivatives thereof, of companies mentioned in TheStreet.com Internet Review and may take positions inconsistent with the views expressed. TheStreet.com Internet Review contains Mr. Altucher’s own opinions, and none of the information contained therein constitutes a recommendation by Mr. Altucher, Formula Capital, or TheStreet.com that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Past results are not necessarily indicative of future performance. Investing in the stocks chosen for TheStreet.com Internet Review model portfolio is risky and speculative. The companies may have limited operating histories and little available public information, and the stocks they issue may be volatile and illiquid. Trading in such securities can result in immediate and substantial losses of the capital invested. You should use only risk capital, and not capital required for other purposes, such as retirement savings, student loans, mortgages or education. TheStreet.com Internet Review portfolio is a model portfolio of stocks chosen by Mr. Altucher in accordance with his stated investment strategy. Your actual results may differ from results reported for the model portfolio for many reasons, including, without limitation: (i) performance results for the model portfolio do not reflect actual trading commissions that you may incur; (ii) performance results for the model portfolio do not account for the impact, if any, of certain market factors, such as lack of liquidity, that may affect your results; (iii) the stocks chosen for the model portfolio may be volatile, and although the “purchase” or “sale” of a security in the model portfolio will not be effected in the model portfolio until confirmation that the email alert has been sent to all subscribers, delivery delays and other factors may cause the price you obtain to differ substantially from the price at the time the alert was sent; and (iv) the prices of stocks in the model portfolio at the point in time you begin subscribing to TheStreet.com Internet Review may be higher than such prices at the time such stocks were chosen for inclusion in the model portfolio. 9