Very Profitably Buying and
Selling Low Priced Stocks Using TigerSoft
(C) 2013 William Schmidt
by William Schmidt, Ph.D. last edited 9/16/2013
Creator of TigerSoft - www.tigersoft.com
OUR GOALS
Typical Examples of
Trades We Should Be Able To Make Regularly.
Introductiory Rules
Making money trading with TigerSoft using low priced stocks is not that
much different than using TigerSoft to
trade high priced stocks. But there
are some key differences. I suggest
the following rules to start with:
1) Low priced stocks do a lot of sitting
around doing nothing. Look at their
charts. This should readily become
apparent.
This makes it imperative to pick your
stocks carefully using the right technical
cues to time your purchases so that they
have the highest chance of moving
in a reasonable period of time.
Otherwise, you will surely feel trapped holding
stocks that seemingly do little or
nothing in a rising market. Waiting weeks
or months for your stock to move when the
general market is rising is very
frustrating. It shows a mistake was
made. Review your trades and learn
from them.
2) Very important. Sell when a key
support level is violated even if the
Accumulation Index is positive and the
Closing Power is rising. I've found
that the folks who try to accumulate and
rig low priced stocks are
much more likely to be wrong. Don't
fight price downtrends with these
stocks. There is no need to.
Pick stocks that are above their rising 65-dma and
show good internals. Even if the
Closing Power is rising, the Accumulation
is positive and the stock keeps falling
on very low volume, sell when the
stock violates the neckline of a
head/shoulders pattern or when the stock's
65-dma turns down or when the stock
breaks key price support.
3) Diversify. Do not just buy one
or two low priced stocks. Buy a
handful, 5-7. This will increase your
odds of getting one or two really big winners.
This is what will increase your gains at
the end of the year.
4) Take 50% profits in 1/2 of your
position when you can. Too many times,
a hot low-priced stock quickly cools off
and falls back to where it started its move.
This rule can be varied, of course, as
desired. One could work with a stop beneath
a winning trade that guarantees you a 50%
profit in half the stock.
5) Avoid stocks that trade less than
250-500 lots of ine hundred shares
a day. The spread between the bid
and ask are just too wide and the market
makers will more easily take your shares
away at unfair prices.
6) Use the Opening and Closing Power to
decide whether the stock is
apt to open high or lower. Use that
knowledge to your advantage.
7) Mainly buy low priced stocks that show
the BOTH UP condition. "UU" in
the spread sheets under "Tiger
Sig" tell you this conditon is present. Chart
the stock's Opening and Closing Power,
too. With low-priced stocks, the risk is
always that the stock will fall asleep
for weeks and months. When both Opening
and Closing Power are rising, the stock
is bullishly openng higher and then
closing still higher than that each day.
8) When stocks under $10 appear
among the BEARISH MINCP stocks,
sell them short while they are
still over $5. This allows them to be margined.
If they show very bearish
Accumulation, a CLosing Power that is making new lows
ahead of price, a falling Relative
Strength Quotient, they are very apt to
drop much further. Just
because a BEARISH MINCP stock is low-priced
does not not mean it won't fall
much further.
You Just Cannot Be Too Cynical When It Comes
To Wall Street
Wall Street's Dirty Little Secrets.
1) Democrat or Republican in the White House: It doesn't matter:
Wall Street Runs The
Whole Show. Early in 2009,
Wall Street insiders bought heavily at
the bottom with money
given them by the Federal Reserve.
They also were secretly
guaranteed by the Fed that interest rates
would be kept very
low for a long time.
2) The fat-cats there keep the best
investing opportunities to
themselves. I vividly remember realizing this
working at
the main office of stock brokerage
Harris, Upham. I saw how the
partners kept the best stories to
themselves and did not disseminate them
them to their clients until they had
taken their own big positions
in stocks about to go up.
Not surprisingly, Wall Street kept the start of the 2009-2013 bull market
a secret from the Public. Our
indicators showed Professionals were
steady buyers early in 2009 and for many
months after the March 2009
bottom, all the while the Public was
steady net sellers. Only years later
in 2013, is the Public finally invited to
the party, probably just in time to
buy what Wall Street and the Insiders
want to sell. (Download 09-Q
from our Tiger Data page look at the
Opening and CLosing Power for
QQQ.)
3) Wall Street Insiders always know first
when there is insider information
that will affect a stocks prices.
See how we spotted this with our Accumulation
Index in Pizza Hut. There are hundreds and hundreds of such cases
we could point to.
USING TIGERSOFT
1. Tiger Data Page Downloads for This Pursuit
ACCUMHOR - consistently positive Accumulation - Regularly maintained
new VHIP21 - Stocks under $5 that have shown a bulge of
Accumulation above +.45 - Regularly Maintained
LOWPRICE - Stocks under $5
- Regularly Maintained...
BIOTECHS
2 Tiger Indicators and
Tools
Each year Tiger reports
on the best gainers of the last year. Each year, most show big
bulges of Accumulation before they start the
best part of their moves. Flat topped
breakouts with gaps and red-high volume are
also typical of the majority of the
top 10, 20. or 50... See the study for 2007's
biggest gainers.
See also http://www.tigersoft.com/Tiger-Blogs/8-30-2007/index.htm
There are always many low priced stocks
with these characteristics that double or
triple.
Tiger Accumulation Index
Test Your Skills at Stock
Selection
Which would you have bought?
IBM or Cheyenne Software
Here's What would have happened.
IBM or Cheyenne Software
Tiger Closing Power - Read
our on-line book on this.
The Tiger Power Ranker lets you easily screens
large numbers of low-priced stocks to find the stocks
to find the best candidates that are apt to
become the next explosive super stocks.
Using the the Tiger data downloads mentioned
above run the Power Ranker's ANALYSIS.
Then either list these stocks with the
spread-sheet display or graph them in sequence.
Using these screens will find you most of the
best stocks early-on.
Find and examine
stocks showing these Power Ranked Characteristics:
BULLISH - the most important...
New Highs,
BothUp, Unusual Volume, Price Gaps, B10s, B12s, B20s,
B24s, Unusual
Volume, Short-Term Stochastic Buys,
Require AI/200 to be
above 145, IP21 to be above +.23
Require Closing Power to be confirming the new high
Require OBV and Relative Strength to be confirming the new high.
Don't chase a stock more than 10% above its flat top breakout point.
Example from the
9/3/2013 run of the TigerSoft "BULLISH" picks among the 200 Biotechs
we offered.
They were:
Power AI/200 Curr, IP21 Price
50-day Trend MACD Signal
Tiger Signal
EBS 551
175
.25
17.73
.98 (below)
Sell ?D
(Pink shows the price was too high, or the value was too low or negative)
QDEL 481
183
.18
26.69 1.02
Buy
?U
ALNY
436
158 .05
52.42 1.05
Sell
U!U
==>CUR
418
160
.13
1.64
1.03
Buy
UU
CSB
399
166
.23
1.33
1.04
Sell
DU
CUR was the only stock in the top 5
Power Ranked Biotechs that night that qualified
on all
counts. Examinatin of the CSB chart
showed it had nearly doubled since its
June
breakout. As we customarily want to find a low-priced stock that will give us a 50%
gain on a
breakout for half of our position, CUR clearly was much better. A quick look
at Yahoo
showed that its work in spinal repairs using stem cells made it a good story
spot.
the coming football season would surely highlight the need for better ways
to treat
spinal trauma.
Technically, CUR was perfect. You can see what the stock looked like on
9/3/2013
above
when I recommended it on our Stocks' Hotline. The factors that made me
pick
this stock were listed below. You will see that these were the classic
technical considerations we want to see in a low priced stock we buy.
So, I
suggest studying them closely.
1) It showed steady positive Accumulation. Its AI/200 score was above 145.
2) It had had a bg bulge of insider buying in early July. The IP21 went above
+.50.
3) The stock had two weeks earlier then shown s Closing Power that had broken"
its downtrend. This was the bullish "Closing Power hook-upwards" following
a
bulge of insider buying.
4) The stock had then gotten back above its 65-dma.
5) Now both Opening and Closing Power were rising. The stock was primed to
advance. We might not have to wait long.
6) Best of all, the stock had a set of earlier flat peaks at 1.80. If the flat
resistance here could be overcome, the stock would breakout and attract
new buying interest.
7) It was in the red-hot biotech group. This meant its trading would be
watched by many investors and advisors, too.
CUR did breakout. It jumped by more than 50% with two weeks. Here is
its chart right now, as I write this.
================================================================================================
KNOW THE STAGE OF THE BULL MARKET WE
ARE IN.
ADJUST YOUR TRADING TOO IT.
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3. STAGE ONE: Buy The
First-Out-of-The-Gate Low Priced Stocks :
At the end of a long bear market, many
stocks will be low priced. Buy those
that first break their price downtrends
and that are the leaders in terms of Price-Pct change
and Unuusal Volume. As they
advance, their Closing Power should be leading Price.
They should show rising and increasingly
positive Accumuation.
See Tiger Blog: "The Great 2009 Bull
Market"
See also http://www.tigersoft.com/BiggestG/index.html
- See examples from early 2003
and early 2009.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
4. STAGE TWO: The bull market has now gained many believers. But not all
stocks
go up equally or together.
After the bull market is a year or two old, we must
be more selective. Use
Tiger's Buy Tiger B12s and B10s to find these among
stocks between $10 and $20.
This is the price range of the biggest gainers
ar this time. As they
gain acceptance and surpass $20/share, bigger insttitutions
will start to buy them based
on jumps in earnings and expanded PEs.
Unusal volume, big gaps and Buy
B12s will also find low priced stocks at this
time. They are most likely to
be in biotechnology, where earnings potential
stories can be spread based on
potential new drugs and treatments they are
developing.
Require these stocks to
bulges of Accumulation and flat topped breakouts.
These are stocks insiders and
professionals have accumulated preparatory
to a mark-up phase that
usually lasts a year before the bullish news finally comes
out that the insiders
expected, controlled and will use to bring in the last public
buyers near the final top.
See: TigerSoft's 1997 Study of Bullish
Special Situations --
Note that these STAGE 2 Explosive Super Stocks will usually rise a
year before they collapse.
This will give you many
additional buying and trading opportunities with these stocks using Tiger's
Closing Power in
conjunction with the rising 65-ma and 21-dma of Closing Power. Where
there has been a
classic bulge of Accumulation and take-off with majors Buys, flat-topped
breakouts on red high
volume with price gaps, you may want to be an investor, not
a trader. Take a
position in five or six of these and just let them run. Hold them as
long as they stay above
their 65-dma. If they violate it, sell. But don't recommit the
funds until you see
whether the breakdown was actually bearish. If the stock quickly
recovers and the
Closing Power turns up sharply. But the stock back. The decline will
probably prove to have
been false.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
5. STAGE THREE: In this
stage, it shuld be apparent that the long bull market is coming to an end.
Peerless will have given Sell
S9s and Sell S12s. The DJI may be desperately trying
to hold up above its flat
65-dma. At this point, the few, remaining stocks making
new highs get an inordinate
attention from breakout buyers and high-performance
chasing funds. This
makes them go up faster and further. The general public is now
in the market now. They
prefer low-priced stocks. These are usually very thin. After a
suitable period of insider
and professional Accumulation these stocks breakout with
flashy increases of volume
and big price gaps. They show the usual major TigerSoft
Buy signals: B10s, B12s, B20s
and B24s. The difference is that they are "shooting stars".
Their extraordinary gains
from start to finish usually are made within 6-9 months. Then
they collapse completely.
They give back all their gains in the bear marlet that has
now hit all shares.
Act accordingly with these stocks. Work with tight stops. Look
for
the signs of a top, such as
head/shoulders patterns, false breakouts and breakdowns
below nested price
suppport/the 65-dma/the longer price uptrend/the Closing Power uptrend.
We saw this in many small
oil/gas "penny stocks" in 2008 when crude oil prices
briefly rpse from 110 to
$150/bar.
6. THINGS CAN GO VERY WRONG WITH LOW PRICED STOCKS.
Actually this is true for any priced stock. But low priced stocks are manipulated
mostly by "small-time" operators. They are "small-time" for many
good reasons.
Their judgement and control of the stock is much mor elikely to be wrong.
This means the Accumulation and Closing Power can fail to call a top or
a support about to give way, as they do with higher priced stocks. This makes
sense I think. The manipulators and Accumulators of these stocks are
not nearly so smart, well-endowed with money or have as much control
of news and events as the much bigger operators do. Goldman is successful
because it has money and because it can control Washington DC. The small-time
operators working with low-priced stocks are much more likely to be wrong
as a result.
Warning - Sometimes low priced stocks fool even the
professionals and
the
Accumulators. It is best to work with stops with these stocks underneath
well-tested flat support. Below, I
recommended SFEG at $1.00. It rose
nearlt to our 50% goal for half the stock, but then started falling back when
the
take-over of another company they were attempting failed. As gold
prices
fell, the stock dropped and dropped, hitting 10 cents two and a half years
later.
See how this happened and why you must use sell stops and sell
when prices
break below these support levels.
Jan15,
2012 SFEG
Santa Fe Gold Shows Bullish Insider and ... - TigerSoft