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Making a list

August 6, 2007
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We spoke about making a group list together at the next meeting. We’re still working on the group rules, but perhaps we can squeeze a bit of list talk in there too. As IBD always points out, corrections or bear markets are a great time to build new lists for the new bull market or next rally. It sure was a good time to do so in March.

As a bit of reference I wanted to point you toward the last bit of posting I did on making a list. We don’t HAVE to do it like that. It’s just the way I did at the time and shows a bit of my thinking on the subject.

Back in march I made list and did a post explaining a bit about my thinking for the list at the time. It focused much less on the strong group of the time and more on strong stocks in various groups. Here’s the post on the Watchlist Criteria. It was posted on March 31 just before the SPX was successfully tested as new support the old resistance from the middle point of a very clear double bottom reversal. Very nice rally happened from there.

A proposed list was put up on April 4. I made a portfolio out of it with 1 share of each stock at a purchase price of that day’s close for each. It doesn’t say anything about trading them, but the success of the basket as a whole since that day speaks volumes to the merits of strong fundamental scores and some of the considerations I explained in the post about criteria. It also speaks to the value of relative strength, be it versus an industry group or the market as a whole. This should also be a consideration for our new list.
Here is the latest status of that list from April. After being at around 30% profit in recent weeks, it’s now showing 19.6% profit. Not bad for just over 4 months.

As for the WFR trade I setup in that post, it got stopped out on 4/13 for 13.60 per contract and a total loss of $720. Perhaps the stop was a bit tight and I wasn’t happy to miss the quick rally to follow. But I certainly was not upset to be out of it when it gapped down big on earnings.

The CMG triangle in that post didn’t quite pan out as a stellar ascending triangle liftoff, but a kick ass earnings call sent the stock off strong.

I like Ben Stein’s articles. Always a very level headed take on things. How Speculators Exploit Market Fears.

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