Friday, December 31, 2004



Allan - These are still down, and passed my test, if you want to try buying stocks that may potentially rebound. Or just follow them to see if it works.


Allan: What test, the SAT?


Most are Biotechs that I like anyway; some are technology stocks near lows that seem down mostly due to tax loss selling; most have enough cash to survive, or at least revenue.


Ok gang, twenty-one new stocks to consider for a pop next week. In addition to these new picks, in previous blogs I've highlighted a number of simlilarly situated stocks that interest me for early 2005 pops. If you're going to play this strategy, pick at least five for your basket, ten if you can manage the angst.

2005 is shaping up as an bullish year, at least through the first half, so I intend to be around, touting the market as the place to be.

Happy New Year, All!

Wednesday, December 29, 2004

A Couple News Related Trades

Acambis PLC (ACAM)

Acambis plc is a developer of vaccines against infectious diseases. They have over $4 a share in cash, very little debt, are growing at triple digit rates and sport a P/E under 10. The stock is trading this morning at $9.90.

ACAM web site

Strategic Diagnostics Inc (SDIX)

Strategic Diagnostics Inc. develops, manufactures and markets immunoassay and bioluminescence-based test kits for detection of a variety of substances in the food safety and water quality markets. This is a $74M market cap company providing huge leverage should it's unique services become subject to a few new contracts.....which seems more and more likely every day now. The stock is trading this morning at $3.90.

SDIX web site

Wednesday, December 22, 2004

Biotechs, Part IV

I added two more biotechs today, BIOV and ARDM, bringing my Biotech Pop Portfolio to 10:


That should about do it, unless something extraordinary appears on my radar screen in the next few days. For background as to the whys and wherefores underlying the list, check out my previous Biotech blogs.

How to Value a Source

Are you asking whether subscriptions to services that help us trade stocks are cost effective?

This question applies to any stock advisory service and for that matter, any tool, be it charting, data, software, blackbox systems or even hardware and broadband tools. The answer is that it depends, and you need to evaluate the services on an individual basis to decide.

Tradable pops for me need to generate on average intra-day return of 2-3%. For simplicity sake, let's say that $10,000 worth of stock is purchased on any one signal. That would mean the system has to have an on average profit expectation of $250 a pop. These expectations are not prayers, they are based on extensive back-testing as well as real time trading experience with the source of the signal.

For example, in order to evaluate whether $150/month is justified for any one service, look at the average profit expectation for each signal generated from this source, including losing signals, times the number of signals triggered each month. For example, if there are 10 signals per month averaging $250 per signal, then the gross profits from this source amount to $2,500 per month. The cost of the source is $150 per month. Viewed in this context, do the results generated from this source justify it's cost?

Wednesday, December 15, 2004

Insider Buying: Case Study - UTSI

In my last blog, Insider Buying: Case Study - ALOY I showed how a single key insider buy triggered an immediate day-trade win of up to 4% and a multi-day short-term win of up to 10%. Now I want to describe another type of insider buy trade, one where a cluster of insider buys creates an outstanding opportunity for a 50% gain in a position trade lasting about two months.

Between September 22, 2004 and September 27, 2004, the insider service that I use published a series of insider buys for UTSTARCOM INC (UTSI). In this cluster of buys, just under 350,000 shares of UTSI were purchased by a group of insiders ranging from Directors to Senior Vice Presidents to the President and CEO of the Company. Purchase prices ranged from a high of $15.90 to a low of $14.04, for an average cost of the cluster of buys of $14.86. All of those came after the stock had dropped over 50% in the previous two months. According to CBS Marketwatch:

"Culminating what had been a year-long slide, UTStarcom endured a sharp drop last month after issuing for the second time a warning that third-quarter financial results will not match Wall Street's expectations."

But these insiders, arguably those who know more about the company and it's prospects and anyone, including analysts, financial journalists and hedge fund short sellers, reached deep into their own pockets and purchased almost $5M worth of UTSI stock on the open market. All of this insider buying was presented, day after day, in clear and unambiguous terms at the website, as well as on most if not all of the other insider transaction web sites. In other words, the information was public and as it turns out, very timely.

As of December 15, 2004, about ten weeks after these transactions were first published, UTSI closed at $22.35. This is a return of over 50% from the average price the insiders paid for their stock. While these insider buys were being reported by the various services, the stock was available to the public from a high of $16.60 to a low of $13.89. Buying it between $14-15 a share, along with these insiders, offered an excellent opportunity to profit alongside those in the know.

Insider Buying: Case Study - ALOY

On December 13th about thirty minutes before the close, my insider service, SEC Analytics, posted an insider Buy for ALLOY INC (ALOY); the CEO had bought $108K worth of stock on the open market two trading days earlier, on December 9th. At the time of the posting, ALOY was available to buy at the very same price range that the insider had bought his shares, $5.88 - $5.90 a share. Before the close, ALOY was trading above $6.00, to as high as $6.10 on very heavy volume.

The next morning, December 14th, ALOY opened at $5.97 a share and traded strong all day long, trading as high as $6.51 before closing at $6.40. On December 15th, ALOY once again opened strong, at $6.43, trading as high as $6.68 as I write this.

This is typical of a one of the better insider buying trades:

A late afternoon signal that carries into the next day and beyond, for a 10% or better pop. A day-trade on the afternoon of the signal provided the potential of a 4% gain, the days immediately following the signal expanded the potential gain to over 10%.

Tuesday, December 14, 2004

Insider Buying

In the past month I've alluded to my stock day-trading system without discussing many details. I'd now like to explain some of the technical aspects, in case any of you reading this are going to set yourselves up for day-trading. What follows is my technique for day-trading Insider Buys.

The concept behind my insider trading is to take advantage of the SEC "Form 4" filings that describe insider transactions in publicly traded companies. The SEC web site runs all through the day with new filings showing which insiders are buying what company's stock. Once that information hits the market, the underlying stocks are often good for anywhere from a 2% to a 10% "pop" in a matter of minutes, hours or sometimes, days.

In order to trade these pops, you need to gather, organize and recognize these insider transactions and then get into the stock before it has popped too much. There are a number of commercial services set up to do just that for traders, some of them are even advertising on this blog. Each one provides a similar service, presenting the essential information you need to trade these pops, although they differ in formats, approaches and cost. Most offer trials of varying lengths to try out and see if it works for you and your trading style. I've tried a number of these services and have been using SEC Analytics because I like their format, speed of posting and ease of use.

SEC Analytics takes the SEC published filings and publishes them almost simultaneously on their web site. The table at the site refreshes itself every five seconds. When a new Insider Buy hits, I quickly discern whether it is likely to pop the stock. For example, a CEO buying $100k of a low cap tech stock will almost certainly pop the stock, usually significantly. A Director buying $5k worth of Cisco usually will have no effect on Cisco's stock price. SEC Analytics, as well as many of the other Insider Buying services provide background information on this type of trading, what insiders are best to monitor for influencing stock pops with their buying and what purchase amounts will most likely move the stock.

As pointed out above, there are a lot of Insider web sites providing this kind of service, which implies that there are a lot of traders participating in insider trading, all keying off of these Form 4 filings. I like SEC Analytics because they are timely, have a well formatted table for identifying new trades, offer a free trial for newcomers and maybe most valuable of all, they have a real time chat room where these trades are discussed by not only SEC Analytics but other subscribers to the service. Although SEC Analytics is designed for the short-term trader, some of the other services are longer term oriented and some do all the work for you, narrowing the process down to one or two insider picks a month.

The beauty of day-trading though is that you are only in these stocks intra-day and usually are in cash overnight. All you need are two or three decent trades a day, averaging a few percent each, to generate a very respectable monthly return. Of all my day trading techniques, Insider Buying ranks at or near the top in terms of percentage wins and average percentage profits per trade. If you're going to start day-trading, this is where to begin.

Friday, December 10, 2004

Trio of Tech's

Sometimes my day-trading picks stay in my portfolio because as I am trading it, I will discover the story underlying the shares, learn a little about the fundamentals of the company and decide it's worth holding longer-term. That's what happened with each of these stocks:




So along with my Biotech Portfolio, I'm holding these Trio of Tech's beyond my usual day-trading time perspective. I'll leave it to you the reader to take a look at these and decide for yourself if the story is worth a walk on the wild side with your hard earned cash.

Biotechs, Part III

I've added Titan Pharmaceuticals (TTP) to my position trade portfolio this morning at $2.60 a share. TTP is down about 50% from it's highs this year, so there may be some tax-loss selling here and is down from it's all time high of $65.30 in September, 2000.

has $1.34 a share in cash, no debt, and an impressive pipeline of drug candidates in various phases of development. At $2.60 a share, it, like the other biotechs mentioned in these blogs, has both short-term double digit appreciation potential as well as longer term home run potential. Thus, TTP joins my biotechnology list.

Thursday, December 09, 2004

The Market and System Trades

It's thirty minutes into trading on Thursday and the market is very weak this morning, due to some semi talk about weak business. This spells opportunity for short-term trading. It is much easier to make money buying weakness-turning-to-strength, then buying strength-turning-to weakness. Thus, the first part of that equation, Weakness, is now in place. If the market turns up now, our system trades should work out quite well. Oh, yea, most important of all, we don't trade anything without a system trade and if we get a system trade, we take it, no matter what shape the market is in. So why even consider market weakness verus market strength?

We consider it only in the context of the size of our bets and the length we are willing to stay in a trade. In other words, in a very weak market we might take smaller wins on reduced sized trades. In a booming rally, we might be willing to stay a little longer at the party and make more sizable bets. This is the one subjective aspect of my day-trading, overall market conditions effect the trades, on size, on profit taking, but almost never on whether or not to take a system trade. We take them all.

Monday, December 06, 2004

Biotechs, Part II

Here is a list of my biotechs, the ones I'm holding for a December-January "pop" due to tax loss selling and/or bullish seasonality and/or insider buying:


Monday, Monday

Monday, Monday, can't trust that day,
Monday Monday, sometimes it just turns out that way

Halfway through Monday and I've gotten only one system trade so far, a profitable position in PNR. But I'm down on the day due to a couple of non-system trades, taken out of boredom. That's my Lesson of the Day, be disciplined. If you have a system that works, trade it and if you're bored, make a bowl of Tofu dip, or do a Google search on "Day-trading," or re-arrange a closet. Sometimes, not trading is as important to your success as everything else put together. This blog is a keeper.

Saturday, December 04, 2004

How Stress Can Make You Age

It's Saturday, so how about we talk about something other then day-trading your way into affluent self-fullfillment? Ilene just e-mailed me a fascinating article, the subject of which is the title of today's blog. Yes, Geron (GERN) may very well be the play here, but on a much longer term basis then we are used to in our stock trading. I'm still holding some of my original GERN shares, bought in late nineties. One of these days, this stock will be untouchable.

Hi, Allan: Possibilities for GERN?? The immune system and nervous system are highly inter-related, though I haven't been following the latest research on it, it's a fascinating field of study. Let's say your body senses stress, and, or causing, the immune system's poor functioning, and this leads to a destruction of telomeres (perhaps as a consequence of stress hormones) and this feedback to the brain leads to changes that other's might characterize as unpredictable and atypical behavior, as you subconsciously fall into what may actually be the survival-mode. Interesting, huh? - ilene
How stress can make you age

By Benedict Carey The New York Times
Thursday, December 2, 2004

NEW YORK Some stressful events seem to turn a person's hair gray overnight. Now a team of researchers has found that severe emotional distress - like that caused by divorce, the loss of a job, or caring for an ill child or parent - may speed up the aging of the body's cells at the genetic level. The findings are the first to link psychological stress so directly to biological age.

The researchers found that blood cells from women who had spent many years caring for a disabled child were, genetically, about a decade older than those from peers who had much less caretaking experience. The study, which appears in Proceedings of the National Academy of Sciences, also suggests that the perception of being stressed can add years to a person's bio logical age.

Though doctors have linked chronic psychological stress to weakened immune function and an increased risk of catching colds, among other things, they are still trying to understand how tension damages or weakens tissue. The new research suggests a new way that such damage may occur and opens the possibility that the process can be reversed.

"This is a new and significant finding," said Bruce McEwen, director of the neuroendocrinology laboratory at Rockefeller University in New York. He said the research provided some of the clearest evidence yet "of the price in wear and tear on the tissues that everybody pays during a stressful life.

"And we know as we get older," he continued, "we have a greater tendency to put on fat, to develop heart disease and diabetes."

In the experiment, Elissa Epel and Elizabeth Blackburn of the University of California at San Francisco led a team of researchers who analyzed blood samples from 58 young and middle-age d mothers, 39 of them caring for a child with a chronic disorder like autism or cerebral palsy. Using genetic techniques, the doctors examined the DNA of white blood cells, which are central to the body's immune response to infection.

The scientists focused on a piece of DNA, called the telomere, at the very tip of each cell's chromosomes. Like the head of a split matchstick, the telomere shrinks each time a cell divides and duplicates itself. Cells may reproduce themselves many times throughout life to repair and strengthen their host organs, to grow or to fight disease.

A chemical called telomerase helps restore a portion of the telomere with each division. But after 10 to 50 divisions or so - the number varies by tissue type and health, and biologists still do not understand the system well - the telomere gets so short that the cell is effectively retired and no longer able to replicate.

People born with a genetic disease called dyskeratosis congenita, which causes accelerated shortening of telomeres, die young, usually by middle age, most often as a result of complications from weakened immunity.

Change in telomere length over time, in short, is thought to be a rough measure of a cell's age, its vitality.

When the researchers compared the DNA of mothers caring for disabled children, they found a striking trend: After correcting for the effects of age, they calculated that the longer the women had taken care of their child, the shorter their telomere length, and the lower their telomerase activity. Some of the more experienced mothers were years older than their chronological age, as measured by their white blood cells.

"When people are under stress, they look haggard, it's like they age before your eyes, and here's something going on at a molecular level" that reflects that impression, said Blackburn, a professor of biochemistry and biophysics.

The researchers also gave the women a questionnaire, ask ing them to rate how overwhelmed they felt by daily life, and how often they were unable to control the important things in their lives. The women who perceived that they were under heavy stress also had significantly shortened telomeres, compared with those who felt more relaxed - whether they were raising a disabled child or not. "Some of the women who had a lot of objective, real stress also had a low perceived amount, and the next step is trying to understand what it is that promotes this kind of resilience," said Epel.

She said the group had plans to test the effect of meditation, mindfulness training and yoga on both perceived stress and telomere length. Cognitive therapy, in which people learn to temper their responses to stress, could also help, psychologists say.

Experts caution that the telomere study needs to be replicated and that no one has yet shown convincingly that psychological stress significantly shortens people's lives. And it is far from cle ar exactly how fretting over a child's learning disability, say, can cause a parent's telomeres to shorten before their time. "Right now, that is the black box," Blackburn said, "and that's what we're going to study next."

Friday, December 03, 2004


Buried in yesterday's F.A.Q. thread was a disclosure from Ilene that we had received a Buy signal on CRIS yesterday, at about $4.48 a share. In the after-market, I sold some CRIS as high as $5.05. That's over a 10% pop and points out what is possible if you get these right, especially tech and biotech. Last night, one of my subscription services pointed out that in the past 11 years, the biotech sector has posted gains from mid-December to late January nine times with almost half of those gains in the double digits. It may be a sector to look to in the days ahead for opportunities, especially if there are any significant insider buys.

Thursday, December 02, 2004


Allan, why are you doing this?

I've been posting on the Internet since the old Prodigy "Hypotheticals" thread, circa 1990. While it's ego satisfying to publish one's thoughts, I don't like to argue with people, especially strangers on the Internet. So this way I get the best of both worlds, publishing, but without accountability.

Is there a regular schedule for your blog?

Yes, whenever I feel like it.

Are the stocks you mention worth buying?

I thought so at the time. But if you're thinking about trading them, remember, I already bought in and usually at much lower prices. In fact, I might be selling out soon after mentioning a stock, or, as in the case of ELAB, trading in and out of a partial position and holding onto a partial position for an extended time.

Say what?

I'm trading full time and what I post here is but a small part of my trading activities. I think one of my purposes is to show that it can be done, to inspire others who may want to try full time trading as a vocation. Somewhere along the line, enough of this may make enough sense to you to give it a try, maybe not exactly the way I do it, but along your own path. Like I said, it can be done.

Buying anyting today?


Monday, November 29, 2004

Monday, November 29th

Still on the road, trading now from the lobby of the Doubletree Guest Suites in historic downtown Charleston, South Carolina. The wireless set-up here has been perfect and we haven't had to resort to the Sprint wireless card or dial-up at all. Best of all, with two hours of trading to go, the trip is more then paid for with today's handful of most excellent day-trades. I closed out a part of my ELAB position today, bought one week ago at $23.50, sold today at $26.00, for little over 10%, worth the risk of holding the trading position overnight. Will keep some as a longer term position as long as general market is holding up.

As for today's day-trades, I am currently flat, looking for one or more good trades before the close today. Tonight it's onto Orlando for a 24 hour lay-over with my trading partner Joe, then Tuesday after trading it's back to the Great Northwest for what passes as normalacy, until Christmas.

Friday, November 26, 2004


This morning I'm coming to you from high atop the Delta Crown Room at the Orlando Airport. I am amazed that an airport as large and lucrative as this has NO HIGH SPEED INTERNET CONNECTIONS! So I have one computer on the Sprint PCS wireless card and one on a dial-up line. The Crown Room is nice, worth the price of admission just to use the bathrooms. How can airports stay so filthy? Everywhere I look is a maintanence person pushing a cleaning cart, yet, these places remain disgusting. Maybe it's just a big ploy to get you to join these high flyer clubs, clean, comfortable, open bar. Works for me.

Oh, yes, the market. Only play today so far has been SIRI, bought the open, sitting on about a 3% gain, have 20 cent trailing stop in at just above b/e. When I finish this blog, I'll sample their Manhattens. Still 90 minutes until my flight.

Tuesday, November 23, 2004


Several trades this morning and zero, nada, nothing going on this afternoon. So a good time to blog. My pick of the day is ELAB, bought on the Open today and I'm holding most of my position for a few days at least, maybe weeks. That leaves me holding, in addition to ELAB, LPSN, WSII and TINY as day-trades evolving into position trades. What's that all about? I don't know, but they're all going in the right direction.

Monday, November 22, 2004

Monday wrap-up

Chalk Monday up as another good day, with about a dozen new day-trades. Plus the position trade in TINY (Friday afternoon's blog) was up about 5% on the day. Still holding TINY, if for no other reason then it's a great name for a company.

If you, like me, are just a little tired of the bearish prose littering the Internet stock forums, may I suggest you pick up a copy of Harry S. Dent's, "The Next Great Bubble Boom." The author suggests that the stock mania of the 1990's was just a prelude to the real bubble, directly ahead of us and should last the rest of this decade. Right or wrong, it's a refreshing overview of what could go right in the next few years. Why not?

Monday AM

My two day-trades carried over the weekend (see Friday's blog), HYGS and PTSX are up nicely, 5% and 4% respectively and I've now put in trailing stops on both, hopefully locking in 3% gains no matter what. Had it not been late Friday afternoon Buy Signals for these two stocks, I would have bought a lot more of each, but I'm not complaining, it all adds up nicely in the end.

Saturday, November 20, 2004

Tools of the Trade

My trading system depends on 1-5% pops in stocks over the course of a few minutes to a few hours. I average about 5 trades a day and usually achieve profitable results in at least four out of five trades. Key to my success, apart from the underlying methodology, are my tools of the trade that open the doors of speed and accuracy in the placement of my orders. Don't think of day-trading without the proper tools, as even with market orders, the speed of your entry falls directly to your bottom line and it does so time and time again.

My primary trading platform comes from my broker, Interactive Brokers. It is lightening quick and as accurate as I am in entering orders. In other words, the only mistakes are mine alone. My back-up is Schawb and their Street Smart Pro platform. Even with their newly discounted fees of $9.95 per side, Schwab is still about twice as expensive as IB. At 1200 trades a year, those commission dollars add up.

I use a cable broadband connection, backed up by a Sprint PCS PC card. As it should be, the back-up is rarely used and even when called in off the bench, it's only in for a play or two before the cable connection is back on. The Sprint card's speed is about half-way between dial-up and DSL. Good enough for a back-up.

Now the fun part: I trade off of two notebooks, an Apple 17 inch Powerbook which runs the IB platform on a UNIX base and a Sony Vaio running both IB's Windows platform and Schwab's Street Smart Pro. The Mac has a half of gig of RAM, the Sony one full gig. Both machines are about 18 months old, but still adequate, no, make that perfect, for my trading. They both run off of an Apple AirPort Express wireless network and all of the above packs up in about 15 minutes and converts effortlessly to two carry on briefcases for travel. The Sprint card allows me to connect the Sony to the Internet and thus, puts me in business anywhere and any time I am in range of a Sprint PCS tower. In other words, just about anywhere and any time.

My software is a mix of store-bought and proprietary technology that forms the soul of my trading system. 'Nuff said about that.

How much does all this cost? Or asked another way, with 4 out of 5 wins, making 1-5% on average per trade and making about 25 trades a week, who cares how much it all costs?

In summary, my trading system is built on and around top-of-the-line technology; speed, reliability and accuracy. There are days when I don't even know if the market is up or down, I'm just standing by, managing my trades, waiting for my triggers, looking around the net and trying to keep sharp. Ergo, this blog.

Friday, November 19, 2004

Friday's close

After an uneventful afternoon, a series of Buys triggered in the last thirty minutes today. I don't like holding overnight and certainly like less the thought of holding over week-ends. Nonetheless a system is a system and I didn't get here from there skipping trades. Although my system is truly a day-trade system, the trades do need some time to sprout, more time then Friday's close allowed. So I'm holding small positions over the weekend, HYGS, PTSX and TINY to name a few. TINY is actually a postion trade, will hold for days, if not weeks. Now, let the errands begin, first with a trip to Costo optical. A bright Eastern Washington sun belies 36 cold degrees. What was he thinking?

Frolicking in the mist

The market is still languishing, not moving any lower, nor showing signs of a turn-around and my day-trades have dried up. So we wait. I average about 30 trades a week, so a slow day every now and then is meaningless in the grander scheme of things. Still, I can't go off and frolic in the mist because the next grand slam home run trade can happen at any time. So we wait.

Friday CAB trade

CAB: Bought 21.65, sold 21.97. It's a living.

Friday morning

Markets are down and short-term trades have slowed to a crawl here, so I'm taking a break to warm up some quiche, brew a new pot of Starbucks and post this update. Spokane continues to be cold, bleak, damp, and grey. Been up 4 hours and still haven't put on my shoes, so what difference does the weather make? Just got an alert on CAB. Gotta go.

Thursday, November 18, 2004

Thursday night, November 18, 2004

OK, this is how a day-trader prepares for the next day's trading, or at least how this day-trader prepares: We went out for Thai food. Ginger chicken and Thai fried rice. "Why no chart's," you ask? We don't need no stinkin' charts. For twenty years I slaved over charts, night after night, looking at everything from neural nets to oscillators to Elliott Waves and back again. It's like going to Hebrew school as a kid in Detroit. You did it because you were "Jewish." So if you fancy yourself a "Trader," you look at charts at night. If you go to a place like, you see hundreds of charts analyzed by well-meaning individuals who still believe that there is some predictive power in chart analysis. I did it dutifully for years and years until it occured to me in the depths of the 2000-2002 bear market that all I had been doing right was buying stocks in a bull market, the mother of all bull markets. A rising tide lifts all wannabe traders. It wasn't the charts at all.

So what works?

In eighteen months of real time real money trading, I have found that day-trading works, That prediciting the next 2% move in a stock in much easier then predicting the next six months of price movement. There are clear, objective triggers that move stocks a little bit over a very short period of time. Put them all together and you are making a half dozen trades a day, making 2-4% per trade and returning to 100% cash at night. Thus, a relaxing evening of fine dining replaces struggling over the great bull versus bear debates raging on Internet stock forums.

Tomorrow is Friday and there will be a half dozen or so great trading opportunities, little pops, clearly predictable and tradable. It is with that knowledge and comfort that I retire early this evening, to savor some of the finer pursuits, ripe, seductive, compelling and I am mush.

Thursday evening, November 18, 2004

It is 41 degrees in Spokane, grey, wet, dark and cold, mostly cold. But the bad news is, this is the warmest it will be here for the forseeable future. The good news is, I am day-trading for a living and boy am I ever day-trading. This Pacific Time Zone is incredible. You get the quotes three hours earlier then the traders on the East Coast. Talk about advantages, there outa to be a law. Yet Martha rots in jail. I went shopping a few weeks ago for sheets. Didn't even know they made cotton in Egypt. Everyone should shop for sheets just one time and not simply buy the cheapest-on-sale Costco K-mart blue light specials. Knowledge is an end, not a means. Ergo, Allan, all Allan, all of the time.

All Allan all the time

All Allan all the time. Welcome.