Special Report on Financial Stocks - yourmoneymag

A Special Report on Financial Stocks is available here:
http://resources.keymedia.com.au/ymo/2011/Issue8/FinancialStocks.pdf

It is published by yourmoneymag.com.au and the analyst contributing to this report are:
Stan Shamu - Australian Stock Report
Benny Sada - Australian Stock Report
Dennis Ng - Lincoln Indicators
Julia Lee - Bell Direct

To summarise, the list of stocks picked by this report are:

Commonwealth Bank of  Australia (CBA)
Westpac (WBC)
Australia and New Zealand Banking Group (ANZ)
National Australia Bank (NAB)
Credit Corp Group (CCP)
IOOF Holdings (IFL)
MyState Limited (MYS)
QBE Insurance Group (QBE)
Bendigo and Adelaide Bank (BEN)
Macquarie Group (MQG)
Suncorp-Metway (SUN)
Bank of Queensland (BOQ)

Actually this covers most of the big financials in Australia. But in any case, the report has a pretty graph for each as well as a table of key financial ratios.

Technical Analysis - 21 Nov 2011 - Dow and All Ords with Gann Angles

Since the last update to the Gann charts of the Australian All Ordinaries (XAO) and the Dow Jones Index (DJI), Greek has changed Prime Minister, Italy took over the bad news, Italy changed Prime Minister, Germany failed to sell all its bonds and France is in risk of a ratings downgrade. On either side of Europe, the US SuperCommittee failed to agree on debt reduction plans while the growth in China is in serious doubt.

All these news within two months and it looks like the world finance system is beyond hope. So what do the charts tell us?

The charts below are weekly charts so within the last 2 months there is about 9 new points on the graph. Both the All Ords and Dow Jones show a similar characteristic. Both when sharply up and then both went sharply down. Both have not even reach the resistance level talked about in the previous blog post.

The summary is that, sure the trend is sharply down. But it has broken no major Gann resistance angles yet and have a slight way to go. So although the news sound hopelessly indicating a financial meltdown, the charts say Not Yet.

An Article on Pharmaxis, Iinet, Channel Ten, CSR

For those with an interest in Aussie shares, here is a news article that talks about for mid-caps. These four companies are almost household names here in Australia.

http://www.smh.com.au/business/buyup-revelation-lights-iinets-share-fuse-20111018-1lyo9.html


I know a lot of you are not in Australia but perhaps they may be a reflection of their industry worldwide.
I'll provide a bit of background here.

Pharmaxis - $3.00 stock crashed to 1/3 to less than $1.00. One of its promising drugs for the lungs and respiratory system was in Stage III and got knocked back in the trial for some technical reasons. It was not that the drug has failed. Details are a bit murky - but it may still hold promise. As in all biotechs, this is speculative.

Iinet - Internet Provider. At one point was in deep financial situation. Parts of it shares was bought up by smaller rivals a few years ago. Now there seems to be more shareholding rebalancing as small rivals consolidate their holdings. More action to come maybe.

CSR - is an established Aussie company that recently divested its sugar division with a handsome capital return. Although the building industry is not crash hot, more buildings are needed. And there may be more corporate action to come.

Ten - Aussie TV channel. Not impressive. Nothing that special as a business. Entertainment at risk from new medium. As a television viewer, this channel is not that great anyway, its lack of respect for viewers is shown by simply cancelling certain TV shows in the middle of the season. Don't think it is that popular among viewers.

Technical Analysis - Dow and All Ords with Gann Angles

It's more than half a year since the last Gann Analysis. Things have certainly taken a turn for the worse. The doomsayers say that the bottom is still far away. The optimist are trying to find any shred of evidence to the contrary. So what does the Gann Angles tell us? Below are the weekly Dow and All Ords with their updated angles.

The Dow is very interesting in that it had stuck to the line of Gann +10 for about a year and showed signs of coming off this March. Now it has definitely broken off the Gann +10 angle. Question is how far will it drop. According to Gann, it would tend to drop to the next support angle. However the Gann +5 angle is still quite far from reach. If this is simply projected, the Dow may fall to 8000 by March 2012.

The All Ords has clearly broken the Gann 1x1 drawn from the low of 2003. The Gann 1x1 is the strongest or most stable angle. The other closest angle is the Gann +2.5 (Pink) from the low of 1991. This angle is significant in that it was the support for the 2009 low from which the market made a strong recovery. Will the same angle provide a resistance for the current trend? If yes, then the bottom of the current market will be about 3750-3800 in mid October 2011. Looks like we are almost there! If it does not support, then it will fall a long way more.

Interestingly, if Oct 2011 is to be the bottom, this would break the trend that the market crashes in October. In addition the Dow Graph would be resting on the Gann +7.5 angle (not drawn, but imagine between the +5 and +10 angles) in Oct 2011 at about 10,100-10,200.

Silver Companies in Australia

.... ongoing article .....

This article looks at Silver exploration or mining companies that has the potential to take off as the price of silver resumes its upward path. The gold to silver ratio is at a historically high number. When the silver price catches up to the historical average ratio, silver companies would follow.

The following are some silver companies to consider:
White Rock Minerals WRM
Silver Swan Group SWN

From just a purely technical analysis view, WRM seems to be stabilising while SWN had a long downtrend which shows sign of slowing. Given the silver price is on the rise over the last week, it may be time to watch these two closely.

WRM chart

SWN chart

Shale Gas - the Next Energy Revolution

Shale Gas - at this point in time, has not exploded into the main investment media. Yet those who are familiar are  already jumping in the bandwagon. In Australia, Coal Seam Gas investments have taken off substantially in the first decade of the 21st century. Rare earths has exploded in terms of investment at least between 2009 and 2010. It is both too late now for investors to make 1000% gain. However, Shale Gas is approaching the stage where it is almost starting to grab investors attention.

This article is an ongoing development. Details of the Shale Gas can be found elsewhere. This article is a collection of loose notes about potential investments in Shale Gas in Australia.


Updated 11 March 2013
Recent news of Chevron buying a huge stake in exploration land in the Cooper Basin.
Here are a few recent articles on Shale:

http://www.misa.net.au/__data/assets/pdf_file/0008/153359/204095-004.pdf

 

http://www.smh.com.au/business/miner-defends-fracking-in-the-cooper-basin-20130310-2fu0k.html

 

http://www.brisbanetimes.com.au/business/chevrons-bet-on-shale-down-under-makes-target-of-senex-20130307-2fo75.html

 

http://www.strikeenergy.com.au/our-assets/southern-cooper.html

 

http://www.proactiveinvestors.com.au/companies/news/32494/australian-shale-and-tight-gas-hits-milestone-as-norwest-energy-exoma-energy-increase-activity-32494.html

 

Some companies to note are

Senex SXY

Strike STX

Norwest NWE

DrillSearch DLS

Orica OGY

Beach BPT

Santos STO

Adelaide Energy board urges no action on Beach Energy bid
BY: TIM BOREHAM From: The Australian November 07, 2011 1:05PM

IN pitching a $73 million offer for its junior Cooper Basin partner this morning, Beach Energy is trumpeting its faith in the potential of the shale gas tenements in which Adelaide Energy has a 10-20 per cent interest.

Adelaide has been free-carried so far, but Beach chief Reg Nelson warned his more substantive outfit would turn off the funding tap, leaving Adelaide, which has $11m of cash, to pay its share of the expected $200m exploration bill with more capital raisings.



Hail shale gas, a force in the energy balance
by ROBIN BROMBY From: The Australian July 25, 2011 12:00AM

"SHALE gas, while now contributing to a gas glut in the US, may be looming as one of the most important developments in the world's energy geopolitical balance.
Gas supplies are a raw nerve issue in Europe, which remains concerned about its dependence on Russia, a nervousness exacerbated by the disruption of gas supplies from Libya earlier this year."


July 13, 2011

NEW STANDARD AND CONOCOPHILLIPS EXECUTE HEADS OF AGREEMENT
TO FARM INTO GOLDWYER PROJECT
(ASX: NSE)
New Standard Energy Ltd (New Standard) announces that it has entered into a non-binding Heads of
Agreement (Heads of Agreement) and exclusive negotiating period with ConocoPhillips Australia SH4
Pty Ltd (ConocoPhillips), an affiliate of global energy company ConocoPhillips [NYSE:COP].
The Heads of Agreement sets the framework  for ConocoPhillips to farm-in and jointly  explore, New
Standard’s flagship Goldwyer Project in the Canning Basin, Western Australia.



BHP buys Petrohawk Energy for $US12bn to boost shale gas exposure
ROBB M. STEWART  Dow Jones Newswires   July 15, 2011 10:11AM


Some Aussie firms position themselves as early movers in shale gas  
The Australian March 15, 2010

The article above lists the following companies with Shale Gas interests:
Beach Energy BPT
Sundance Energy SEA
AWE
New Standard Energy NSE
Molopo Energy


Future is hale and hearty for shale gas
Herald Sun February 23, 2011

More companies mentioned here with interest in Shale Gas:

BHP  paid $7.45 billion for US shale gas field

Santos STO

Beach Energy BPT

Lake Oil

Somerton Energy

AWE

Buru Energy 

Central Petroleum


Some more companies which are speculative and may have interest in Shale Gas:
Cooper Energy COE
Senex Energy SXY


Gas giant BG gets into Cooper Basin shale
Global gas giant the BG Group has joined up with local junior Drillsearch Energy to develop shale gas resources in Australia's Cooper Basin.


Analysis

The main areas with Shale Gas and potential companies with tenements appear to be:

Perth Basin - Iluka (ILU), Santos (STO), Origin (ORG), AWE, Norwest Energy (NWE)

Canning Basin - Oil Basin (OBL),  Buru Energy (BRU),

Maryborough Basin - Magellan Petroleum (MGN), Blue Energy (BUL)

Cooper Basin - DrillSearch(DSL), Inanmincka (INP), Linc Energy (LNC), Beach Energy(BPT), Adelaide Energy(ADE)

News: Rice, Mining Services and Asian Soft Landing

A collection of articles today, from quite a diverse range.

1. Local Australian rice growing collective decides to spurn a takeover by Spanish agricultural giant. Food is one of the sectors which will be in greater demand in the future, due to a global shortage of food. It is interesting to see stories like these and perhaps more in the future. In terms of investment, it is worthwhile to spot a good agricultural listed business because this sector will feature more in the future.
Adios amigos as SunRice snubs Spanish food giant Ebro's bid


2. Over recent months, there are more doom and gloom predictions. This article attempts to show using various economic data that some Asian economies are slowing down, but not necessarily the big fall many shorters are hoping for.
Asian slowdown to be a 'soft landing'


3. Australia is a resource country and the demand in commodities globally had produced a mining boom. However, investing in big miners may show mediocre growth. Investing in junior explorer may have explosive growth but extremely high risk. This article presents a group of companies with high growth potential due to their exposure to the mining industry, yet without the risk of explorers. These companies are the mining services companies such as: Zicom, Matrix Composite and Engineering, Monadelphous Group, Fleetwood Group, Campbell Brothers, Clean TeQ Holdings, Imdex, VDM group.
Mining services a ticket to commodities boom

Australian Property Bubble

This is blog about the sharemarket and in particular stocks and trading methods. No I have not gone off the rockers in writing this blog article about the Australian property market. So why am I writing about the property market? Few reasons are:
- the Australian economy is partly sustained by the booming property market, not just the resources sector.
- the Australian banks with huge exposures to property market are highly vulnerable if there is a bursting of the property bubble. If the banks suffer, the rest of the economy will follow.
- Usually the property market lags the sharemarket, so why bother with predicting a property market crash? The fact is that is already happening. The sharemarket seems to be highly volatile and can fall significantly any day now. Throughout this time, the property market data has shown signs of easing and more commentators have begun to write about this. Although the sharemarket may fall first, the downturn momentum pulling the property market with it (like being tied with a rock thrown into the sea) will mean the effect on the Australian economy will be so much worse before it can get better.

There are many more people who are more qualified in commenting on the property market and the economic drivers than me. The main goal of this blog article is to collect news articles regarding the slowing property market and general economy. The number of articles have increased recently.


Housing starts up in smoke
Peter Martin  May 17, 2011
HOUSING approvals have collapsed to a 10-year low, falling 12 per cent between December and March and sliding 9 per cent in Victoria.
While the Queensland floods contributed to the fall, Bureau of Statistics figures released yesterday show that, excluding Queensland, nationwide approvals fell 11 per cent.

Real estate slump will leave banks in pain, too

May 17, 2011

More an orderly retreat than a rout. Australian real estate, long the subject of global concern, bears all the symptoms of a market that simply has run out of puff.

Ever since America's housing bubble burst in 2007, setting off a chain reaction in Britain and across Europe - which then infected the global financial system - international pundits have been warning of a similar catastrophe here.

Endless boom a shaky theory and China's economy is likely to stall
The Australian May 16, 2011 12:00AM
A MEMBER of the Coalition's leadership team says China's economy will stall in the next year and the resulting commodity price plunge will push the budget deficit back to $30 billion or more.


Housing finance falls to 10-year low
AAP May 16, 2011 12:26PM
THE number of home loans approved in March fell to a 10-year low, dragged down by the Queensland floods and by the November rate hike. The number of home loans approved in March fell 1.5 per cent, to a seasonally adjusted 44,968, its lowest level since February 2001. Economists' forecasts had centred on a 2.0 per cent rise in housing finance commitments for the month.

How to Profit from Black Swans or At Least Don't Lose Your Nest Egg

This blog article is inspired following my reading of the book called Black Swan (not the Ballet movie with Natalie Portman) written by Nassim Nicholas Taleb, mathematician, professor, philospher, writer, Wall Street options trader. The Black Swan book is more than interesting, it is intellectually fascinating and courageous as it takes on the established world of mathematical finance dominated by PhDs and turns it upside down. Technically, the author criticises and shows with detail why the Gaussian approximation, which is at the hearts of many derivatives pricing, can be so wrong because it fails badly when some rare event happens.

This blog article will leave the details of the book to the book itself. Instead from here on, I have developed some thoughts on how to make the most out of the markets based on having read the book. The suggestions here will be divided into 2 broad categories. The definition of Black Swan here are unexpected events which are almost inconceivable and have huge impact.

How to survive Black Swans
----------------------------
Some of the points here are along the strategy of diversification but there are subtle details relevant to black swan events.

- It has been said that to be save, invest in blue chips rather than speculative stocks. However, throughout history, most recently the GFC, blue chip companies with huge reputation and operating for more than half a century, have collapsed in a matter of days. Investors in such supposedly save companies are caught out much more severely than investors who invest a little amount in a certain speculative stock.

- There is no safe stock or even safe sector. By definition, a Black Swan happens when we least expect it and with the biggest impact. So diversify across stocks, sectors, or even classes of investment, say property or cash.

- Expect the worse to happen, then make decisions on the investments with such possibilities in mind. When we expect the worse or the unexpected, we take away the element of surprise and the event loses its sting. Furthermore, having expected the unexpected, the amount invested would incorporate risk measures, thus the amount of loss may be minimized. Examples:
    - expect the Australian currency to hit US$2.00 and asses what that would do to export companies.
    - expect some powerful nations to default and make appropriate plans.
    - expect commodity prices to go extreme in either way and see how it affects companies.
    - expect commodity prices to plummet and assess your investments in the mining companies.


How to profit from Black Swans
-------------------------------
Black swan events are not always there to cause damage. It is quite possible to make tons of money when exposed to a positive Black Swan. Here are some ideas:

- Expose yourself to investment opportunities that may present a positive Black Swan. This is not too different to what venture capitalist do. They invest in companies with totally new ideas and concepts, knowing that most will fail, but the one that succeeds will have an enormous return on investment.

- Speculative stocks are not necessarily Black Swans. One may first think that mining companies that can hit a jackpot is some big discovery or biotech company with potential ground breaking drug may be classified as Black Swan events. However, by definition the Black Swan being very rare and unexpected, mining and biotech companies cannot be true Black Swans because many investors expect them to have breakthroughs.

- An extraordinary event may still make a mining or biotech company a Black Swan type investments. Examples may include a mining company that has been in production for years and has almost no exploration program. Then suddenly that company happens to find a large mineral rich deposit on a very large scale. A biotech company may already have some drugs in the market and suddenly found that the same drug can be used to cure something totally different or unexpected.

- It is very hard to catch a positive Black Swan event due to its rarity in its class. However, in the overall sense, such as look at the entire sharemarket, there are enough Black Swans that occur that can be profitable. One of the key is that as the Black Swan event unfolds, not many will recognise it in the early stages, so those who paid attention enough may make a profit. One example in the resources sector is the advent of Coal Seam Gas CSG. Not that any CSG company are Black Swan itself but the entire CSG phenomenon is a Black Swan because before that, it simply did not exist. Then a few companies came into existence that tried to harvest this new resource and initially no one paid attention - this was the time to get in. When the majority of investors understand CSG, the early investors would have made a significant profit.



More ideas are most welcomed. Note that the investment ideas above are not from the author of the Black Swan book. Rather they are my ideas inspired after reading the book.

News: Small Caps, Biotechs, Rare Earths, ETFs

Quite a few articles on today's news about Small Caps, speculative and alternative investments.

Highlights a couple of takeover, acquisitions or collaboration of Australian biotechs by giant foreign pharmaceuticals. Notable ones include Acrux, Chemgenex, Mesoblast, Biota and Cellestis.
Life-science battlers have a spring in their step


This article talks about a few small caps funds and the fact that it is getting harder to choose a winning small cap. Also provides a historical view of small caps that have become huge successes, like Cochlear, Super Cheap Auto and The Reject Shop.
Small-caps scarce but worth wait: a lack of floats has tightened the market


Highlights a few highly speculative mining stocks. Miners include those with Australian as well as foreign operations, like in Africa.
Mining stocks flying under the radar


Introduces a new rare earths company called Data Motion, which used to be an IT company.
Rare earths worth a shot for IT minnow


Finally an article on ETF which has gained worldwide popularity among investors. This article however, cautions about ETFs. In particular synthetic ETFs carry much more risk since they are based on derivative and leveraged products, rather than just mirroring the index.
Exchange traded funds under global scrutiny

Technical Analysis - MCP - McPherson's Limited

McPherson (MCP) is a company involved in marketing of household consumer products, and book and commercial printing. This will be all that is going to be said in terms of fundamentals of this company. The following will be strictly a technical analysis using methods from McNeil's book How to make money in Stocks and Weinstein's book Secret for Profiting in Bull and Bear Markets.

The two graphs presented here are the 2 year daily graph and the 5 year weekly graph. The black line is the closing price. The red lines are the 20 point moving averages. The Green line is the Stopping criteria from VectorVest.

Looking at the 2 year daily graph, the current price is almost back up the top level from around 1 year ago. This is potentially a set of the cup and handle pattern mentioned by McNeil
(http://ozstock.blogspot.com/2010/12/canslim-method-william-oneil.html). Once this signal breaks strongly, it will be a good signal to buy. Also the buy should only happen when the price still keep above the moving average.

From Weinstein's method
(http://ozstock.blogspot.com/2011/01/stan-weinsteins-secrets-for-profiting.html), the top from almost 1 year ago seem that it may be the end of Stage 2 and going on Stage 3 as the increase in price levels out. However a Stage 4 which is going downwards phase, did not develop, but instead it went sideways for almost 1 year and now it may be ready for a cup and handle.

Looking now at the 5 year weekly graph, we see that the current high price and the top of 1 year ago is only slightly lower that the pre-GFC top. One interesting feature from this 5 year graph is that the crash of MCP due to the GFC can be anticipated. The red moving average line is a good indicator since the pre-GFC peak, MCP then drifter slowly below the red line and even form lower top a few times below the red line. This is the point to sell. Only after this, then MCP dropped dramatically. So those who watched the red moving average should have got out before the steep crash.

Technical Analysis - Dow Up but All Ords Crawling

There has been a lot of talk of a two speed economy in Australia but perhaps there is a bigger two speed economy when we look at the world as a whole. The developed world which has slumped during the GFC is showing signs of recovery, slowly but surely. The high-flying GFC defying developing economies led by China and dragging a resource economy like Australia (it's more relevant here to classify Australia as a resource economy than a developed economy for our current argument), are showing signs of braking due to overheating. Let's look at our usual comparison of Gann angle charts for Dow and All Ords to compare.

Looking at the Dow first, today's news announced the Dow has doubled its GFC low, meaning it's now over 12000 while the GFC low was 6000. This has much less importance though than the half way point between the Peak and Trough of the GFC. Roughly, the Peak-Trough is 14000-6600 = 7400. Half of this is 3700, but clearly, the DOW is way above 6600 + 3700 = 10,300. So the half way point is clearly broken and not relevant now.

What is interesting from the Gann angles is that the current rise in the Dow sits very nicely at the Gann +10 line and has been doing so since mid 2010. The mid 2010 point, from our previous analysis, was where it looked like it was a double top. Since then the Dow has powered ahead. There are no visible signs of breaking any angles.

Going on to the All Ords, our previous review stated that a triple top has been confirmed. This was the right call but since then it has reversed quickly. The result for the All Ords is however a bit lack lustre. Since the reversion from the triple top, the All Ords has climbed but only very slowly. At the moment it is at the level similar to the peak of the triple tops between Oct 2009 and mid 2010. In fact the current All Ords is hugging the top of the Bollinger Band and there is no evidence of violating any Gann angles soon.

So what do we make of all this? Though the All Ords is moving very slowly, both All Ords and Dow are still on a very firm positive trend. Unless there is any reason to doubt, we can play the market with the continuing trend but keep your fingers on the button since it can turn absolutely at any moment.

Agflation and Australian Agricultural Companies

The phenomenon of Agflation is gaining headlines and will increase in the near future. It is the inflation of products of the land, such as wheat, corn, soybeans, basically food supply commodities. There are various reasons for this and the problems will get worse. Some of the reasons include population growth leading to more people to feed and at the same time less land for agriculture. Natural disasters worldwide has recently had dramatic effects on agriculture. The recent environmental push for biofuels also mean that products are grown for fuel rather than to feed humands. None of these causes will go away soon but may increase in severity.

From an investment perspective, agriculture companies have fundamental reason for appreciating in price. Some of the Australian agriculture companies are below. Please feel free to comment if you find other significant companies.

AAC  AUSTRALIAN AGRICULTURE COMPANY
CAQ  CELL AQUACULTURE
CSS   CLEAN SEAS TUNA
ELD   ELDERS
GFF   GOODMAN FIELDER
GNC GRAINCORP
IPL    INCITEC PIVOT
MSF  MARYBOROUGH SUGAR
NUF  NUFARM
PAG  PRIME AG
RIC   RIDLEY
RHL  RURAL CO
SHV  SELECT HARVEST
TAN  TANDOU
TGR  TASSAL
WCB WARRNAMBOOL CHEESE

Dethroning the US Dollar - Part II

Following the brief article Dethroning the US Dollar,
the present article continues to track what's happening in the world of US dollars and money printing.

A lot of the details of what is to be said here can be obtained from online media, just Google it. Basically, the market has risen dramatically in the last two years. Compare this with the rise in 1932 after the 1929 crash and the subsequent crash of 1937 which took longer to recover.

The situation now is on a much larger scale. Many major banks around the world was bailed out. A big Depression was averted for now. The solution was that the government saved the banks.
- Where does the money come from? They print them. The QE2 is nothing more than printing money to pay debts.
- How can the US do that? Because the US is the reserve currency and the real physical commodities are sold in US dollars.
These news are well known in the media to anyone who wants to read.

However, what many people are in denial about is that the risk of hyperinflation, in which the currency can become so worthless that it can cost billions of dollars for a loaf of bread. Is this ridiculous? Look at the history of Germany in 1920's, Yugoslavia in 1990's and Zimbabwe recently. Here is a potential way events can unfold.
US prints more money - Cannot pay off debt - inflation becomes hyper - people's life savings are worthless.

Why would a goverment do that? Why print money and make your currency worthless? Simply, there is no other way out. The solution is to declare bankcruptcy of your country or make your currency so worthless that everyone knows you cannot pay anyway. Rest assured, the people pulling the strings and controlling the monetary policy would have bought other assets before they devalue the nation's currency. THEY would not hold their savings in their own currency.

So is this devaluing real? Here are some evidences:
Geithner says "US will not Devalue Dollar" (they always say the opposite) -
China's holding of US Treasuries tumbles -
China cuts US Treasury holdings by the most ever -

The wold community knows the US dollar is losing its value fast. There are plans already to introduce a One World currency. Here is a document by the International Monetary Fund (IMF) entitled: Reserve Accumulation and International Monetary Stability.
http://www.imf.org/external/np/pp/eng/2010/041310.pdf
The world currency already has a name: Bancor

Some other articles:
Yes, China can choose to just say no to one export from America - inflation

World finances go topsy-turvey -

Stan Weinstein's Secrets For Profiting in Bull and Bear Markets

Continuing the series of summaries of investment strategy book's, here is the acclaimed book by Stan Weinstein on Secrets for Profiting in Bull and Bear Markets. It is presented in point forms so that it is quick and easy to read. 

The points includes when not to buy stock, how not to sell stocks, how to sell stocks profitably, when not to short sell stocks and when to short. In addition, Weinstein has identified the pattern on how stocks rise up and decline in FOUR stages.

Don't buy

- overall market is bearish

- stock in negative group

- stock below its 30 week MA

- its 30 week MA is decreasing

- stock has already advanced a lot

- if stock has poor volume characteristic on breakout

- stock has poor relative strength

- stock has nearby overhead resistance

- by guessing a bottom

Don't sell (stock you already have):

- sell based on tax considerations

- sell based on dividend yield

- sell based on PE or because PE is too high

- average losses by buying more stock that is going down.

- wait of the next rally to sell

- refuse to sell because market is trending up

- keep holding stock because it is high quality

Selling stocks

- use stop losses - based on MA and previous support level

- don't use stop loss based on percentages

- First stop loss should be based only on the previous support

- Other stop losses adjusted based on MA

- Increase the stop losses to higher bottoms

- use stop loss at number slightly less than a round number.

don't short

- because of high PE

- because  price has rise too much

- because everyone thinks it's going to crash

- stock trades thinly

- a stage 2 stock

- stock that is in a strong group

- without protecting with a buy stop loss

- a stock that is above its Rising 30 week M.A.

- a stock with positive relative strength

Do short

- negative market

- negative group - group chart broken below 30 week MA, and declining relative strength.

- its stage 2 increase  was very strong, clearly above 30week MA

- Volume confirmation not necessary for shorts, since prices on the way down don't need strong volume

- Short when the price break down below a certain level. Place buy stops at the previous peak.

STAGES

1. Base phase - trending in range

2. Advancing phase- moving strongly upwards. 30 week MA also  starts increasing after breakout. BUY

3. The Top Area - 30week MA starts to level off. Place sell stop below this range.

4. Declining phase - don't need strong volume to confirm this phase. SELL

RELATIVE Strength = Price of Stock / Price of Market Average