Sleuthing for the Next Cash-In-The-Box

I'm looking for another Cash-In-The-Box opportunity this morning. Look at the chart of ABG courtesy of Worden's FreeStockCharts.com  It will be interesting by the end of the day to see whether or not ABG can close above the resistance line I've drawn in at the top of ABG's recent price range. As you can see ABG has been in a range for more than 20 trading days. This makes for an excellent Cash-In-The-Box opportunity IF ABG can break out on heavy volume today that exceeds the 50 day moving average line I have drawn over the volume bars below the price chart. So just what are the parameters definining a Cash-In-The-Box play?
   
A stock must have been in a price range for 20 trading days or longer. You have to be able to draw a horizontal resistance line touching two or more top prices and a horizontal support line touching two or more of the lowest prices in the range. This is what gives you the rectangle or box that the stock has to break out of. See the lines I drew in above on the ABG chart.  Also the stock needs to be above the 50 day moving average of volume. This provides the oh so important volume spike that moves a stock to higher or lower prices depending on its direction. Also the stock should ideally trade at least an average of 100,000 shares per day. Gary B. Smith's formula called for 500,000 or more per day. The stock should be $20 or higher in price. The stock should have closed above the resistance line or below the support line on strong volume above the 50 day moving average of volume.. In fact you can sort for stocks that meet these parameters yourself if you have Worden Charts. Here is the Gary B. Smith formula for scanning for these stocks on Worden 2000 Stock Charts Program:

Gary  B. Smith
Worden Sort Formulas for scanning for breakouts

Longs
(C>20) and (AVGV50>500) and (C>MAXC5.1) and (C>C1+1) and (V>1.5*AVGV50)

Shorts
(C>20) and (AVGV50>500) and (C1.5*AVGV50)

Or you can look for candidates yourself for free without any software. Just go to BarChart.com.  My favorite lists of stocks to look through are the 52 week highs, 52 week lows, Stocks that Gap Up, Stocks Gap Down, etc.. But almost all of their lists have potential candidates. You will have to see which categories work best for you. This website is a treasure trove of great stock and commodities data.  Enjoy browsing. It costs nothing to register and login for an enhanced browsing experience, too.

 A phenomena that Gary B. Smith noticed was when the market was ready to turn down then there would be a dearth of setups for longs and more setups for short candidates, and visa versa when the market was bottoming and turning back upward. This tended to keep him from being in the wrong position and getting killed by a sudden market change.

At BarChart.com Once you click on a category a list of stocks moving today will appear. Access each stock's chart by clicking the chart button Link icon to the right. It's pretty easy to check out every stock on the list. After you look at a few charts it gets easier to recognize the telltale flat range a stock has been treading water in to create the Cash-In-A-Box setup. The volume is also graphed at the bottom of each chart so you can see if the volume is spiking up and if the stock trades enough shares per day. If volume is not turned on it's a simple matter to switch it on using the Display volume setting control underneath the chart.

 Next you really want to check out your stock. Go to FreeStockCharts.com and you can draw in the support and resistance lines to be sure the prices are breaking above/below resistance/support and you can also check the 50 day moving average for the volume.The horizontal line tool is in the list to the left side of the chart graph. Can you connect two or more of the highest price tops in the range? Can you connect two or more of the lowest prices at the bottom of the range? Is volume spiking above the 50 day moving average line today? Does this stock trade more than 100,000 shares per day on average? Is the stock's price above $20. Did the stock close today above/below the resistance/support lines for the first time since being in the range? If yes then it's a candidate. Buy the stock or the options at the open at market price on the next trading day and watch it go up (or down if it's a short)!

If I find a Cash-In-The-Box pick for another paper trade Monday I will post it this evening or over the weekend.

A Review of Financial, Options and Stock Trading Newsletters and Services

Over the last few years I've tried quite a number of Stock and Option picking and Financial type newsletters touted as being just wonderful for your portfolio. I have yet to find even one that gives reliable stocks, options picking advice. I have lost money with every one of the following newsletters/trading services, so be sure to check out the reviews of any newsletter or service before you subscribe at StockGumShoe.com:

Weiss Research (Larry Edelson is terrible at timing the markets, also a Mike something or other that runs Leaps Options service). Anyway I lost money following both these jokers.

Quick Hit Trader by Joe Burns. I took a quick hit alright, right in my trading account!

Boom and Bust by Harry Dent, Lousy options picks lost me a chunk.

Market Authority - Gold and Energy Option Trading by James DiGeorgia and his minion Geoff Gorbacz, very amateurish and inconsistent. They did fine during the trial period but after that was over they went on to recommend 5 losers and held them through earnings announcements. Every one of those tanked. Ended up losing more money than they made for me in the beginning. They cut off their winners and let their losers run, not monitoring any stop losses for us as they'd promised and letting our options expire worthless. Very bad.

Maximum Options by Ken Trester - touts his Z-Trades which are nothing more than put option credit spreads. He's deceptive in his ads claiming full disclosure equals his 100% Z-Trade winners, in fact I just got another of his ads claiming this today and sure enough he didnt include my personal biggest loser of all time, the WTW trade. You can see what happened to the stock on the chart above on Feb 14th the stock had gapped down because of bad earnings overnight causing those of us in this trade to lose the maximum loss. He had at least another trade just like this but I didn't trade that one.  Of course full disclosure doesn't include his 500% Z-Trade losers. put option credit spreads can be very dangerous. I found out the hard way with Ken Trester who also had us waiting for our credit spreads to expire worthless through earnings announcements so we could keep the credit we received for taking $450 of risk for only $50 of reward per contract. Problem was they came in with bad earnings and tanked overnight before we could activate our protective stop losses. I sure lost the maximum!

If you receive a tantalizing newsletter/trading service offer check out the reviews before you subscribe at StockGumShoe.com

In my experience the newsletters are good for entertainment value only. Follow their trading advice at your own risk.

YAY! ABAX Crosses the Finish Line

Hooray! ABAX delivered right on the money. The stock is trading at $47.47 and the $45 April call option sold for $2.70. That's a gain of $1.10 per option and $110 gain for every option contract (BTW options are traded in contracts of 100 shares each). About a 69% gain on your investment in options in less than 3 days, too! If you bought stock instead you are ahead about $2.25 per share.

Anyway ABAX has been an example of how to finance a full-time RV lifestyle on the road. Last month I invested in a smart phone with internet. Now I don't have to even be around my computer to trade. I can access my broker and charts from just about anywhere as long as I'm not in a dead spot. Very handy.Basically all one had to do to trade this was place your order to buy it. Then place your order for it to sell when  the stock reached its 5% gain goal and voila! It sold automatically. A total time investment of probably 5 minutes. The rest of the time you can be doing other things.

ABAXing Up

ABAX is progressing nicely trying this morning to break the $47.00 barrier for a third time which probably will do it as the stock seems to be gaining momentum for yet another run up on its way to our 5% gain goal. The $45 April Call option is also up nicely again this morning to $2.50 on the ask and $2.35 just now on the bid price. So for each option contract you are up $75. Not bad on a $160 investment! Above is a chart this morning of ABAX courtesy of BigCharts.com. If this isn't fun what is?

I just checked ABAX again and now the stock's up above $47.00 so it made it through the dollar barrier. That is always a struggle to get through those even dollar levels. The $45 April Call is up to $2.55 on the bid price and $3.00 on the ask. Another 20 cents and the Call will have doubled in price.

One thing I might mention here is be careful when you are playing options. Don't put all your money down on a trade. You could lose it all. Always keep some in reserve so you can make another couple of plays just in case you hit a losing streak and lose a couple of times. Hopefully the third time will be a success and you will be back in business. No strategy is successful all of the time and according to Gary B. Smith this one is successful 8 out of 10 times. So be ready for the two losers to come along in the normal course of events.

Here's a Link to a Stock Chart of ABAX

ABAX Chart Courtesy of BigCharts.com

How Much Cash Is In The Box?

ABAX was our Cash-In-The-Box  play I selected last Friday evening for this morning, March 11th. (See Previous Post regarding Cash-In-The-Box).

This morning the $45 April Call option sold on the open  for $1.60. The stock opened at $45.11. We had our gain objective of 5% gain on the stock price and to sell automatically at that point.  You can also do a contingency order if you are playing options. Just set your option to sell at market when the stock reaches its 5% goal, and your broker will sell your option.

 The goal for the gain on the stock is $2.25 which means our target price is $47.36. At this point the stock has been up to $46.60 or $1.49 per share. Always remember to have a protective stop just beneath the breakout line which is at $44.60 so set your stop loss at $44.55 or something underneath the breakout line. I usually just use a mental stop but you can put a hard stop in with your broker. Things can always go wrong so you will be taken out of the stock or option if the stock hits $44.55 for a small loss. Right now the Call Option is worth $2.30 on the ask and $2.00 on the bid. So the option is up about 40 cents. One contract of Call Options, (100 Shares) is up $40.00. For every $160 investment risked you now are worth about $200. If the stock makes its goal you very possibly will double your money depending on volatility. Now isn't this fun? I think so. Stay tuned for more updates and a new pick once this play is over.

  

Skirting the Issue

Promised a while back to publish the photos of my done-it-myself RV skirt that I purchased from EZ-Snap company of Canada. I finally took some pictures this weekend before it snowed.  I put this skirt on in the fall of 2011. So far since then I have not had one freeze-up. The prior winter of 2010-11 I had something like 10 days of freeze-ups. Temperatures that winter got down to 26 below. The winter temperatures this year and last have not fallen that far as far as I know. According to Accuweather the low so far this year has been 12 below zero. I think it was similar for last winter. However before putting the skirt on my plumbing would freeze up at about the 11 below zero point. It hasn't done that and we definitely hit below that.this winter and last.

This fall I doubled the original number of snaps I put on because of the tremendous winds that we have here on the open prairie. It is not uncommon for the winds to kick up to 90+ mph. Also this fall I went ahead and fastened the base of the skirt to a PVC pipe system as recommended by EZ-Snap on their website EZ-Snap RV Skirt Web Page. You can see a video of how to construct this simple system there. EZ-Snap RV Skirt Video . I used the 3M adhesive studs since I am mechanically challenged and was afraid of putting holes into my RV. They worked well even in the high winds once I doubled the number of snaps. I think when I placed the first set on I allowed about 11 inches between each snap and that was not enough snaps to hold the skirt on without ripping the snaps off. Just too much stress per snap with 90 mph winds flapping the fabric. So this last fall I placed extra snaps on so that there is about a 5" space between the snaps. Held on much, much better.

The first winter I didn't have the fabric affixed to the little PVC pipe system recommended by EZ-Snap. This last fall I engineered the PVC pipe base. It was very simple to do. I then placed small paving blocks inside each corner to stabilize the PVC pipe foundation. We have had lots of wind as usual but the skirt has stayed down this winter. Last winter I'd just used 4x4's to hold the fabric down and that did not work at all in the high winds. I had the skirt loose and flapping to the point you could see clear under the RV and beyond as the wind tore under the RV.  I used the EZ-Snap pipe clamps at the every 4 ft. interval. However the next time I order some replacement snaps I will order another bunch of the pipe clamps to place clamps at the every 2 ft. interval. It just makes the fabric stay around the pipe that much better as I had a couple of places where it began to unroll a bit off the pipe. Not a serious problem but I'd prefer it not do that.