CCME

A lot has happened since the last article I have written. I will begin this blog by explaining what changes have been made to the Duck Brother’s account and brief updates on stocks in our watch list. Also I will explain a little on the strategy for our account.

Last week we sold MIPS, INFA and purchased ALTR (Refer to the article on ALTR for fundamentals and buy point). This transaction can best be explained by our strategy. In our account we will hold at most three stocks at a time and from different sectors. Our goal is to choose the best stocks on the move, also known as buying fundamentally sound growth stocks with sound chart patterns. We analyze the stocks using William J. O’Neil’s CANSLIM approach. Sources of this approach can be found in the Successful Investor and How to make Money in Stocks. MIPS and ALTR are securities from the same sector. We sold MIPS because ALTR is more fundamentally sound and hit a buy point with increasing daily volume. We sold INFA because it had a large distribution day over 100% above average. This sign tells me that institutions are selling the stock. For this reason we decided to take our profit and move on. Below shows our securities since inception of this blog.

The main stock in our watch list that I would like to address is FFIV. FFIV last week hit the buy point monatarily, but not by daily volume. Since the the volume did not indicate insitutions were buying FFIV we did not purchase the stock. If volume does not increase 40% or more the stock is more risky and as you can see FFIV took a big tumble sortly after the price move. Below is a graph of FFIV.

This week our stock pick of the week is CCME. CCME is a Chines company that operates a television advertising network. CCME is creating a cup-with-handle pattern. Watch this security, it should move down to the 50-day moving average. The downward trending is the handle. Once it gets close it should gain support indicating institustions are purchasing the stock. The stock will then run-up passing the buy point with increasing daily volume. If this happends the stock will be a good security to add to our Duck Brother’s account.

LULU and Other Thoughts

I have had a love/hate relationship with this stock from the beginning. I have bought in, and gotten out, and back in and then back out at least three times now. For some reason I cannot take a gain on this stock. I know that it has been a good stock for a lot of people over the last few months, but with LULU I seam to make all the wrong moves.

Today LULU is up 5.51 (8.19%) in the morning trading. Even after today's great gains I'm still down 4.60% lifetime. Last year I bought 76 shares at 48.03. If i had left that trade alone and not set my stop loss so close I would be up almost 48% on LULU. Instead, I fighting to get back to positive on a stock that has almost doubled in value over the last 6 months (since it hit its low in August 2010). This is just unacceptable.

The gains that I missed out on last year have got me thinking about my approach to investing. I used to subscribe to the "quick gains" approach. I would find a good stock, one that had just taken a dip, and bought in with hopes of making 8-12% and then getting out. Sometimes I would make more, sometimes I would take a small loss, but for the most part it balanced out. I ended the year about even in 2010, which is ridiculous because there were so many gains to be made. In fact I invested in many of those companies last year (NFLX, AMZN, GOOG, LULU, and BIDU) with hopes of making a quick buck. I could have just bought, walked away for 6 months, and came out almost 50% gain for the year. But I didn't, I got greedy and I keep selling off with small profits and not getting back in before the next big gain.

So I have been taking some time to consider my investment strategy and here is what I came up with. I'm still approaching the same companies I did before, focusing on technology and companies on the IBD100 list but I'm taking a different approach on buying in and getting out. Since I'm now focusing on holding a company for longer it is more important that I select a buy point that I'm comfortable holding onto for 3-6 months. I'm still trying to diversify in 5 different stocks or EFTs and never put more than 20% of my money on 1 stock. I'm also trying to loosen the reigns on my stop losses a bit to allow some of these investments to grow unrestrained. The bottom line is that I'm trying to buy smarter, hold on longer and wait for the steady gains over several months. Will this work better in 2011 than it did in 2010, only time will tell.

ALTR

This last week Duck Brothers Investing had a very productive week. PCLN and MIPS both hit buy points and have started to run up. PCLN hit its buy point of $428.20 after gaining support with a flat base. We bought back into MIPS after it created a cup-with-handle pattern and had its follow through day with increasing volume. We now own INFA, PCLN, and MIPS in our portfolio.

This week Duck Brothers Investing will be talking about ALTR. ALTR is a company that is in the semiconductor sector and has created a flat base. Its buy point is $38.24 and will need to have a follow through day with increasing volume.

FFIV

Duck Brother’s Investing stock pick of the week is FFIV. FFIV produces data storage devices for networking delivery. This stock has an outstanding pedigree and is forming a flat base. The buy point is $143.85 and its current price is $130.08. Over the last week volume has dried up and the 50-day moving average has caught up with the price. Watch this stock over next week for price and volume movement upward.

Since inception of this weekly stock pick Duck Brother’s is up 7.49%. LULU made us 24%, INFA has made 6.56%, and MIPS lost us 8%. PCLN and EBIX have still not made the buy point and should be watched closely for upward movement.

EBIX

This week I will be discussing EBIX. EBIX is a company that produces software for insurance companies. The company has a median price target of $25.64 and its earnings per share have steadily been growing. EBIX has a buy rating from marketgrader and is currently creating a cup with handle base. This week the pattern should fall down to the 50-day moving average where it will gain support. Once this happens if institutions are buying the company it will re-bound reaching the buy point of $24.76 with 40% or higher volume.

A recap of Duck Bother’s stock picks of the week. LULU is up 54.14%, INFA is up 9.45%, MIPS crashed -8%, BIDU and PCLN have not made the buy points. Using William J. O’Neil’s strategies we sold LULU at a 24% profit, are still holding INFA with a 9.45% profit and sold MIPS with a -8% loss. All together Duck Brothers pick of the week is up 8.46%.

PCLN

This last week was a difficult week for Duck Brothers investing. My stock pick of the week ended in a big disappointment. MIPS hit the $16.03 buy point on Monday with increase volume, up by 148%. The stock decreased over the next three days, trending down toward the 50 day moving average. I still believe in the stock, because the fundamentals look great and it’s above the 50 day moving average. In fact the stock over last week created a cup with handle which is William J. O’Neil’s most talked about base. Continue watching this stock it’s going places.

Since the inception of this Blog Duck Brothers investing has analyzed four stocks. The stocks are LULU, INFA, BIDU, and MIPS. LULU after hitting the buy point has run up 47.02%. Implementing William J. O’Neil’s 3-to-1 sell rule we sold at a 24% profit. An example of the 3-to-1 sell rule would be selling at an 8% loss or a 24% profit. This is what we did with LULU. INFA has gone up 7.88% since the buy point. BIDU never hit the buy point and MIPS decreased 8% hitting our sell rule. So far we have picked two winners one loser and a dud.

This week we will talk about Priceline (i.e. PCLN). Priceline is an online travel agency specializing in economical tickets and packages. PCLN is making a five week flat base. Its buy point is $428.20 and its current price is $400.64.

MIPS

Last week I talked about BIDU, China’s largest search engine. Its buy point is still $115.14. Keep this stock in your watch list and watch for volume to increase by 40% or more. I have a confession to make. This last week I bought into BIDU. When I did this I became a predictor. I thought BIDU was going up and I would get a discount price if I bought then. It still can go up, but the truth is no one knows what BIDU will do. I do not want to predict the market; I want to invest in the market. Investing is about earning money, making logical decisions, not gambling. This is a lesson learned. I still hope my gamble earns me money, but with any gamble there is more risk than there should be.

This week I will analyze MIPS. MIPS is a company that is in the semiconductor sector. More specifically they make 32-bit and 64-bit chips for computers. Currently MIPS is forming a 6 week base and its buy point is at $16.03. MIPS had its follow through day on Thursday with volume up 189.6%. This suggests institutions are buying MIPS.

Following William J O’neil’s strategy I’m up a total of 15.46% over the last month. I earned 24% on LULU and I’m up 6.94% on INFA.