Article Overview

In part 1 of this 7 part series I defined 6 critical elements of any successful trading strategy. In case you didn’t read the first article, these key elements are:

A daily routine for analyzing the overall market trend Details for creating, testing, implementing, and refining screens / other methods of identifying possible trades Guidelines for opening new trades Guidelines for monitoring your trades Open, hold, and closing guidelines Rules for updating / refining the overall strategy

In this article, I will show you my method of analyzing the the DOW, S&P 500, and NASDAQ markets to identify overall trends. Then following a top down approach, I will break down each sector, and then show you how I track these trends to find stocks gaining momentum in the appropriate trends.

Overall Method

Many of you have heard the phrase “a top down approach” to analyzing the markets. For those of you have not, this

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Renaissance TechnologiesRenaissance Technologies - Hedge Fund ProfileHere is a collection of links to resources and articles on the hedge fund - Renaissance Technologies. All of these sources below are publicly available and can be easily found by anyone via Google searches. They are listed here for those who would like to skip the junk and learn more about Renaissance Technologies more efficiently than they might through Google alone.Letter from Renaissance Technologies how Renaissance Technologies had only 1 percent profit in 2007.Article summary how Renaissance Technologies has high fees, but had generated 85 percent returns.Article: Jim Simmons Institutional Equities Fund has been down $13 billion dollars.SEC may put a new law against ...

Ok we're having a good day... another of our names is flying - that's 3 of them @ 15%+. Again this is not NEW news to blog readers and this stock was beaten to a pulp in this panic - I actually added a touch first thing this morning to take A-Power Energy Generation (APWR) to a 3.1% stake. This is a good company WITHOUT the wind business, but with the birth of this new line, it's going to be a lot more than good in my opinion. [Jun 27: New Position in A-Power Energy Generation Systems to Create Alternative Energy Mini Basket]A-Power Energy Generation Systems, Ltd. (NASDAQ:APWR - News) ("A-Power"), announced today that it has completed the construction of the first phase of its wind turbine production facility ...

I don't have details so if anyone has access to this I'd be interested in reading the reasoning/research - since it's a small cap company there is very little coverage. I'd like to take credit for it with my article on Pickens yesterday but apparently it's an upgrade from firm Broadpoint Capital.Broadpoint Capital upgrades Fuel Systems Solutions (Nasdaq: FSYS) from Neutral to Buy with a $36 price target.I truly believe we have the correct stocks - we just have such an awful market, they are not able to show their colors. It's a shame the rest of the economy is in such shambles.[Jul 2: Buying Fuel Systems Solutions (FSYS) for the 3rd Piece of my Alternative Energy Basket]Long Fuel Systems Solutions in fund and personal account ...

A reader left a question that I think is pretty damn good. He asked "what are the variables that I use that allow you to do a forward analysis of an asset with any meaningful probability of being right." As someone who believes in top down management I focus on big picture issues and then try to figure the best way to invest toward the big picture while at the same time building in some sort of counter strategy in case my assessment is wrong. So instead of looking at a stock from the bottom up and saying ok, here is a stock with such and such valuations that will make more widgets next year for a slightly smaller cost and buying it, top down looks at the world for things like supply and demand issues, turning points in cycles or big long-lasting themes as examples. The world ...

Think your stocks are doing bad? Try the best steakhouses in the country, in the last year Ruth's Hospitality Group, Inc. (NASDAQ:RUTH) shares have fallen 70% and Morton's Restaurant Group, Inc. (NYSE:MRT) is down 64%. Beef. It's what people don't want to pay for when out for dinner. McCormick & Schmick's Seafood Restaurant ...

Jamba, Inc. (NASDAQ:JMBA) shareholders are throwing up everything today after shares hit $1.58.  The 52-week decline is now at -82%, that's right, WaMu bad.  So do you keep drinking the juice even if your stomach can't take it?  Stan can't. Today's buzz kill came from Wedbush Morgan, they said a slowdown in ...

A common question I receive is if I am aware of a reputable company which allows electronic trading of the traditional commodities such as Oil, Grains, Meats, Metals, and also Index futures such as S&P’s, Dow, Nasdaq, and Russell. At the trade show in Ontario, CA last week I met with Mark Monaco, who is the Head of sales for Prime Investments LLC and also Ehedger, both Introducing Brokers at the Chicago Board of Trade in Chicago, Illinois. I used to work with Mark and know him to be a good man and an excellent trader. Mark showed me his company’s trading platform and told me about his company’s background of 40 years trading at the CBOT and expertise in trading grains as his company’s owners are third generation corn and soybean farmers in Northern Illinois, they not only understand the technicals of trading, but also …

Reed’s, traded on NASDAQ, is in the natural foods business, specializing in brewed ginger beverages. Reed’s has also expanded into ginger candy and ice cream products. Clearly passionate about the herb’s benefits, Reeds goes on to explain (on their website) that “Ginger is traditionally used to improve digestion, cure motion and morning sickness and for general health. The latest research is showing ginger to be anti-cancer, to lower cholesterol, and in Europe it is used as an arthritis medicine.”

The stronger partnership announcement with Sprouts, a large health grocer in the Phoenix area with 26 locations, will cover the Southwest and Rocky Mountain regions for Reeds, and positions Reed’s in more mainstream stores in the region. This news is on the tail of the announcement last week of Reed’s agreement with Ralph’s California-based supermarket chain.

Reed’s is currently trading around $2.16, near its 52-week low of $1.50. Its 52-week high, hit nearly

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Mircovision shares are recovering after the secret Hedge fund employee Liam Mulcahy posted a negative article on SeekingAlpha.com against Microvision, Inc. (NASDAQ:MVIS).  The damage has been done, so what can happen to Liam, and more importantly, what about MVIS shares? After Liam and SeekingAlpha.com published the article, MVIS ...