Ideal Trigger Point 0013

Amgen Inc.(NASDQ: AMGN) is a Delaware corporation incorporated in 1980. The Company is a biotechnology medicines company. It discovers, develops, manufactures and delivers innovative human therapeutics. Its medicines help patients fight against cancer, kidney disease, rheumatoid arthritis (RA), bone disease, and other serious illnesses. The Company operates in one business segment which includes human therapeutics.Industry: Healthcare | Biotechnology | USA

What Did Jesse Livermore Think Of Break-Out to A New High or A New Low

Livermore was one of the first people to realize that stocks breaking out to new highs often took off from there and had astounding runs. Large profits can be derived from this simple fact. 

Livermore’s logic was always simple and to the point. New highs or new low break-outs were always good news for Jesse Livermore. The theory behind heeding this pattern was that Livermore had observed that people do not want to sell their stocks for a loss. So, if they missed selling on the high, which happened to the bulk of investors, they would sit with the stock through thick and thin and, when it rallied, if it did in fact rally, and proceeded to get back to the old high, they would dump their stock to recoup their losses. So, when the stock broke out to new ground above the old high this meant to Livermore that all that old overhanging stock was now cleared out of the way. This meant clear sailing ahead, in most cases. So, he was in effect buying the stock when the majority of people had sold theirs and when the stock was in position to make a new run.

Conversely on the short side, new lows mean people have given up on the stock and are now dumping it, throwing it overboard to get whatever they can for it.

Why these formations repeat themselves is unknown. Livermore attributed this repetition to human nature: “All through time, people have basically acted the same way in the stock market as a result of greed, fear, ignorance and hope—that is why the formations and patterns recur on a constant basis. The patterns trader observes are simply the reflections of human's emotional behaviors.”

Ideal Trigger Point 0012

CalAmp Corp (NASDQ: CAMP) develops and markets wireless communications solutions that deliver data, voice and video for critical networked communications and other applications. CalAmp’s two business segments are Wireless DataCom, which serves utility, governmental and enterprise customers, and Satellite, which focuses on the North American Direct Broadcast Satellite (DBS) market.

Industry:Technology | Communication Equipment | USA

Break-Out from A Consolidating - Saucer Base Breakout

Stocks sometimes take time to consolidate and build a base before continuing their movement. This base allows time for the stock to take a breather and a chance for the sales and earnings to catch up to the new valuation of the stock. In many ways, it is similar to a long Continuation Pivotal Point in function, although the formation looks different, and it usually takes longer for the Consolidating Base to form.

When the Consolidating Base occurs, the same patience must be applied to the situation as required with the Continuation Pivot Point—don’t anticipate—rather wait for the stock to tell you by its action which direction it is going to go.

A common pattern of a Consolidating Base is called the saucer pattern. This pattern shows a slow, often long-term consolidating bottom that forms a kind of extended gradual change in trend as it develops into full maturity. To recognize this pattern, the trader must see a clear arc with tight trading ranges at the nadir, or bottom, of the arc.

As stated, this pattern is very similar to the Continuation Pivotal Points pattern, where the buyers and the sellers are about equal in power. The stock lags along, or languishes and consolidates, waiting for the next move. These extended consolidations often come at the end of long market declines or advances. But the key rule still applies: do not anticipate the next move—wait patiently for the market to tell you—to confirm the movement either up or down.

Ideal Trigger Point 0011

Alliance Fiber Optic Products, Inc. (NASDQ: AFOP)  designs and manufactures components, modules, and subsystems that empower dynamic optical network, and facilitate the migration of fiber optics from the long haul through the last mile. They offer a broad range of products including interconnect devices that are used to connect optical fibers and components, couplers and splitters that are used to divide and combine optical power, and dense wavelength division multiplexing, or DWDM, devices that separate and combine multiple specific wavelengths.
Industry: Technology | Semiconductor - Broad line | USA

Jesse Livermore's Spikes and One-day Reversals

Jesse Livermore was very wary of any aberration in the price or volume of a stock that he was tracking. Sometimes, the price would spike, accompanied by abnormally heavy volume of at least a 50 percent increase over the average daily volume. This often led to what he named One-Day Reversals or trading climaxes. They often were like a red flag warning of a change of trend.

An aberration to him was any strong deviation from what was normal for the stock. He considered a spike in the stock price, high volume, as well as low volume, all aberrations, deviations from the norm. To him, these were possible danger signals, and often signals to exit a trade.

These spikes are often a reflection of exhaustion in the stock’s momentum, and they often appear at the end of a move, like a last gasp. They can provide a terrific signal for the observant, savvy trader.

A One-Day Reversal occurs when the high of the day is higher than the high of the previous day, but the close of the day is below the close of the previous day, and the volume of the current day is higher than the volume of the previous day.

It was Livermore’s belief that if you had the patience to sit with the stock all during its rise, now after the one-day reversal pattern appears you must have the courage to do the right thing and acknowledge this danger signal. You must now consider selling the stock, because you have received a valid warning signal.

How to understand Jesse Livermore's Continuation Pivotal Points

It is essential to understand that while the Reversal Pivotal Point marks a definite change in direction, the Continuation Pivotal Point confirms that the move is proceeding in the proper direction.

For Livermore, a stock’s price is never too high to Buy Long or too low to Sell Short. Waiting for these Continuation Pivotal Points signals gave him the opportunity to either open a new position or to add to a current position. But do not chase a stock if it gets away from you—let it go.

Livermore would rather wait and pay more, after the stock had regrouped and formed a new Continuation Pivotal Point, because this provides a confirmation and mental insurance that the stock will most likely continue with its move.

By correctly catching Continuation Pivotal Point, Livermore was able to make his initial purchase so that he had an entry point at the right price at the beginning of the move. This ensured that he was never in a loss position and could therefore ride out the normal stock fluctuations without risking his own capital. Once the stock had moved off the Pivotal Point Livermore was only risking his paper profits, not his actual capital, because he was “in profit” from the beginning of the trade.

Livermore defined Continuation Pivotal Point as a consolidation, which mean it is a range rather a specific price level. It gives the stock a chance to consolidate, often allowing a stock’s ratio of earnings and sales to catch up to its current price. It is usually a natural reaction in the stock’s progress. 

The Pivotal Point (either the Reversal or the Continuation point) is the only tip-off you need to trade and win. A trader has to be patient, because it takes time for a stock to run its logical and natural course to form a proper Pivotal Point, then breakout off its range. It will not be willed or forced forward by an impatient trader. It will come as a natural event. Be Patient!

Ideal Trigger Point 0010

China Distance Education Holdings Limited (NYSE: DL) offers a range of online education and test preparation courses and other related services and products. Its courses are designed to help professionals and other course participants obtain and maintain the skills, licenses and certifications necessary to pursue careers in China in the areas of accounting, law, healthcare, construction engineering, information technology and other industries. CDEL Cayman also offers online test preparation courses to self-taught learners pursuing higher education diplomas or degrees and to secondary school and college students preparing for various academic and entrance exams. In addition, it offers online foreign language courses.

Industry: Services | Education & Training Services | China

How to understand Jesse Livermore's Pivotal Points

Jesse Livermore's trading method (Pivotal Point Trading System or PPT) is very straight forward. It is easy for us as normal people to understand and even apply to achieve success. This system contained only three components, which are respectively known as the reversal pivotal point, the continuation pivotal point and the symptoms of weakness.

1. Reversal Pivotal Points

The very first component of Livermore’s PPT system is the reversal pivotal point, which is defined by himself as “the perfect psychological time to mark the beginning of a new move, representing a major change or reversal in a primary trend.” However, confirming a market reversal in real market is not that easy, e.g. when there is a big rally in a long bear market, how can you tell whether it is just temporary or the bull market has returned? Fortunately, Jesse already gave you some clues, you can use the following steps as your favors to justify:

1. The rally should be a intermediate trend (not minor trend) with volume increase, . 

2. The following correction(intermediate trend) does not get retraced below the rally's starting point. 

3. Few weeks later an even bigger rally follows. 

4. This time the volume of the subsequent rally is significantly higher than previous days. 

5. This subsequent rally breaks the trendline of previous bear market.

This monumental subsequent rally is exactly what Livermore called a reversal pivotal point, because it marks the return of large money back into the market.

2.Continuation Pivotal Points

The second component of Livermore’s PPT system is the continuation pivotal point, which focus on the time to re-enter into the new trend. While a reversal pivotal point marks a trend reversal, a continuation pivotal point confirms that the trend continues.

After the breakout of previous bear market trendline, usually the market will form a consolidation which is known as the accumulate process or the preparation of the new take-off .This breakout from consolidation is the continuation pivotal point, where a trader should get in and follow it. Most importantly, just as for a reversal pivotal point, a true breakout at a continuation pivotal point is usually accompanied with a higher volume than the previous few days.

Buy at breakout off a consolidation is one the greatest secrets in trading stocks. It can help maximize your profits and minimize your risk at the same time.

3.The Symptoms of Weaknesses

The final part of Livermore's PPT system is called the symptoms of weakness, which tells you when to exit the market.

Symption 1: Failed Rallies-----After an overall head is formed, the subsequent rallies often end with a weak momentum, Failed to make a new high and volume decreased.

Symption 2: High End Price Consolidation (Distribution)-----The volume during this period of time is very high. After distribution, the price would breakdown and downtrend formed.

Summary

Over his entire legendary career, Jesse Livermore obtained two important insights in trading: firstly, he often lost when he entered a position before a pivotal point was formed and secondly, the big money could only be made by capturing big trends, Thus he developed the discipline to avoid any personal opinion until a pivotal point appeared, as well as to hold onto his positions until market was shown the symptoms of weakness.

In short, this is how Livermore traded:

1. Trend confirmation: he never trade against the trend as indicated by the reversal pivotal points.
2. Careful entry: He only entered the market when a sound breakout appears. 

3. Let the winners ride: He held onto his positions until the symptoms of weakness appeared.

Ideal Trigger Point 0009

Methode Electronics Inc.(NYSE:MEI) is a manufacturer of component & subsystem devices with manufacturing, design & testing facilities in China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, Philippines, Singapore, Switzerland, United Kingdom & United States. It designs, manufactures and markets devices employing electrical, radio remote control, electronic, wireless and sensing technologies. Its components are found in the primary end markets of the aerospace, appliance, automotive, construction, consumer and industrial equipment, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), rail and other transportation industries. Its business is managed on a segment basis, with those segments being Automotive, Interconnect, Power Products and Other. 

Industry: Technology | Diversified Electronics | USA

Some Misunderstandings of Jesse Livermore's Timing

Livermore always considered time as a real and essential trading element. He often said: “It’s not the thinking that makes the money—it’s the sitting and waiting that makes the money.”

But this often has been incorrectly interpreted by many people. They thought Livermore would buy a stock and then sit and wait for it to move. This is completely not so. What he really meant was there were many occasions when he should sit and wait in cash, until the right situation appeared. 

When all these conditions came together and when as many of the odds as possible were in his favor, then and only then, like a sniper, he would pull the trigger, usually with great result.

After triggering, if everything did as normal as it should be, Jesse would never consider sell until something abnormal appear.

The hardest part of his timing is patience. If you want to achieve great accomplishments, you must learn to be very patient, wait for the opportunity come to you.

Ideal Trigger Point 0008

Autobytel Inc. (NASDAQ: ABTL) is an automotive media and marketing services company in the United States. Autobytel offers automotive dealers tools to manage their business. Specific products include: the Rapid Response program, designed to connect dealers to online customers via phone, as well as the Email Manager program, which manages long-term email campaigns on behalf of the dealership. Additionally, LeadCall, a live call program that sets in-dealership appointments and scores customer readiness to buy for auto dealers.

Industry: Technology | Internet Information Providers | USA

The Key of Jesse Livermore's Timing Success

Pivotal Points are a key factor in the Livermore's Trading System. Livermore was the first person to use the term Pivotal Point and incorporate it as an important part of his trading system.

He never wanted to buy at the lowest price or sell at the top. He wanted to buy at the right time and sell at the right time. 

The Pivotal Point Trading theory allowed Livermore the chance to buy at the right time--the beginning of a new trend". But this required him to have much patience. Patience of waiting for the perfect trading situation to finish its development (Accumulation or Distribution). 

If all the right conditions did not coincide on a particular stock which he was following, he would not buy or short it, because the it is nor the right to enter into the market.

Patience . . . patience . . . patience — wait for the perfect trade — that was the key to his timing success.

Though buying on the Pivotal Point assured him the best chance of coming into the situation just as the action was about to start, bear in mind, when using Pivotal Points to anticipate movements, that if the stock does not perform as it should after crossing the Pivotal Point, this is a very important danger signal that must be heeded immediately.

Every time Livermore lost patience and failed to wait for the Pivotal Points, every time he fiddled around for easy profits, he lost money. 

Livermore said that once he understood Pivotal Points, they became one of the true trading keys, a reliable trading technique. They are timing devices that can be used to get in and out of the market with great success.

Ideal Trigger Point 0007

Bitauto Holdings Limited (NYSE: BITA) is a leading provider of internet content and marketing services for China's fast-growing automotive industry. Bitauto manages its businesses in four segments: the bitauto.com advertising business, the EP platform business, the taoche.com business, and the digital marketing solutions business.

Industry: Technology | Internet Information Providers | China

The Classic Flow Chart of Jesse Livermore's Trading Mindset

Jesse Livermore's Trading Mindset

This chart shows when Jesse Livermore begin to build his position and how to manage them accordingly.

The core idea of his trading system is only pull the trigger when both Stocks and Industry Group confirm each other with important action of price and volume, after that the only thing you should do is to pay attention to the potential risk. If everything looks normal then just hold your position, do not sell it too soon, which might grow to a big profits later. Only when some abnormal situations occurred then you begin to consider close your positions.

Ideal Trigger Point 0006

Jarden Corporation (NYSE:JAH) is a provider of a diverse range of consumer products with a portfolio of over 100 brands sold globally, operating in three primary business segments - Outdoor Solutions, Consumer Solutions and Branded Consumables. In 2012, Jarden was ranked #371 on the Fortune 500.

Industry: Consumer Goods | Housewares & Accessories | USA 

The Man Who Called "J.L."

From today we are gonna start to talk about my favorite legendary trader, Jesse L. Livermore and his trading systems. Jesse was famed for making and losing multi-million dollars and making his biggest fortunes by selling short during the stock market crashes in 1907 and 1929.

Time Magazine described him as the most fabulous living U.S. stock trader.His progress from office boy to Wall Street legend - his trading lessons - his triumphs and disasters - is probably the most fascinating of any of Wall Street's stories.Even today, many stock and commodity traders owe Jesse Livermore a deep debt of gratitude for sharing his experiences in Reminiscences of a Stock Operator.

You can learn everything about trading from him. He is your mirror to observe yourself ---- When you are confused with what you are doing, just think of him, you will know what should do and what should not.

Ideal Trigger Point 0005

Constellation Brands (NYSE: STZ & STZ.B) is a leading wine, beer and spirits company with a broad portfolio of premium brands. Constellation is the world leader in premium wine, the number three beer company in the U.S. and the leading multi-category beverage alcohol company in the U.S.

 

The company’s brand portfolio includes brands like Arbor Mist, Black Box, Black Velvet Canadian Whisky, Blackstone, Clos du Bois, Corona Extra, Corona Light, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Modelo Especial, Mount Veeder, Negra Modelo, Nobilo, Pacifico, Ravenswood, Rex Goliath, Robert Mondavi, Ruffino, SIMI, SVEDKA Vodka, Toasted Head and Wild Horse.

Industry: Consumer Goods | Beverages - Wineries & Distillers | USA

“Lines” May Substitute for Secondaries

A Line in Dow Theory is a sideways movement in one or both of the Averages (Dow Jones Industry & Transportation), which might last for 2 to 3 weeks or, sometimes, for as many months, in the course of which prices fluctuate within a range of approximately 5% or less.

The formation of a Line signifies that pressure of buying and selling is more or less in balance. Eventually, of course, either the offerings within that price range are exhausted and those who want to buy stocks have to raise their bids to induce owners to sell, or else those who are eager to sell at the “Line” price range find that buyers have vanished and that, in consequence, they must cut their prices in order to dispose of their shares. 

Ideal Trigger Point 0004

YY Inc. (NASDQ:YY) is a major Chinese video-based social network with over 300 million users. It features a virtual currency which users can earn through activities such as karaoke or creating tutorial videos, then convert to real cash. Launched in 2005 as duowan.com, it originally targeted gamers, before broadening to include video streaming and chat features for uses such as concerts, sport and fashion. Users exchange "virtual roses" as a kind of currency, with top users said to earn as much as $20,000 per month.

Industry: Technology | Internet Information Providers | China

Volume Must Confirm The Trend

According to Dow theory, the main signals for buying and selling should always be based on the price movements of the indexes (Price Confirmation).Volume is used as a secondary indicator to help confirm what the price movement is suggesting. 

It means volume should increase when the price moves in the direction of the trend and decrease when the price moves in the opposite direction of the trend.

Ideal Trigger Point 0003

CalAmp Corp.(NASDQ: CAMP) develops and markets wireless communications solutions that deliver data, voice, and video for critical networked communication and other applications primarily in the United States.

Industry: Technology | Communication Equipment | USA

Market Indexes Must Confirm Each Other

Under The Dow theory： a major reversal from a bull to a bear market or bear to bull cannot be signaled unless both indexes (traditionally the Dow Industrial and Transportation Averages) are in agreement. 

Ideal Trigger Point - 0002

Actavis plc (NYSE: ACT) is a global, integrated specialty pharmaceutical company focused on developing, manufacturing, and distributing generic, brand, and biosimilar products. The Company has global headquarters in Dublin, Ireland and administrative headquarters in Parsippany-Troy Hills, New Jersey, United States.Industry: Healthcare | Drug-Generic | USA  

Trend Levels

Market Structure

Any Market has three trends:Primary Trend, Secondary Trend and Minor Trend.

When you are gonna buy/short some stocks. the first thing you should figure out is which level the trend is in. The smartest guy in the market would only trade the direction of the Primary trends, pay attentions to Secondary Trends and forget about the noise from the Minor trends.  

1.So what is the Primary Trend?

Simply put,  A Primary Trend is a broad movement neither goes up or goes down, both of which might last from a year to couple of years (average periods is 1 to 3 years, according to history records). The people who lost most of their accounts more often than not is because they went against the primary trend. The Primary Trend is very powerful and no one can beat it, the only thing you should is just follow it, be friends with it, then you will feel very comfortable.  

Ideal Trigger Point - 0001

Three Hypothesis of The Dow Thoery

If anyone who wants to know how the financial market really works, it really need to understand this first:

"Three hypotheses must be accepted without reservation whatsoever"

1.Manipulation:Manipulation is possible in the day-to-day movements of the averages, and secondary reactions are subject to such an influence to a more limited degree,but the primary trend can never be manipulated.

2.The Averages Discount Everything:The fluctuations of the daily closing prices of the Dow Jones rail and industrial averages afford a composite view of all the hopes, disappointments and knowledge of everyone who knows anything of financial matters. For that reason, the effects of coming events (excluding acts of God) are always properly anticipated in their movement. The averages quickly appraise such calamities as fires and earthquakes.

3.The Theory Is Not Infallible:The Dow Theory is not an infallible system for beating the market. Its successful use as an aid in speculation requires serious study, and the summing up of evidence must be impartial. The wish must never be allowed to father the thought.