Monday, July 26, 2010

Stockbee’s IBD 200 Market Update: NASDAQ: OPEN

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If you have been reading my site, you are no doubt aware that I've been putting Stockbee's IBD 200 strategy to the test here and the first stock that popped to the top of the screen was Open Table Inc (NASDAQ: OPEN). I used a stock simulator to purchase 22 shares of OPEN at $44.95. It's now trading at $46.69. Right now that represents a 3.87% gain. The position was established on July 12.

I almost sold the stock on July 16 and am guessing that Stockbee would have per his sell rules. It found support around it's 50 day moving average line. Volume has been light but volume really has been light for the overall market as well. While the stock closed higher today, volume was only slightly higher. I'd like to see a greater demand for the stock.

My target price is a 20% gain when the price reaches $53.94.

My overall guess is that this stock doesn't have the power to make a huge move. I remember that the day I selected this stock from the screen, there weren't a lot of potential stocks to choose from and that the market was down for the day.

If you are a beginner, I hope that you see the value in simulating trades until you get an idea of the mechanics behind your trading activity. What I've been doing is developing my philosophy and detailing the steps I take to move forward. Here is the road map I've been following.

  1. My first step was to get a handle on how to interpret the general market direction. Each day I look at the market action and decide what effect it has on the overall trend. Rule number one - only invest in a market uptrend.

  2. My second step was to start developing a set of stock screens such as the IBD 200 or the Stocks on the Move or a combination of several of the IBD screens.

  3. My third step is to simulate several trades to get a handle on the decision making involved so that I can hammer out a daily routine.

  4. Once I've ironed out the daily routine, I will invest real cash in the market.

I'll keep you posted here on Stock Market Investing Today as to the progress of this current experiment based on Stockbee's strategy.

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