1. Is there a beta range that seems to lend itself especially well to position trading?
Beta is the measure of a stock or a fund's volatility relative to a market benchmark. A fund could perform as well as the market, but its volatility could be much greater or less than the market itself. A fund with a beta of 1.25 is 25% more volatile than the market, whose beta is always 1.00. Since this statistic relates to the market index, betas are best understood by examining the correlation to the market index, as measured by R2.
I simply use 5 basic things to find a good trading stock.
1-The stock must trade more than 1 million shares per day.
2-It’s general 3 to 6 month daily pattern must be saw toothed to the eye. -->VVVVVVVVVVV
3-It must show a lot of daily volatility, i.e. frequently move in a large daily trading range. RFMD is one that comes to mine as well as QCOM.
4-When back tracking the stocks trading history it must show me that it’s stochastic 15-5-5 buy/sell signals are consistently correct. AOL is a perfect example of this.
5-I like a float under 10mm.
2. When comparing a company's PE ratio to others companies within the same sector does a relative higher PE, lower PE, or similar PE ratio responds best to position trading?
I have found that stocks with no PE attract a lot more traders thus making them more volatile and better to trade under normal market conditions. However, I have been focusing on low PE tech stocks lately that have been beaten down along with the no PE stocks during this market decline. I see these stocks as safe bets in the event that I get caught under water because these high quality stocks with earnings will be the first to recover after markets bottom.
The down side of position trading a low PE or any PE stock is that they trade with less volatility so the position in the trade takes longer to be rewarding and ties up funds. That is the trade off for safety.
3. How many different sectors would a person need to follow in order to effectively play the rotation in and out different sectors?
Watching and predicting sector rotation is as easy as accessing this link and viewing the sector rotation clock. It is accurate.
4. Is overall performance increased in position trading by playing only companies with relatively good fundamentals or does fundamental really matter?
In a nutshell it does not matter. I am embarrassed to tell you how many times I have entered and exited a stock without know what the company did or made. The question here is how much risk are you willing to take. If you are good enough with using the daily technical tools that I often refer to then fundamentals don’t matter. You will know that something happening good or bad with a stock’s fundamentals at any given time based on reading its chart candles when viewed in 1 minute time frames.
I like to set up the same chart and watch the NASDAQ side by side of the chart I am watching (trading) because the NASDAQ intra-day chart is MY preferred BETA. Tech stocks mirror the NASDAQ as a general rule.
5. What price range and volume produce the best predictability?
I don’t have any set rules here but presently I like the above defined stocks that have a price range above $10 to $25. You get more bang for the buck and with high volume you can enter and exit the stocks without upsetting the stocks price.
For instance a $5 stock which trades 30k shares per day would fall if one trader sold 3000 shares. Too many people using L-ll would see the sell order and would panic.
If I did not fully answer your questions don’t hesitate to ask me to clear up anything.
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