Thursday, May 6, 2010

BOFI long 100 shares

A member of the IBD 100 which I go through every weekend. This list of is supposed to represent the 100 best companies by way of fundamental and technical ratings. As I have mentioned before I am trying to pair down my universe of stocks and am trying to use IBD for that. I am not fully committed to it yet, but most of the stocks on my watch list are members of the IBD 100.

Anyways as the market is pulling back I this stock has pulled back from its all time high made in the latest run higher of 19.27 down to about 15.60. When I first identified the stock I thought the stock was overbought and wanted to wait for a pull back to a more attractive level. The 50 day moving average was about $15 and I saw sum good support around $14, so I set my alert around this area and a week later it is know at what I consider an attractive price which offers great risk/reward.

I am buying a bit in front of the 50 day moving average as one thing I have learned over the last few months and especially more recently is that this entry and exit thing is more of an art than a science. I bought 100 shares @ 15.98. One thing to take notice on the chart is the increased volume that this stock has been attracting since last September. I do not normally look at stocks with volume under 1MM shares a day because of liquidity concerns, but I like the prospects of the growing volume and will look for this to continue. I bought stock as this equity does not trade options. I am placing my stop between 12-14 dollars. So the hard stop would be a breach of 12, and I will use discretion to either add a little if it trades between 12-14 or make the decision to exit. This will either give me a little more flexibility to let the position work or I am just opening up my risk for a larger loss. After being stopped out of so many positions the last few months I feel like I need a little more room to breath because I have watched many of the positions that get stopped out move just beyond my stop only to then reverse and move in the direction of my initial trade.

With the increased volume and nice uptrend I think this one can continue to make new highs after a bit of a rest and have an initial target of $20 and then higher. That initially puts my risk at 1:1, which for right now I am comfortable with as I think it will go higher than this.


  1. What is the IBD definition of "best"? Is this from a long-term investment point of view or are these short-term trading ideas, or something else?

  2. The IBD blends technical and fundamental indicators to rank every that trades in the US markets. It believes that stocks should be setting up both technically and have great fundemntals. Basically it is all about timing entries in the best stocks. But they also have a 7-8% decline automatic sell rule. I am still learning exactly what their entire system is but this is the jist. Like I said I mostly use them for idea generation. I would say that this is a good paper for short term traders, or very disciplined investors. Time frame varies as it depends if they continue to meet the criteria to stay a part of the IBD 100.


    I saw this the other day and your post about IBD just reminded me. Just thought I would pass it along in case you're interested.

  4. I sold out of BOFI for a small $30 gain today as the volume pick up has ceased to continue and it reversed pretty hard after bouncing off of its 10 week and 50 day moving average.