Friday, June 28, 2013

Stocks To Watch

Some of you may wonder how is the Murasaki ts system doing. Our subscriber base has been growing  well. The early months were choppy as people did not fully understand how to use the system. Now we are getting back many of our trial users to our Masterclasses (which are free). The weekly crowd is good and its getting to be a big social event and sharing of investing ideas. Below are two examples of how we use the system to pick early movers.

This screenshot was taken at 12.34pm Friday 28 June for LB Aluminum. FQR, M, Live MFI and BRH are our proprietary data. FQR is a measure of the fundamentals based on last 4 quarters. M is the energy index or Murasaki index. If a stock is behaving normally, it should register an M of around 100 or below. If its 400, it means it is 4x abnormal behaviour. 

The bottom right is the last 5 days data on M, MFI and BRH. As you can see, the M index was behaving itself for most of the past 5 days except yesterday, the 1,323 was a big anomaly which was accompanied by a positive uptick in price. Its a signal that let us confirm it is an early mover. It may not go up every day after that, but at least we know the engine has been started. Hence LB Aluminum is a good trade for a 1-15 day period.

The second stock highlighted is Ewein. Again, just by looking at the last 5 day pattern, you can already confirm 3 days back that something is up. The M energy continued, accompanied by positive upticks. As it is still well below the 1,000-2,000 reading on the M, you can conclude that it is early days still. Once it gets very speculative where day traders get in, the M will usually go into the few thousand category.

The other important indicator is the MFI or money flow index. The system is about the only one that has a live MFI. Others usually calculate MFI only at end of day. MFI gives an important read on the status of smart money residing in the stock. If the figure is steady or rising, one can safely continue to hold onto the stock. Once it starts dropping (more than 2%-3% points from the week's high MFI), you can basically conclude the smart money has exited and so should you.

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.