The RIMM swing trade: standing still

Research in Motion traded above 123 in pre-market, opened at 122, sold off to 116 and is about to close at 118. Should I have sold? Perhaps. Going from sub-100 to 123 is a hefty gain in any language. My long position entry point is 103 (average). My swing trade shares entry point is 120. So I'm holding on through the selling.

In hindsight, selling at the open (122) and buying back swing shares at 118 would've made sense. The market has a chance to stay bullish for a few days, perhaps through the final third of December.

Nice to see Apple rally, now at 123, less than a buck off its intra-day high. If I buy more shares of either, it'll be Apple especially because I have a slightly smaller position in AAPL than RIMM.

If not Apple, then definitely more Nintendo. Have not added more NTDOY.PK shares in three months or so. My nephew loves his Guitar Hero on Wii. Why not get Activision (maker of Guitar Hero)? Activision is peaking and my intolerance for flitty, fickle smaller cap stocks won't let me get in. If the Fed gets busy with a drastic rate move, I'll consider another ride with a small- or mid-cap retail. Otherwise, no, no, no.

The vomit is still fresh from roller-coaster rides on Crocs, lululemon athletica, China Digital TV, etc. If there is a next time, I'm banking the 50% and 70% profits.

Good Apple for the day

Sold AAPL @ 166.75
Net +2.86/share
The strangest feeling, clicking the sell button on a stock with momentum just two minutes before the close of after-hours trading. My web browser stalled up, a rarity, and I shut it down. When I came back to my online broker, the sale had executed. What Jason Zweig said recently about the psychology of selling stocks is true. I'm like a lot of people, apparently, who are more comfortable with the feeling of holding a winning stock rather than locking in those winning profits (rRe: CROX, STV, LULU, etc.).

Though I had a sell price of 170 on my AAPL daytrade shares, I returned to discipline mantra: not to make decisions, but rather to follow rules and procedures and to act in accordance with policy. That means selling the daytrade shares. I could have rationalized that the trade isn't done, it could become a swing trade going into Monday morning. But the volatility of this week, so many down days, has me wary. I'd love to believe that the correction is done, but I can't. I think the market remains in erratic mode for awhile. Therefore, I will continue to daytrade a half-position in AAPL. If I can get nearly +$3/share as I did today with one trade, I'll be content.

If AAPL opens at 167 or 170 on Monday, so be it. Everything will depend on the market, on news. But if AAPL opens below 166 and the market is neutral, I'll look for a re-entry point.

X Factor: Volume was lower today and did not surpass volume of the previous six sessions. Not an overwhelming indication that Apple's rally will fizzle, but bullish either.

One-day chart below. I like stockcharts.com, but bigcharts.com has the one-day chart. I slept through the big run. I actually remember falling asleep as AAPL began to bounce of its low of 159. Told myself not to bottom-fish just yet. It was about 5:30 am Hawaii time. By the time I got up, it was after 7 am (noon Eastern) and the stock had already run to 167. Amazing. But I like the entry point AAPL gave me later at 163.89.

Sorry for the sloppy lines. I don't have a mouse, nor a pen thingie for the laptop.

Swoons and a margin call

Today, finally, is a good day in the green, up 10% or so. In the meantime, I sold my itty-bitty positions in McDonald's and Under Armor today. I bought these stocks a few months back for my 11-year-old nephew as a way to show him how buying what you know is a good thing, and he's bullish on both, especially Under Armor. Well, UA was obviously horrible, sinking from the 61-65 levels I bought it at. The bloated P/E was a real indicator of where the Co was as a retail stock, plus the huge insider selling was blatantly arrogant. McDonald's on the other hand is a fine Co and I'll be buying that back for my nephew in the near future, long before UA. I'm not anti-UA. I just see major bloating, and the market crushed the stock.

The sales were key for me because of (I saw today) a small margin call. I could have avoided this problem if I had

a. Sold my CROX, LULU and STV (and other stocks) at or near the top
b. Avoided buying speculative stocks like LFT (an IPO)
c. Avoided buying more BIDU and AAPL on the way down

I could've waited and bought BIDU and AAPL earlier today when the market rebounded from the horrendous 5-day slide. I will stay on top of this margin call, of course. Took 20 minutes to get through to someone on the phone at E*Trade, but he said that it's possible that if my account continues to rise before Thursday's margin call deadline, they may not require me to sell any shares. "It's a mystery," Jeff said.

Hmm. Well, I sold the MCD and UA shares today, which could help if the funds settle quickly. You know, if I were a genius and sold near the top before the recent crash, I'd have an account worth about twice what it is today ... and today's session would've been a buying spree to da max. Instead, my account is just getting back to 60% of what it was at its top. Moral of the story: It's a trader's market. I am fully aware of this now. No longer in denial.

When the next dip begins, I'll sell 50 to 75% of my stuff, even AAPL. Then I won't dread looking at my account or at the market action next time. Yesterday (Monday) I didn't even look at my account. First time in a long, long time. Even today, I haven't activated my MarketTrader tool to watch trading in real time. It was good. I had no buying power anyway. But what I must always remember, however, is that I always have selling power.

I have always been faithful to the point of blind faith. Back in the day, when we were 13-year-old comic book collectors, it was me and Peter who loved to read the comics and learned to appreciate great stories. It was Jae who paid superficial attention to the content and really, really knew how to hustle other kids — especially the younger ones enamored with flashy cover art and infamous superhero names like X-Men and Frank Miller's Daredevil — to buy his comics. He was a GREAT salesman who knew what appealed to the masses. He'd have the same comics on the same table as Peter. Jae would have a higher price, but his loud, busy mouth and great salesmanship got him the big profits. He would sell sell sell and make money.

I hold and lose huge profits. The concept of selling, somewhere in my subconscious, is probably that it's a form of "giving up," which is absolutely preposterous. I'm learning to sell to avoid losses, which I did with many stocks in the past month. But the concept of selling to LOCK IN profits is still novel, and I must embrace it.

I realize that my honesty here can and probably will open me up to criticism, but I'm the first to admit that knowledge is key, and I intend to learn from my mistakes, to learn how to sell. It's psychology, not so much the mechanics — a 7% stop-loss is sensible to me. What's crucial now is to overcome the losing mindset, the denial that any stock is going lower ... and lower ... and lower. Hitting that sell button is equally as important as investing long term, if not more. I plan to do both.

Suckage wasn't as bad as I thought

I manage to beat myself down pretty good when a trade goes sour. But looking over my mistakes, I can feel a little better about recent sells. No, I didn't sell at the right price or time. That's listed for the record in my full disclosure (at right). But these stocks that I recently got out of have dipped even lower since.

Amazon (AMZN) • sold @ 90.11 • currently 86.01 (after hours)

China Mobile (CHL) • sold @ 87.54 • currently 86.49

Crocs (CROX) • sold @ 41.70 • currently 40.76

Garmin (GRMN) • sold @ 117.20 • currently 89.00

Longtop Financial (LFT) • sold @ 25.90 • currently 23.19

lululemon athletica (LULU) • sold @ 43.70 • currently 41.00

Blue Nile (NILE) • sold @ 81.25 • currently 80.70

China Digital TV (STV) • sold @ 37, 39 • currently 35.24

VMware (VMW) • sold @ 102.72 • currently 99.80

Yingli Green Energy (YGE) • sold @ 34.85 • currently 36.00

I bought back only into one of these stocks: YGE. Other than that, I'm more than happy to wait out this storm. VMware and China Mobile are the most attractive of the rest.

Picking right means squat without tight stops

Most of the screen is green. I tried those other background and font colors, but I always return to "Wall St" black with green and red fonts. And today, it's mostly green.

CROX 72.00 +3.02, 4.4%
VMW 119.90 +7.81, 6.9%
YGE 37.12 +2.73, 2.7%
BIDU 366.89 +13.50, 3.8%
RIMM 121.65, +1.84, 1.5%
NTDOY.PK 77.89, +2.51, 3.3%
AAPL 184.98, +0.28, 0.15%
MCD 59.18, +0.71, 1.2%
UA 60.10, +0.53, 0.9%

Then there are two stocks that I am out of my freaking mind about.

lululemon (LULU) 50.00 -0.4%
Longtop Financial (LFT) 26.76 -3.19, -10.6%

I entered LULU a couple of months ago at 38, added later at 47, and the stock eventually ran to 60 on the company's raised guidance for Q3. By then, I'd fallen in love, didn't even consider the possibility that 1) the stock had run way too fast, way too high to sustain any level near 60, and 2) selling at least half of my position wouldn't kill me. But boy, like a fool in love, I held all the way down and today, LULU is at 49.50 in after-hours trading. That's about 17% down. This stock won't announce earnings for several more weeks. It has a history of taking a deep plunge (see the stock's movement before the Q3 raised guidance).

Lack of discipline, no lack of arrogance.

Longtop Financial (LFT) was a bust from the start. I was away late in the day, missed the IPO's run-up from 25 to 32, and when I got back home, I was a fool and chased it. I got shares at 33.70, saw the stock run to 36 in pre-market the next morning and I got way too comfortable. Instead of running wild like China Digital TV had done the week before, LFT reversed field and started running toward its own end zone. Words cannot describe what I wanted to yell at this clown stock, going backwards on the football field. But the real clown was me. Instead of putting in a stop-loss (since I obviously have problems following through on mental markers), I saw it drop this morning from a high of 31.22. I kept thinking, well, the market is up, LFT will follow eventually.

Nope, didn't really happen. Some fake-outs, yes. But late in the day, after struggling to get back up over 29, LFT plunged below 27. At this point, it was way too late for me to sell. I know there's a bottom somewhere in this vicinity. The sell should've been 7% below the top (36). That means my stop-loss would've been 31.80 or so. Note to self. Cut losses fast and clean, fast and dirty, fast and any way. Just do it fast. Set the order and stop the bleeding.

It's ridiculous what my lack of follow-through does. Ten of my 13 stocks were up today, but my portfolio is up only 0.76%. A part of me thinks I'm getting closer to becoming astute, holding my long-term stocks without fear, and trading short-term stocks with a firm grip on the leash. Then LULU and LFT happened, preceded by STV's drop from 55. That shoud've warned me, of course, of this pattern in my behavior.

I did manage to unload the remaining half of my STV position, netting a profit of about $2 per share. (Nothing like what I would've had at 50 to 50, but better than a loss or a case of stomach flu.) So I did something right today. But man, I have a long ways to go before I can truly be Master of my Domain, and you know which domain I'm talking about.

This ineptitude of mine could happen again. Of the 12 stocks I still have, only VMware, Crocs, RIMM and Apple are the ones I plan to hold for years. The rest have to be carefully monitored and set to sell on stop losses, much as I used to abhor the method. I'll cool off and cut myself a bit of a break between now and tomorrow morning. After all, I prefer to buy and hold great stocks, not trade them in full or by halves. But I know my charts, and I'm getting more familiar with behavior in RIMM, for example. There are entry points worth waiting for. I'm better at bargain hunting than anything else.

So, perhaps the solution, the realistic approach with my tendencies and belief system, is to prune my portfolio significantly and focus on no more than 5 stocks. Trade a half-position in some, maybe all. that would increase risk if my analysis is wrong, but I'd rather be wrong with Apple than Longtop Financial.

More food for thought as I head to the car. Slicing off some of my stocks wouldn't be so bad going into the Fed meeting (tomorrow and Wednesday, according to CNBC). My positions in MCD and UA are very small, just for my nephew.

The whole swing trading thing in the past few weeks has been a mixed bag. I'm break even there. All my good, fairly well-timed entry points have been solid. But it's the few that have killed my profits. And it's all because I have hesitated to be as aggressive with keeping my profits as I am with finding great stocks and bargain-rate entry points.

Enough. It's time for a break.

Morning Glance: Green is good

Quick glance at today's bump up...

lululemon athletica responding to its recent bottom (50) and is up 4.2% to 52.58 on low volume. Whether this holds, we shall see, but I am still as bullish as ever on LULU.

Crocs moving up, also, now at 72, an all-time high. If the pattern persists, earnings will be announced around Nov. 14. I want more shares cheap, which could happen within these next 16 or so days. I hope.

VMware is on the move, up 3.2% to 115.75. As sure a buy as any I've made in the past two weeks. Wish I had more! ... Baidu also up 3.4% to 365.

Yingli Green Energy is up 7.4% to 37, also an all-time high, thanks to the price of crude oil. A lot of talk on CNBC about traders in the pit expecting a fall in crude prices soon, too much frothy money from hedge funds, yadayada. Even if crude falls, I will hold my YGE position. Solar in China will be one of the winners.

YGE broke out on Friday, looking somewhat similar to LULU when LULU broke out over 38 several weeks ago. I wouldn't doubt that YGE can catapult into the 50s as quickly as LULU did, but I'd wait for a pullback, even as oil surges higher.

China Digital TV and Longtop Financial are duds this morning. STV is relatively flat, up 0.8%, par with the NAS. LFT is down 3.6% to 29. Arf arf, I might get out of that and buy more CROX, Nintendo or VMW on a dip.

Whine of the Morning: Still wishing I bought CNOOC (CEO) back in the 90s (August) when the P/E was 11. Waah. Friggin waah.

Energy Trade: Crude Behavior

Crude oil is over $91. Turkey is poised to snuff out the Kurds (Iraq). Fear prevails and oil goes up. What's the trade?

• Yingli Green Energy (YGE) broke out to a new high above $34 on heavy volume. This is a stock I've followed for a few months, but never took a dip into the water. Of all the potential energy plays I like, YGE is the smallest cap but also one with the most potential to double. It was $20 in mid-September, but volume and price have been explosive.

• Potash had a great earnings report this week, and as long as ethanol is a factor, POT will keep rising. The Co says that global fertilzer demand remains at a high, and though the stock is at insane levels, the growth is real.

• PetroChina, even at $245, has been consolidating for the past week or so, and is now trading at its short-term (10-day) moving averages. Dare I say this is a buy? Perhaps, but only with a small position. PTR is the golden child of Big Red. In other words, practically money in the bank. Who has more leverage in the world than the Chinese government and economy?

• CNOOC (CEO) is my favorite of the oil and natural gas companies, but is trading well above its moving averages.

I would love to grab shares of YGE, but I'm out of dry powder unless I sell my positions in China Digital TV (stuck at 39) and Longtop Financial Technologies (can't stay above 30).

Lessons for an undisciplined trader

This recent foray of mine, to do some swing/momentum trading, is turning into a pain in the ass. As the cliche goes, you're only as good as your last trade. For me, that would be a major El Stinko!

Perhaps I was far too confident. Not cocky, but overly confident, so much so that the notion of a stop-loss order was hard to comprehend, let alone execute. It had been awhile since I'd picked a loser, but my methodology has applied to long-term holds in my favorite (A grade stocks). By delving into more stocks during earnings season, there's a lot less substance involved. Cases in point :

• China Digital TV wasn't an earnings play, but an IPO that captivated me. I entered this stock on Day 1 and Day 2 at 29 and 32. It promptly ran to 55 within a week, and I even got a few more share at 51 along the way. Inevitably, the stock sank once momentum ran dry. Instead of selling at 7% (or whatever number) from the top, I held all the way down to 39. I sold half of my shares yesterday, thinking I was wiser as a result. The result: With an average cost of 35, this was a mediocre win.

• VMware seemed as good a pick as any for such a young stock. Love the growth rates, the niche, the history being born out of EMC. As close to a lock as there is going into earnings. Result: My buy at 97 is profitable. VMW traded at 113 today. A clear win so far.

• Feeling good about my recent buys, I opted to enter Longtop Financial, but I was way too late. Because of work, I missed the final hour of LFT's amazing run at the end of Day 1. I got home to find that LFT was no longer at 25, 26 or even 27. The stock was at 32 and climbing in after hours. Instead of leaving it alone as I normally would with any runaway stock, I chased and bought at 33.70. Bad move. Today, the stock ran up in pre-market to 36, but sold off after the opening bell down to 28. I should have just sold at 34 and broke even at worst. Now I'm holding the bag. A freaking bagholder. The only silver lining out of this is that it's not a big position. I feel foolish nonetheless. Result: Down 10%, a definite loss so far.

• As if LFT wasn't bad enough, I also bought a few shares of Baidu at 337. A lock for blowout earnings, I felt. Here, as with China Digital TV, VMware and Longtop Financial, I was not buying based on the technicals of the chart. (If I had, with BIDU well above its moving averages, I would have stayed out.) So, Baidu announced OK earnings today, and the stock immediately plunges $20 in after-hours trading. It will be worse tomorrow. Baidu will eventually come back to 337, maybe tomorrow afternoon. Maybe next week. Maybe in December. Whatever the case, it's dead money for now and I am done doing the yo-yo thing with earnings.

• And then theres lululemon athletica, which has plunged from 60 to 51 in mere days. 60 was not sustainable, not without real news since the Co guided the street higher for Q3 earnings last week. It was just a couple of months ago when the stock was mired in the 30s. I entered this stock with a trade in mind, though I was (and still am) impressed with the company's potential. However, the rapid run-up should've had me on red alert. At 60, I should've established a stop-loss sell order for half of my position.

I'm not altogether mad about the slipapge in LULU. At 51, it is now below its 10-day SMA and EMA, and if I were out of this stock, I'd be real close to buying in here.

But more and more, I'm starting to think of everything outside my A+ and A stock picks as trade bait and only trade bait. I'm not 100% there yet, but the day is coming. I may have to embrace the volatility rather than rebuke it.

Train goes through Xinhua

Xinhua. I am in Xinhua Financial — better known as Longtop Financial Technologies — at 33.70. Not exactly a great entry point, but I think as far as IPOs go, this one has a good chance to keep climbing for a few days. Got out of NILE and sold half my position in STV to enter LFT.

Though the Co has strong potential, catering to financial services in China, I view this through trade-colored glasses only. I just lament that I was away at work during that last hour of the session, when the stock was went from 27 to 32.

RIMM's Great Leap Forward

Days like today are a vivid reminder of why I like to buy and hold my favorite stocks. Somewhere around 6 a.m. (Hawaii time) I fell asleep, and at the time, my position in Research in Motion was lagging a bit. No surprise. Earnings came out a few weeks ago, and the stock was resting as the rest of Nasdaq showed plenty of green action.

I woke up a few minutes ago (9 a.m. Hawaii time) to find RIMM at the top of my percentage gainers. Not just at the top, but far above Apple. RIMM is up 11% to 126, off its high of 128. Before I could look the news up, CNBC said that the BlackBerry is officially being distributed in China. No wonder! I suppose the RIMM bears can shut up now, what few are still around.

The RIMM chart is amusing. The stock shot up precisely at 8 a.m. here (2 p.m. Eastern). Maybe even more entertaining is the fact that Baidu, China Digital and Amazon have higher percentage gains so far today than Apple, even as Apple trades $13 up at $187 after yesterday's buttkicking earnings report. I had debated on Friday whether to buy a few more shares of Amazon, Baidu or start a position in VMware. Looks like Baidu would've been the right choice. VMware is up 3.9% and I have no complaints since getting a few shares at $97.66; VMW is now at $106.38.

There are a lot of astute traders who enter stocks prior to earnings and get out immediately afterward with their profits. They would've missed today's Great Leap Forward by Research in Motion. I'm just glad to be a vested spectator from the outfield seats.

WSJ: BlackBerry + China = Stock Goes Crazy

Too early for cheap buys?

DJ -366 (-2.6%)
NASDAQ -74 (-2.6%)
S&P 500 -39 (-2.5%)

AAPL 170.80 -2.70 (-1.9%)
Apple reports on Monday. My favorite, an A grade stock. If they can thump the estimates and raise guidance, AAPL becomes an A+ stock. Still trading above its 10-day SMA (168).

VMW 97.74 -3.81 (-3.75%)
VMware reports on Wednesday. May sell off on good or bad news because of the run from 50 since August. I'm late to this stock, but I understand the strength it has in its industry — its dominant stance. Currently an A- grade stock and it's trading below its 10-day SMA (101). Big run, decent pullback, hugely popular. That means it won't stay down long. Very tempting.

BIDU 314.75 -5.25 (-1.6%)
Baidu reports on Thursday. Google's upswing since yesterday's earnings report could (should?) have a mirror effect on Baidu, right? Why would it have a positive effect on earnings rather than today? (Maybe the selloff was just too strong and broad.) I'm split on that notion. Nevertheless, BIDU has a shrewd CEO in Robin Li, and I don't see him disappointing the street as long as he's got Big Red backing the Co up.

Baidu is trading below its 10-day SMA (320), which sounds preposterous considering this was at 161 on August 16. (The 50-day SMA is a bit more reasonable at 254.) Tempting here, also.

Looking back, I should've sold Blue Nile and China Digital TV when I had nice profits. I bought NILE at 80, it ran to 106, and now is back at 81. I bought STV at 29, 32 (and 51). It ran to 55. Now it's back to 39. Some positions are holds. Other positions are trades. These two should've been trades.

NILE is trading below its 10- and 50-day SMAs, but I hesitate to add more here. Even if I disagree with the downgrade (Citigroup) and even if I don't pay mind to the insider selling, the market is less than pleased. Can't fight the trend, can't add more here. I'm holding my little position.

STV is a long-term hold, but I would've profited by selling half my position high. The pullback for a recent IPO is almost destined. But I will hold on here.

Amazon is taking up space in the portfolio. I got in at 89, which is where it remains today. Though today's selloff hit tech and retail hard, AMZN lost just 10¢. The stock moves drastically only on earnings. The astronomical P/E keeps the stock on a leash for most of the quarter. I may get out of AMZN to raise a little more cash. OK, scratch that. I just realized that Amazon reports on Tuesday. Very interesting.

This isn't exactly a bargain sale here, but I've become severely underweight in two of my favorites, Crocs and Nintendo. Haven't sold a share. Just gotten heavy with other stocks. This pullback is an opportunity to fill up on CROX and NTDOY.PK, or perhaps to just wait until Monday. My Friday buys have been stellar in the past few months. Hmm...

Crocs is a relative bargain here at 65.99, well below its 10-day SMA (68). Q2 earnings were reported on August 14, and if Q3 comes out three months later, that would give us longs a Nov. 14 target. That's 26 days away. Too early to add more?

Nintendo (70.80) is milking the Wii and DS and everything it owns for all it can — but without emptying the whole sack. No question in my mind that the Co will deliberately ration the Wii as long as demand is huge. Remember, Nintendo was kicked to the curb, particularly by U.S. shareholders, for a few years there. The Co remembers this and isn't just tight with the product overseas, but is also overly discerning with its shares in Tokyo. (Investors there can only buy in bundles of 100 shares, and that comes out to about $41,000. Talk about an illiquid market in stock 7974.)

Today's pullback brings Nintendo's stateside pink sheets below the 10-day SMA (72), but I'll wait. The recent run above 70, all the way to 75, needs time to digest in this new box/trading range. I'm loathe to buy it high as I've done before.

Is it just me or was Maria Bartiromo a lot more hyper today on the trading floor? Luv Maria but when the market is on a major selloff, it's like watching a skittish cat trying to run across a busy freeway. When she's back at the desk, Maria is back to her calm self. Time to pick up some lululemon pants and hit the yoga workouts, Money Honey.

Oil hit $90/barrel today, then pulled back to 88.60. Guy Adami on Fast Money thinks the next $8-10 is downward. Dennis Gartman said crude should be at $75, and added that gold will fall if we are in a recession, as Julian Robertson said on CNBC today. If oil is due for a pullback, that will exacerbate the declines for PTR and CEO. I still want CEO, but I want it cheap. It won't get back to 92, but I will still be picky.

A bullish analysis of STV's numbers

A bullish take on China Digital TV (STV) by OTC $peculator.

China Digital TV valuation still reasonable based on growth rate

Given the assumptions above , STV’s earnings per share would be expected to grow from 44 cents in 2007 to 75 cents in 2008, which implies earnings growth of 70.5 percent on revenue growth of 65 percent. ... Google’s stock currently trades at about 1.2 times its growth rate for 2008 EPS. If we ascribe the same multiple to STV shares, then based on the estimates above, we can easily see STV trading over $63 per share (70.5% x 1.2 x $0.75). This is sort of a mid-range price target, but I would argue that China Digital TV deserves to trade at a premium valuation to Google shares because it has a much faster growth rate and the general industry is also growing much faster. If we stretch the valuation for STV to 1.5 times the growth rate, the stock could trade up to $79 per share. The stock could perhaps even go as high as two times its growth rate before it starts to look overvalued, and that would price the shares at $105.

Do I buy these targets? I can't say I do or don't. But at least there's a line of reasoning and an analysis of numbers by this blogger without an overemphasis on P/E.

Will STV rise or fall?

My response to a question on the China Digital TV (STV) forum at Google.

So do you think Monday the price will drop?

Yes, the stock will drop.

Yes, the stock will rise.

This stock will do a helluva lot of things. I've learned that it's always best to practice PATIENCE. Have a system that works for you, that gives you the best possible opportunity to get a great, great entry point. And then chisel your way in rather than buying all your shares at once. I mean, if you were in Vegas, with no way to beat the house day after day, you wouldn't put all your chips in on the first hand at the poker table, right?

Anyway... I plan on watching very closely, and if there's another drop, I'll have dry powder to add another heaping tablespoon of STV. Enough to make a difference, but not enough to poison me if the market tanks.

If Yahoo and Google kick ass with their earnings reports next week, whatever happens in the China Congress may not matter so much. And as for possible rate increases, the Chinese market has only rocketed higher each time.

The same people in China who love their Gucci bags and Louis Vuitton wallets will also tune in 24/7 to the next Chinese version of the Home Shopping Network ... and they will watch HSN with Digital TV. A lot of single kids growing up in the Middle Kingdom, and they have jobs, spending money and (relatively) expensive tastes.

8 am Go to office job (entry level white-collar job at Yum/etc.)
Noon Eat lunch at KFC, text buddies via China Mobile
5 pm Meet friends for tea at Starbucks
7 pm Internet cafe, play WoW for 4 hours
11 pm Go home, watch Digital TV for 3 hours

Weekly goal: Save money, buy gf another Gucci bag.

But seriously, take it from someone who stupidly cut his profits in huge growth stocks of the past. Let your winners run!

My STV Diary: Trading takes a different mentality

I've been to Las Vegas once in my life. I spent every waking hour working. It was a conference, seminars all day and night. By the time I returned to my room, it was lights out for two nights in a row. Completely bushed.

I did get to gamble, though. I hit the one-armed bandits and set my limits. If I'm up $25, quit. If I'm down $15, quit. Well, my luck in that empty place was pretty good at 1 a.m. I found myself up $44. Quitting time. Well, maybe not. Maybe I'd play a little more. Before I knew it, I was down $40. I walked out on the losing end. Sure, I'm not quite the big spender, so that was a blow. I didn't stick to the plan.

And so, this week, I found myself trading a stock rather than investing in it. A big change for me, especially after taking a studious approach to investing in recent months — and finding success. Sure, profits in a bull market are nothing to brag about, if you're the bragging type. But straying from great fundamentals, superb growth and technically sound entry points felt like a walk on the moon wearing a big, bulbous astronaut helmet and oxygen tank. So I held my shares of China Digital TV (STV) from 29 (and 32) all the way up to 55.

Quitting time, right? Well... it was like I was back in that casino eight years ago, sitting on a $44 profit, trashing my game plan. And sure enough, the market pulled back yesterday, dragging STV down, down, down from 55 to 41. It didn't help that I slept through the downdraft at 2 p.m. Eastern time. It was 8 a.m. Hawaii time and I crashed out on this couch. Not a big believer in stop-loss triggers, so my profits evaporated by half. Thankfully, my position is small enough that it doesn't kill me when the drop is huge (15%).

Today, the market bounced and so did STV. In after-hours, it is at 49 plus and I'm relieved. Not surprised. Just relieved. If I'd saved some dry powder, or sold near 55, I could've gotten shares back cheap yesterday or today. But we move on, relieved.

Sweet dreams, sour selloffs

I got up early, 4:40 a.m. Nice. Sleeping earlier and rising earlier than normal wasn't my plan. I was just exhausted. So, while it was still dark outside, I watched my portfolio climb. It was up 1.6%, something like that, when I fell asleep on the couch, lamp on, CNBC blaring away, at around 6 a.m. Hawaii time.

I woke again at 9 a.m., an hour before the close. My portfolio was entirely in the red with the exception of a tiny position in Under Armor. What happened? A quick scan revealed nothing. My only guess was that it was simply profit-taking on a wide scale, triggered by quant funds. Only later did I find that J.P. Morgan's had lowered estimates on BIDU, and that triggered the landslide. BIDU went from a high of 359 to a low of 301. The whole tech sector declined in basically 30 minutes, around 8 a.m. my time.

I was peacefully asleep. Initially, I wanted to get rid of my short-term trade in China Digital TV (STV). It was down big from 51 to 46. Then I had to do a radio interview with some friends with a sports show over at KUMU 1500 AM. That was a good 15 or 20 minutes and I gave them my full attention. I hung up and found STV down to 41. Pretty funny, huh? If my position were big, I'd have sold half the position above 50, but it isn't, so I'm holding for awhile.

I watched and watched, reluctant to pull the sell trigger, and STV found a temporary range between 41 and 44. Looking at the chart, it almost looks like there was money (big money) sitting on the sideline just waiting for the stock to hit 41. Major selling was met by humongous buying volume, which tells me that this is no ordinary pump-and-dump vehicle. So I'm holding my position though I am still a bit concerned about next week's Congress in China. Though there is data that shows a decline of 22% in the past two Congressional sessions (1997, 2002), the market for China's economy was entirely different back then. A decline next week wouldn't shock me, but neither would a move to the upside.

I don't have a take on where the U.S. market goes from here other than the simple fact that we're one pinky toe into the earnings season, and folks with dry powder (as well as the big boys) are going to scoop up their favorite growth stocks at a nice discount right now.

Name change adds glitter

Beijing Novel-Tongfang Digital TV Technology? Yep, that's the former name of China Digital TV. Call it marketing, if you like. Sounds like show biz to me. Anyone remember Engelbert Humperdink?

China Digital TV Gets High Ratings From Investors

The enthusiastic reception is certainly welcome news for its principal founders, Chairman Zengxiang Lu and CEO Jianhua Zhu. Lu has already expressed astonishment at the larger than originally expected demand for its IPO shares, which allowed it to raise $192 million, significantly more than the target of $150 million.

Lu and Zhu cut their teeth in China’s fledgling digital television industry at N-T Information Engineering, a developer of so-called conditional access systems. China Digital TV’s purchase of CA systems, which include smart cards, and software for television network operators and TV set-top boxes, from N-T Information Engineering in 2004 provided the technological and business foundation for the company.

That year was also a watershed in China Digital TV’s fortunes, its last loss-making year.

Krause: STV conservatively valued at $80-100

I'm open to hearing the bull and bear arguments regarding China Digital TV (STV). Here's one breakdown of the numbers that is actually conservative, yet insanely positive on the long side.

Michael Krause on Seeking Alpha: Does China Digital TV Measure Up?

Fast Money loves China Digital TV 'pop'

The China Digital TV choo-choo train keeps chuggin' along. The gang at Fast Money had their say today.

Fast Money
Tuesday, Oct. 9, 2007
Pops & Drops

Dylan Ratigan: "China Digital TV, STV, popping again. 75% on its IPO, 41% the next day. It's off a lot."

Tim (the Ambassador): "Yeah, they're buying Google. Just kidding. I mean, how else can you explain this? The market cap's gone from $700 million to, to almost $3 billion. The key here again, folks, is that these guys are the key digital card player in the market in China. That's gonna be mandatory by 2010. They're the main play here."

Not your ordinary digital TV package

Shares of China Digital TV (STV) hit a high of 49.49 in premarket trading, roughly 25% up from yesterday's close. This follows yesterday's 39% gain. Is there something the Co offers to its subscribers in those 26 provinces that we don't know about? Are customers giving tons of hard cash to the cable guy when he shows up to set up the box and smart card? Is the Playboy Channel secretly stashed among the hundreds of channels and the government doesn't know it yet?

But seriously, the run-up kinda scares me. What goes up so easily can come down just as quickly even though the Co has superb growth rates and real cash in its coffers. Maybe it's just uncomfortable because this stock is taking all the pain out of making money. That would mean that something is really wrong with me!

What's happening may be this: the tiny float (12 million ADRs) plus Cramer's hyper-bullish 'Buy' tag on the stock during yesterday's Mad Money Lightning Round are in effect. It's all highly entertaining, whether I'm long in the stock or not. It's just a heckuva lot more fun to have a few shares.

Cramer: 'China Digital TV is another Baidu'

Amazing. STV refuses to rest.

Lightning Round, Mad Money

Caller Roger in California: "I'm a huge believer in China. They're consuming, consuming, consuming. There's an IPO on Friday, China Digital TV that's been popping. What do you think?"

Cramer: "I gotta tell you, man, you know, I read through the prospectus. I have to admit that this is as good as a Baidu. It's as good as a China Tel. The problem is, is my God! This thing was up — I mean it was up again today! It was up, uh... (checks the computer) It's up another 12, 11 points!! But it does feel like VM Ware, honestly. At 40 bucks, could it add another 20 points? Yeah, it could add that quite easily. It's got that kind of momentum."

STV was at 41 plus when the caller asked about the stock, but it promptly ran more and hit 43 plus after Cramer's summary. Up $15 (55%) today.

CHEEE-HOO!!