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| Name: | Sherri Haskell |
| Lives: | Sausalito, CA |
| Previous profession: | Fundraiser for technology companies |
| Trades: | Stocks and futures |
| How long: | Since 1985, full time as of 1999 |
| Trading account: | Medium ($250k-$1m) |
| Software: | www.stockcharts.com, TC2005, eSignal |
| Tradersā Camp: | St. Maarten, January 2003 |
CHAPTER 1
SHERRI HASKELL
A LOGICAL WAY OF LOOKING AT THINGS
I met with Sherri twice while writing this chapterāfirst in 2003 when I was just planning to write this book, and again a year later. Sherri kept excellent recordsāin 2004 she could pull out the trades we had discussed a year earlier as easily as the trades from the previous week. These two interviews, held 12 months apart, offer a glimpse into how a serious traderās approach can change within a year.
In October 2003 I flew to a conference in San Francisco one day early in order to visit Sherri, who lives in Sausalito. I took a shuttle from the airport, crossed the Golden Gate Bridge, and got off on the other side of the bay. The air smelled of eucalyptus trees. Sherri was waiting for me in her sporty Lexus two-seater. When we arrived at her hillside house, a Mercedes convertible was parked in the drivewayāSherri liked her cars small and nimble, much like herself.
We had a campersā meeting that night, and the following morning Sherri picked me up at the hotel and brought me back to her trading room. Wall-to-wall windows overlooked the expanse of the bay and the hills on the other side. A table underneath the windows that ran the length of the room was crammed with computers, screens, and other gear. An exercise bike and a weight-lifting rack stood against the back wall. Sherriās fat cat, whom she did not have the heart to put on a diet, kept wandering in and out through the open windows, onto her trading desk, and back into the garden.
Sherri complained to me about what she called her poor performance. āI am up 90% this year,ā she said. āBut the year is not over yet; Iāll push to do better.ā I laughed and said, āLay off a bit, relaxāyour results are fantastic, way outside of the envelope. Youāre at the upper edge of the top one percent of traders.ā Sherri did not think so. āIām not good enough because I see stocks that go up 400% and I only make 90%,ā she said. āAt the end of this year I want to be up 200%.ā
She told me that pushing for more had different meanings for men and women. Sherri always felt compelled to push extra hard to succeed in a male world. She had done very well in two traditionally male areas of businessāmedical equipment sales and fund raising for start-ups. Now she was just as determined to do well in trading.
I asked Sherri to tell me about her trading and show me two recent tradesāone winning and another losing. She opened a hard-bound notebook, its pages full of scribbles. āI trade a couple of different waysāone way is following breakouts. I troll at night, looking for consolidating stocks with unusual volume. Something that hasnāt moved very much but has big volumeāthat tells me momentum is building and it may bust out.ā
Sherriās notebook had four columns, and I read several lines. Some symbols, such as EWT and SNIC, were highlighted in yellow.
I jot down ideas every eveningāthe yellow markings mean the stock looks wonderful and I put those into my eSignal alert system. When a stock is yellow, it usually hits my mark within a day. I have no problem finding stocks or understanding technicals. My problem is deciding where to add to positions and where to set stops. I am still refining that.
Every night I go over all my positionsāthis morning I have 13, on most days I have about 8, but even that is too many. I write a note on each position every night and then the chart image stays in my mind, so I do not need to look at charts intraday, but simply watch price levels.
I do my initial review in Stockcharts or TC2000, then track my list using eSignal in real time. End-of-day Stockcharts are the easiest to readāI do not want to pay extra for intraday real time, and 20-minute delayed quotes are useless. I put the symbols of the stocks that I selected in Stockcharts into eSignal, which lets me know when a symbol hits my price. It sends me an alert by phone, an e-mail, or a pop-up window, which is what I prefer because I am in the office most of the time.
Sherri writes herself notes in eSignal, attaching them to each ticker. All notes are dated and she cleans out old notes once a week. When Sherri likes a stock a lot, she marks it with a star, and when she does not like it, she writes Watch! next to it. āWhen the page is mostly stars, the market is bullish. When itās mostly āWatchesā, it is more bearish. Before I enter a trade, I check that stockās volumeāif it is strong, I go. If it is 50% above the normal daily level, it is a sure buy; otherwise I think the move has no staying power.ā
TRADE 1 SHERRIāS ENTRY
ASKJ
My initial buy was on 8/12/03 at $16.21. At that time several indicators were giving similar signals, confirming each other. The RSI had just crossed above 50, the price was moving up on strong volume, MACD-Histogram and both MACD Lines were rising, crossing above the zero. Stochastic was turning up from below 20. How nice! The indicators were screaming to buy, and I happened to be listening.
Will this trade make or lose money?
TRADE 1 SHERRIāS EXIT
I added to my long position on 9/2/03. The stock had been moving up nicely, then developed a lateral consolidation. After four trading days, it broke out of its consolidation on extremely strong volume. RSI was advancing, MACD was strong, and Stochastic was continuing to climb. The most important factor was the breakout from the consolidation pattern on such strong volume, while all the indicators supported my action.
I sold on 9/22/03 at $20.74. The stock had been moving up for a couple of weeks, but the volume was gradually diminishing, and that got my attention. On 9/19 the price traced a doji, a bearish candlestick pattern. That set off an alarm, especially since the doji was on a much higher volume. I thought the price was topping out. While the price was going up, MACD-Histogram started falling off. The combination of all these factors was my cue to get out, saving my profit. I exited the next day at $20.74, just as MACD lines crossed on their way down and MACD-Histogram crossed below zero. It was time to bail out. My timing of the exit was fortunate, as the stock has continued to tumble since that day.
TRADE SUMMARY
Long ASK J 8/12/03 @ $16.21
Added 9/2/03 @ $19.30
Sold all 9/22/03 @ $20.74
Profit = $4.53 per share on the first position, $1.44 per share on the second position
TRADE 1āENTRY COMMENT
Whenever I load up the file of a stock I have not seen for a long time, I begin by compressing its weekly chart until the entire history fits into a single screen. This allows me to tell whether that stock is cheap or expensive relative to its lifetime history.
The history of ASKJ reveals that the stock had been sold to the grateful public in an IPO at approximately 70 (split-adjusted) and ran up above 190 in a final dizzying vertical rally in 1999. From there it crashed and then ground down to a low of 75 cents in 2001. Any stock that falls more than 99% from its peak, like ASKJ, has every right to die. But this puppy decided to live. ASKJ lay quietly on the bottom in 2001 and 2002, just trying to breathe, and in 2003 it lifted its head and started getting up, climbing into double digits. At the right edge of the weekly chart, both moving averages are trending higher, confirming the bullish trend and allowing us to buy.
THE MOST EXPENSIVE $50
I told Sherri about a client who had consulted with me a few years earlier. He had been trading stock index futures and after a long stretch of very poor performance started making money. At that point he set the goal of $1,000 profit per day. One day he entered a long position just right and soon was up $1,950. He decided to hold until that trade netted him a round $2,000 and took it overnight, overriding his technical rules. That day happened to have been the top of the 1999 bull market! Soon his gain shrunk to $1,000, then down to zero. He continued to hold, determined to reach his new $2,000 goal, while his trade went negative. Trying to recoup it, he doubled his position and then doubled again. By the time he threw in the towel and closed out that trade, his account had been reduced from almost $100,000 to $14,000. He then had to go to his father and ask for money, opening a whole new can of worms.
āAE
When the weekly charts give a buy signal, I turn to the dailies. There I decide to go long or stand aside, depending on the message of the daily charts. One thing I will never do is go short if the weekly charts tell me to buy. I will not trade against the message of the weekly Impulse system.
The extreme bar at the right edge of the daily chart is greenāthe Impulse system is giving a bullish signal. This occurs when both MACD-Histogram and the EMA are trending higher. This means that market inertia, reflected in the slope of EMA, is on the side of the bulls, and those bulls are becoming even stronger, as reflected in the rising slope of MACD-Histogram. An even better buy signal occurred a day earlier, when the color of the daily bar had changed from red to blue. When the bars stop being red, they indicate that the bears are starting ...
