Stock trading contest

This is a stock trading contest with fake money that I have entered:
http://si1.streetinsider.com/index.cfm?linkto_tab_id=179

Try doing some trades there to see how you do with fake money vs what you would do with real money. It might provide some surprising insights about yourself.

There's a $1000 prize money for first prize too :)

Also this is sort of a short term trading contest so probably an area for momentum investing.

Trade: Sold DRS Bought RIMG

DRS was my biggest holding. It seems to be in the middle of a breakdown, although the trendlines are still holding up. I sold 50 shares @38.23 out of 200 that I have. It has found some support at the trendline and the 2nd Fibonacci retracement level from it. THere have also been some defense cuts announced and that could affect defense companies even though I think DRS earnings will hold up reasonably well. I plan to sell the rest of the shares on up days or if it breaches it's trendline.

I have also bought 50 shares of RIMG @16.09 which showed up on my volume surge screen. It is a micro cap company with only 9 million outstanding shares. Institutional ownership is at 50% with some good names like Royce and Kern having big stakes. The company definitely seems undervalued right now compared to it's growth rate. Also it has a strong balance sheet with about $5 in cash/share. Technically the stock is coming out of a consolidation and has had some big volume days to break out of a key resistance level at 15.00 I expect to hold this for the mid-long term as long as earnings growth continues.


DRS chart

Portfolio updates and thoughts for next year

New trades
Over the past few weeks, I have made a few more trades. This is the summary:

• RHAT call: The stock dropped after earnings. I sold the $15 call @1.3 while it still had some time value. The initial buy indicators turned negative so I am out of the position now.
• ZONS: Sold the shares @5.4 at a loss. The stock was going nowhere after the initial big spikes and I didn't want to risk a big drop.
• MFLO: Bought at 15.26 Moldflow is a small cap company with excellent earnings momentum and a great balance sheet. It recently broke out of a long term sideways chart and broke past critical "overhead resistance" around $14. I expect to hold this for mid to long term as long as the earnings and price trend is positive. The company also has just one analyst and around 70% institutional ownership. Also it is much more reasonably priced in terms of it's price ratios compared to both ADSK and DASTY which are listed as it's competitors on Yahoo, which then makes it a potential takeover target especially if it hits revenues close to $100 million. Also the profit margins are on a rise which provides further potential upside
• FBR: 1 June @22.5 call for 0.55 The stock just broke above it's 200-day MA and is finding support there even though the 200-day trend is downward. The 50-day MA is on an uptrend to catch up with the 200-day. Potential smaller IPOs and M&A activity should help the stock. Potential first resistance at 21 second resistance at 24. Support at 19.00 Volatility is low from looking at the Bollinger bands.
  
• FDRY: 2 March @17.50 call for $0.20 50-200 day crossover and MACD ROC and momentum indicators are positive. Volatility increase on the upside should help the option. There's potential resistance at around $16.00 so this would be my exit point.
  
• ISSX: 4 February @30 call for $0.2 The stock has made a pullback after breaking out of it's cup-with-handle pattern This position is also expecting that the stock will break to the upside and this increased volatility will cause the option price to increase
  

Reflections
Over the last few months, I am seeing that most of my option trades are playing out terribly but the stocks are doing reasonably well (IDC AUO UNFI XXIA are some recent profitable ones; DRS FDS are some old profitable ones with small losses on ZONS and on old SSFT and VITA positions). I believe the reason this is because I have tried buying options similar to stocks on breakouts, and I pay a steep price because of the volatility spikes. In the new trades above, I have tried to buy stocks when they are in consolidation after their breakouts.

Coming months
I am fairly bullish on the market in the coming months. The technicals are very good and a lot of tech companies are showing up on my "value" screens so it might be a good year for NASDAQ. Looking at the charts, if the market breaks above 2200, there is a possibility of the NASDAQ hitting 2500 sometime during the year

Earnings and retail season
This earnings and retail reports coming out in January should provide some good opportunities for trading straddles. I'll experiment with small bets on this to learn if it works as well.