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Read The Disclaimer
Using The 10-20-30 Moving Averages Rule For
Trading Cisco
Part 5 - Year 2011 Cisco Moving Averages
Strategy
Introduction:
Trading article by
J. Fergus
This is the final year of my charts.
The trade is still ongoing and I plan to
stay with Cisco for the foreseeable
future. To date I have earned $21,376.60
through my Cisco trades and thanks to
the 10 - 20 - 30 moving averages
strategy combined with the HLC charts. I
am enjoying good profits and feel
comfortable that my capital is protected
from large down turns in the stock.
Date
Comments & Action (all figures include
commission charges)
Debit/Credit
Balance
Jan 10 2011
Bought 1000 shares at $20.74
Again I waited a few sessions just to be
sure the moving averages signal didn't turn
down.
(20744.95)
Feb 8 2011
Sold 1000 shares at $22.00
Even though the moving averages were
continuing to show that the stock was moving
up, it had been meandering the past few
sessions. For example, look at the period I
have highlighted in blue with the
blue arrow. Basically the stock is going
nowhere almost since I bought it. The red
arrow shows that the 10 day was falling
over the last two sessions. Meanwhile the
insert shows the HLC chart (High, Low,
Close) for the past few sessions. Note how
there were never any closes at the high for
the last 4 sessions. On Feb 7 the stock
closed at the low for the day- $22.03. I put
in my offer to sell for Feb 8, on the
evening of Feb 7, at $22.00. It turned out
that $22.00 was almost the high for Feb 8.
21,995.05
1250.10
Mar 2 2011
Sold 10 uncovered calls April $19.00 @
.52
After the collapse within a day of my
selling on Feb 8, the stock continued lower.
The 10 day simple moving average was
widening away from the 20 day exponential
moving average and 30 day exponential moving
average. This has always been my cue to sell
uncovered calls. I sold the April $19
strike. These calls expired in April and
were not assigned.
505.05
505.05
June 1 2011
Sold 10 uncovered calls July $17.00 @
.57
With the 10 day simple moving average again
pulling away from both the 20 day EMA and 30
day EMA, it was again my cue to sell
uncovered calls. Examining the HLC chart you
can see in the insert that every day the
stock was closing higher and then on the
31st of May the stock closed at the high.
But the 10 day simple moving average kept
falling even through the stock was climbing.
This told me that the stock is probably
going to move lower. On May 31 the stock
closed at $16.80. On June 1 it opened at
16.76 and promptly began falling. I sold my
uncovered calls at that point. I choose the
July $17.00 strike and I am expecting this
will expire.
555.05
TOTAL INCOME
TO DATE FOR 2011 - $2310.20
Largest Amount Invested - $20744.95
Return on capital - 11.13%
Summary To Date
Adding the HLC chart I think can only help the
10-20-30 moving averages strategy. While it may not
be necessary, I think it can help since the moving
averages strategy is a following, not a leading
indicator. While so many analysts and investors
alike, have sell ratings on Cisco and believe Cisco
is a poor choice for an investment, I have been
delighted with my returns and expect I should be
able to continue. The 10-20-30 moving averages
strategy does an excellent job of warning me when
the stock could be in a serious decline. However
since it is a delayed momentum strategy, I have
found by adding the HLC (High, Low, Close) charting
tool it has allowed me to sell my position early
instead of getting caught in a downturn and has
assisted in pinpointing times when selling uncovered
calls is an additional strategy I can apply to earn
extra income. While I realize that the 10-20-30
moving averages strategy is designed for those
investors who sell options, I am pretty pleased with
its results for my stock trades.
I want to thank Teddi for all the work. It took 3
days to put together all the charts, the trade
details, my comments and polish it off. I understand
that Teddi's site is donation only, so If you find
the article of value I hope you will contribute. I
believe Teddi has created an excellent resource for
investors. I know I appreciate it.
