Perhaps you’ve noticed that over the last week I haven’t been posting during hours too extensively.

Mostly, I don’t want to be tempted by foolish trades.

My favorite strategy, momentum trading, is less reliable during flat or Angelo markets. When volume is light and sentiment turbid, you can see how the strategy becomes more challenging. I want to give the market a week or two to get its bearings, which will aide me greatly in determining what momentum to chase.

So, in order to do something productive, I found myself browsing several-month old news…

about stock voodoo.

At Minyanville, an online community for gypsies and peasant-slaves owned by Jeff Macke, the Hindenburg Omen was triggered a few days prior to this October 19th article. In the past forty years, it has a track record of 20:2, and it predicts weakness for the next three months, but the writer doesn’t explain at all what the next 6-12 months historically look like––what a bastard douchebag.

OT, although I don’t approve of Macke’s slave ownership, I think he’s on point on Fast Money.

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Anyway, I have an idea for tomorrow.Typically, a continuation of a run starts with a nice +4% breakout on some type of volume, and today, we had exactly that for the old Uncle Fostish, [[fwlt]].What follows is an uncommonly stringent examination: the fundamentals are sound.That was rigorous. But, if you most know, they are good.Here’s why I’m gonna pull “big money out of thin air.”

You could almost consider this a “before/during/after” article about a trade. Gotta start the new year off right, right?

Behold, the art of drawing, and basic logic:

I threw Rambo in his carriage on the path to big money to help elucidate this for you all. He symbolizes my desire to pillage small Nordic villages on the coastline of my path to prosperity.

Rhetorically, why did the assholes with all the money put this stock at all time highs today? We’ve known the story, we listen to CNBC. Why?

You ever think that? I know this sounds too basic to be a strategy, but think about what the market is telling you right now.

Who cares why, just know that it happened, and that if there was a ever a glimmer of hope that this stock could reach 180, it must first hit 170.

Many people think buying at all-time highs is risky, but to me it’s logical, because it is the “proof in the spotted-dick pudding” that others like the stock. No one is buying Foster for 3% gains. This logic and further price appreciation above the 52-week high only fuel this notion, which begets momentum, and it becomes easy to scalp 5-10-50% moves.

However, if these things do not hold true, than the market should swiftly reprice the stock lower than this month-long line in the sand [second stop at ~ 164]. If you believe in the ability of the market to price anything, than today it shouted “I LIKE FOSTER WHEELER UP HERE.”

I am aware the market sucks ballés, but fortunately, the odds are in my favor. I know the chances of a momentum breakout above 171 become dramatically reduced below 168, the former highest price and previous resistance. This makes for an easy escape.

Also, on the topic of statistics, would you say, generally, that there is a better chance of stock going up after a month of 40% gains, or a month of trading in a range at 52-week highs? I’d venture that the latter has a higher chance of breaking out or down, than a stock which already made the move and is likely to rest.

The odds appear in my favor for price appreciation. One of the many key criteria to taking a trade. One of my resoltutions is to trade only the better looking ideas.

If I’m right, big money, and if I’m wrong, I lose a defined amount. In this case, I say ~$400. If I’m going to sell at $166.67, to give volatile FWLT more leeway, I have a 2.50/share spread from today’s close of 169.17. This formula dictates that I can buy ($380 + 2 commissions)/$2.50 = 150 shares.

The point is quantifiable risk–2.50 down, and, IMO 10-30 points up, if it does break out.

In times of Angelo though, you gotta stab and run––meaning, sell aggressively on the first move, and lower you’re risk i.e. $400 instead of $800 on the table. As fas as capturing longer moves, after taking profits, look to reload on a pullback.

Sure, I could buy it blindly on any old day––it is a market leading stock––and if the momentum is there, it’ll go up. What I’d much rather do is buy it drunkenly during the period which there is the highest probability that it can catapult higher.

That period is the point after which a stock makes a new highs, on a +4% up day, in a leading sector, and on volume, which, as I’ve said several times, was today. That is about as money as it gets in the stock market when it comes to having any accuracy at predicting short term price movements.

UPDATE 1/4/08: Move invalidated, since it is now at 163. Should it break 168…