QCOR: Trending Up in a Down Market

Finding stocks that are trending up in this bear market can be difficult but you can find some potential long candidates with a little work and a lot of patience. One that is really impressive right now is QCOR. This stock has been on a rampage and is still trending up in an aggressive manner. If your gonna go long in this market for any time period longer than a few hours and shorter than a few years, stocks like this are a good way to go.

One strategy that can work out favorably is to buy a stock like QCOR and simultaneously by a broad short index fund, like SH. This strategy can minimize you're overall returns but it will also cut out some of the volatility. If you buy a stock like QCOR and the broad markets tank, they could easily drag down QCOR with the overall market. On the flip side, if the markets rally, a well performing stock like QCOR should rally more than the overall market and then you get to book the differce between the index and the stock as profit. Let's take a look at the QCOR chart.
Above is a daily chart from QCOR saved after yesterday's close, which was October 28, 2008. I like the look of this stock so much that I'm calling a buy right here. If I'm buying in this market, this is the kind of stock I'm gonna buy. As of this very moment QCOR is trading at $7.77. I'll put in a protective stop at $7.45, which is just over a 4% stop loss and it's located just under the short-term trend line. Hopefully it will provide a little resistance.

There are 3 main factors that are triggering a buy for me.

1) Long-term trend is up--this means I'll only trade to the long side.

2) Good short-term trend that's making new highs on higher than normal volume--love to see this.

3) Moving averages are all saying buy and they're not spread too far apart, MACD says buy and the bb width is moving up but not setting highs.

So I've got my buy signal and my stop loss figured out, now I just need to set a price target. Since it's a strong stock making new highs, I'm going to shoot for $10.00 a share. If we hit that I'll immediately sell half and then move my stop on the other half up to just under $10. This is a profit target of roughly 28%, so I'm risking .04 to make .28. That gives me an R-multiple of 7 or a risk to reward ratio of 7-1. This is a somewhat big R-multiple (which is good) but, when using a trend following style system, I need high R-multiples because I could easily get stopped out by a violent whip-saw. If that happens, and the buy signals are still intact, I'll just re-enter the trade and try again. A high R-multiple will provide a profit even if you have a couple of unsuccessful entry attempts.

I will also use a wide trailing stop, probably 5%, just in case the stock goes up and runs out of steam before my $10 target.

I'll give and update within the next week and let you know how it's going.

Good luck out there.

TLT