By Stan Heller

stan.heller@vectorvest.ca

November 10, 2012

What follows is a random collection of tips

and ideas for using VectorVest. I hope you

will find the material interesting and useful.

Questions? Comments? Tips for Investors?

Please drop me a quick note. Also, I appreci-

ate hearing about any topics you would like

to see covered in future newsletters.

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Topic: Using VectorVest To Find The Best

Dividend Stocks

Time: 2:00 p.m. to 3:00 p.m. EST

Date: Friday, Nov 23

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torVest user group community offers fel-

lowship and makes us all better and

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All the information on Seminars and User

Groups meetings in your area can be

found in the VIEWS tab every Friday. Our

special thanks to all the volunteer User

Group Leaders for their time and dedica-

tion.

NEW TIP: VectorVest instructor Ray Clark

and me had an “Ah Ha” moment last weekend

at the SIW workshops in Burlington and Mar-

kam. Burlington guests gave us a list of stocks

for a Watchlist demo. We added about 30

stocks and put up a 1-year “Watchlist Average

Graph”. Not bad overall, but pretty volatile

especially during the C/Dn’s. Then we “sold”

some of the weakest RT/VST stocks out of our

watchlist. The graph was greatly improved

with fewer bumps in the road. Then we added

a few more high RV, high RS and high RT

stocks. Voila! We had a graph that rose nicely

in C/Up markets and went mostly sideways

but not sharply down in C/Dn trends. Ray said,

‘Let’s see what it looks like over 5 years.’ Fan-

tastic! A smooth price pattern that resisted

declines even during C/Dn’s, except for the big

one in 2008. That was the genesis for my pag-

es on Watchlists in this week’s newsletter.

DISCLAIMER: The information contained herein is

not to be considered in any way as financial ad-

vice. There is financial risk in investing. Every investor

must do your own stock analysis and make buy and

sell decisions based on your personal financial goals,

risk tolerance, time horizon, investment style, time

available for investing and learning about investing,

as well as other factors. Past performance does not

guarantee similar future performance.

If you wish to follow Me On Facebook

and Twitter, it’s all about sharing ideas

for making money with VectorVest.

Stock ideas. Charts. Market analysis. Tips

on using VV. It’s the same information

copied into these pages, but posted each

day, so a bit more timely.

If you don't have a Facebook or twitter

account, you will need to register and set

up a password. You can do one or the

other, or both. If you experience any

difficulties getting set up, please don't

hesitate to drop me a note.

Step 1. Go to www.facebook.com. Once

you have registered, open Facebook and

type VectorVest Canada or Stan Heller in

the search bar. You will see the Vector-

Vest Canada facebook.

Step 2. Go to www.twitter.com. Once

you have registered, open twitter and

type VectorVest Cdn in the search bar. It

will take you to my twitter page. Click on

“Follow” to receive regular "tweets"

The Power of Watchlists—Never miss another major trend The Power of Watchlists—Never miss another

major trend. Hurricanes. Rising lumber prices.

New inventions and innovations. Where you

shop. Restaurants and stores with the longest

lines. Seasonal stocks. MoneySense Magazine

and Canadian Business top picks. The stocks you

own. The stocks you want to own but you’re

waiting for a good entry point.

How can you possibly keep track of them all?

The answer is “Watchlists”. You will never miss a

major trend if you put your key stocks of inter-

est in a well-organized Watchlist.

VectorVest makes it so easy to create and main-

tain your Watchlists. You manage them like a

filing cabinet. You create a “New Group” which

is your main folder. Then you can have any num-

ber of watchlists, which are your sub-folders.

My favourite watchlist is a list of stocks where

my family shops and where I see the line-ups.

At right, look at how well they’ve done since the

beginning of the year.

TIP: A good strategy is to trade in and out of 25

to 50 stocks that we get to know. Keep them in

a watchlist and get to know their patterns of

seasonality, earnings reports and and market

trends like C/Up and C/Dn. It may make your

analysis faster with better results. Whatever

size your list, keep it fresh by adding solid new

prospects and dropping the underachievers.

Where I Shop.

Hurricane Stocks. Want to know which stocks are likely to go up

when disaster strikes? To get the list of Hurricane

stocks at right, I just Googled “*Hurricane

Stocks*”. My list is only a partial list. The first

Google entry was, “How To Play 20 Hurricane

Stocks”.

Perhaps it’s too late for Hurricane Sandy, but put

them in a watchlist to have ready to analyze the

next time storm warnings are issued. Look for

those with good RV and RT. Find the recent new

buys or BUY’s that are rising again after a pullback

with short-term moving averages turning back up.

How to create your own watchlists Watchlists allow you to apply the power of VV

analysis to the stocks own or those you are inter-

ested in. Stocks are instantly ranked by VST—so

the stocks with the best combination of Value,

Safety and Timing are at the top of the list.

Watchlists in VV are organized like a filing cabinet.

“Groups” are your main folders. “Watchlists” are

your sub-folders.

How To Create A Group:

1. To create a group, first click on the Viewers

tab as shown at right.

2. Next click on the drop down arrow next to the

icon that looks like a sheet of paper.

3. Click on New Group.

4. In the new window that

opens, give your Group a

name. Type in the Com-

ments a description of

the type of watchlists

you intend to file in this

group.

5. Click on the Add button

to save the New Group.

6. You’re ready to add your Watchlists.

*TIP: The watchlist group at right is one way to track changes to your portfolio. Analyze perfor-mance and previous buys and sells using quick-tests, stock graphs and the Watchlist Graph.

Main Folder New Watchlist New Watchlist New Group With Watchlists

How to add stocks to your watchlists Once you have created a New Group and a

new Watchlist, you’re ready to add stocks.

TIP: Make sure you have selected the cor-

rect Watchlist folder before you add your

stocks.

TIP: Number at right shows how easy it

is to add stocks from the Stock Viewer or

even from another Watchlist.

VectorVest 7 Quick Reference Guide:

The above circled VectorVest 7 Quick Refer-

ence Guide is the source of the graphics and

much of the information provided here.

To find the Quick Reference Guide, click on

the Training tab at the top of

any page in the VectorVest

program. The Guide is easy-to-read yet

packed full of step-by-step information on

the key features of the VectorVest program.

3

Prudent investor’s high RV, high RS stocks rise during C/Up and soften the fall during C/Dn You should regularly create a Watchlist Average

Graph of the stocks you own. The graph will visu-

ally show you if your portfolio is in an uptrend or a

downtrend, and how well your basket of stocks

weathered VV’s C/Dn calls. It may also reveal

what kind of investor you are. The results may

surprise you. For example, the basket of 32 stocks

at right showed consistently higher than average

RV and RS over the timeframe of the graph. This is

the profile of a prudent investor according to VV.

The basket tends to hold up better during severe

C/Dn trends and smooth out shorter C/Dn trends.

It also rises quite nicely during most C/Up trends.

Below is a snapshot of the watchlist average val-

ues at the beginning and end of a few of con-

firmed calls. (No money management is used).

Basket of Stocks in Watchlist

1

1

2 2

3

3

4

4

5

5

6

6

TIP: This Watchlist Average Graph seems to prove VV’s message: “Never Ignore A Confirmed

Down Call” (C/Dn). The stocks have better than average fundamentals, yet the basket fell

sharply at #1 July 2, 2008. At a C/Dn call, consider selling your losers and tightening your stops

on the others. With prudent stocks, consider a wide stop in a C/Up but switch to a tighter stop

in a C/Dn. Technical analysis using the RT and moving averages is an effective way to determine

a SELL point. (For details, see VV’s Quick Reference Guide under the Training tab).

TIP: To open a Watchlist Average Graph,

right click on the bottom row of your

Watchlist that shows the average values of

all the stocks (as shown at left). Choose,

“View Watchlist Average Graph” from the

drop-down menu.

65-Day MA

STOP Price

C/Up

C/Dn

Aggressive investor’s high RV, low RS, high RT stocks rise during C/Up, but fall harder in C/Dn

Here is a watchlist average graph of a basket of

stocks that generally held a mix of high RV, low RS

and high RT stocks throughout the time period

shown in the graph. This is the profile of an ag-

gressive investor.

Stocks in this list and the list from the previous

page include CCT, FR, FRC, PZA.U and REI.U.

In contrast with the previous watchlist, this

portfolio tends to move down more sharply during

a Confirmed Down (C/Dn) market. However, it

does tend to move up nicely in almost all of the

Confirmed Up (C/Up) trends. It may be best not

hold too many aggressive stocks in a C/Dn trend.

Basket of Stocks in Watchlist

1

2

3

4

5

6

4

1

2

5

6

3

65-Day MA

STOP Price

C/Up

C/Dn

40-MA

STOP Price

21-MA On STOP Price

Oct 31 Facebook—Futures are modestly higher

including crude oil and the metals. What to ex-

pect after a Hurricane force such as Sandy? One

researcher, Ian Wyatt, looked back at the last 3

Hurricanes - Irene, Katrina and Andrew. He

found the US market actually rose in the first

few days. What will happen this time is anyone's

guess, but the US market will open after being

closed for 2 days, and futures are higher. Vector-

Vest has a primary wave up in Canada. Guidance

is for caution and only buy if the market is rising.

Automodular (AM), a maker of truck parts,

showed up on VV's NEW BUY screen. Price has

been rising the last 4 trading days although on

lower volume. It's a low-priced stock at $1.97

but it did reach a high of $2.88 in February this

year. It pays a quarterly dividend with a yield of

12%. It might be a stock to put in your watchlist

for further study.

Update: AM opened at $1.97 Oct 31, reached a

high of $2.00 and closed at $1.99. It went side-

ways for 3 days before breaking out to close at

$2.35 Nov 6—a 17% gain from the $1.99 buy

point (.02 cents above the previous close of

$1.97). It rose to $2.46 on Nov 7 before losing

ground Nov 8 and Nov 9, closing at $2.29 Friday.

If you bought in around $1.99 on Oct. 31, you

should have locked in a gain between 15% and

22%.

Buy On STOP Orders—Rules for you to consider and possibly

adapt to suit your trading style and risk tolerance:

Stock Price—Under $2.00 - Add .02 cents to the last close

Stock Price—$2 to $5.00 - Add .03 to .05 cents to the last close

Stock Price—$5 to $10.00 - Add .10 to .15 cents to the last close

Stock Price—$10 to $15.00 - Add .15 to .20 cents to the last close

Stock Price—$15 to $60.00 - Add .25 cents to the last close

Stock Price—$60 and higher - Add .50 cents or more

ORDER PREPARATION—Buy On Stop Limit Order

Excerpt from Dr. DiLiddo’s Essay of Dec 24, 2009, U.S. VIEWS

1. The whole idea is to place your order in such a way that you know the stock's

price is rising when you buy it. The Buy-Stop-Limit is designed to do this for you.

2. The Buy-Stop-Limit Order instructs the broker to enter a Buy Limit order when

your Buy trigger price is hit. This order has two parts: the Buy price and the Limit

price. When a trade has occurred at or through the Buy price, your order be-

comes executable and enters the market as a Limit order at the Limit price.

Buy right with a Buy-On-Stop Limit Order—”New Buy” Automodular Up 17%

40-MA

STOP Line

21-MA On STOP Line

Here’s one way to buy after a new 52-week high $9.55

Oct 30 2012 Facebook—Avigilon (AVO) showed

up today on my New 52-week high unisearch

scan. But how should you buy a stock that’s hit a

New 52-week high? One technique is to buy

when the stock breaks above the new high. You

can do this by placing a Buy on Stop limit order

with your broker. In this case, I would add .10

to .15 cents to yesterday’s closing price of $9.55,

so my Buy On Stop order would be $9.65 or

$9.70. I might place an upper limit of $9.90. So

what does this accomplish? Two things. 1. If the

price opens lower and starts trending down, my

order will not get filled and no harm done. I can

cancel my order or lower my Buy on Stop Order

to .15 cents above the new price. 2. If the stock

“gaps up” from $9.55 to above $9.90, my order

won’t get filled either. Sometimes stocks will gap

up at the open and immediately start retracing.

Placing a limit on what you’re prepared to pay

allows you to reconsider and perhaps get in low-

er than the open if the stock does retrace. If it

continues to move up, you can decide if you still

want it at the higher price. There’s lots of good

news out on AVO although trading volume is

low. It manufactures high-tech video surveillance

cameras the produce quality images. It’s the best

performing Canadian initial public offering in the

past 12 months. It’s up 127% since it first got a

“NEW BUY” rating from VV on May 23. Remem-

ber, every big winner starts out as a New Buy.

That’s why we run the NEW BUY scan every day. Other stocks hitting

new 52-week highs yesterday were NBD and CFP from the Building

(Wood Products) industry and drug company TKM.

Nov 9 Update: AVO closed Nov 9 at $10.89, up 11% or so from the

$9.70 buy point Oct 30. TKM is up 20.73% from Oct 30 and NBD is up

6.65%. CFP was up over 3% by the close Nov 1 but started losing

ground. It ended down 1.26% if held to the close Friday, Nov 9.

Nov 2 Facebook—”Futures are mildly lower.

Time to follow-up on ZCL Composites (ZCL:CA in

the Petroleum/machinery/equipment Industry

Group). I posted about it on Oct 17 as a High

Comfort Index Prospect, a great search that I've

posted about before. It’s up another 8% since

then. It has the potential to go higher, but once

again because of the longer term caution being

urged by VV and the volatility we’ve seen, it

wouldn’t be a bad idea to lock in some of that

gain. You can sell all or half a position or place a

tight trailing stop. ZCL is also in VV's watchlist of

High CI Favorites, a positive indication. It has a

solid business plan providing liquid storage pri-

marily to petroleum companies. It had record

2nd quarter revenue (up 44%) and strong earn-

ings and earnings growth rate (38%). It has a

backlog of $62 million in secure orders. It's rela-

tively safe and undervalued according to VV's

valuation. If you don’t own it, it still might be a

good watchlist candidate to buy after the pull-

back, but only if the market is rising.”

Update: ZCL gave back 2.3% since this post on

Nov 2. It’s still up 7% since my Oct 17 post and

54% since VV gave it a NEW BUY Rec back on

Feb 28. Remember, every big winner starts out

as a New Buy. Not every New Buy pans out, but

when they do, it can be big. That’s why it’s im-

portant to run your “new buy” scan every day.

40-MA

STOP Line

21-MA On STOP Line

Price hit an intraday

high of $5.25 on Nov 2

before retreating to

close the day at $5.12.

It closed at $5.01 Fri-

day, Nov 9.

Price is up 54% since this New Buy REC on Feb 28.

Notice how the STOP Line pulled away from the 21-

MA On STOP as price really started moving up. This

separation is a fairly consistent indication of a sus-

tainable uptrend. When the STOP Line eventually

pulls back to the 21-MA On STOP, that’s often a good

re-entry point, when and if price bounces up off of it.

High CI Prospect ZCL posts another 8% gain since Oct 17—but only if you take it

Nov 5 Facebook— “Futures are little changed

ahead of the US presidential election. Vector-

Vest does not advocate buying US stocks. The

election and fiscal cliff underscore that signal. In

Canada, S&P TSX/60 futures point to a mildly

lower open although crude and gold are up at

the moment. VV advocates caution. Don’t buy

stocks unless the market is rising. What about

RIM? It’s moved higher on strong volume lately

and has a BUY recommendation from VV. How-

ever, if you follow Bollinger Bands, the short-

term outlook is bearish. This signal is generated

when price closes more than 2 standard devia-

tions above the 20 period moving average of

price. You can see that price pierced the upper

band on Nov 1. The “filled” green candle on a VV

graph shows that price on Friday (Nov 2) closed

lower than the open price. What the Bollinger

Band bearish signal means is that price is ex-

tended and may reverse. That’s what happened

the last two times this signal was generated, Oct

2 and Aug 10.

“If you own RIM, it may be prudent to watch for

signs of reversal, but momentum may be strong

enough for price to keep hitting higher lows, the

essence of an uptrend. Just watch it closely and

be a bit defensive in this market to protect

profits, however small.”

Bollinger Bands (20,2)

21-MA

Aug 10-Sep 5—Price is extended.

Price falls 21.0%.

Oct 2-22—Price is extended.

Price falls 8.0%

Nov 2—Price is extended.

Price falls 1.80% so far.

Update: RIM rose over 1% both Nov 5 and Nov 6 but fell (-8.56%) on Nov 7. It fell again Nov 8 before gaining

back 4.26% on Friday. Is the downtrend over for RIM? With the market in a new DEW/Dn condition and RIM’s

RT still hitting lower highs, I would still tend to be defensive. If you didn’t set a Sell price when you bought, de-

termine your absolute lowest Sell price now. Take action immediately if the stock hits that level. If price contin-

ues to move up, you can always adjust your Sell price up accordingly. Never adjust it down. I repeat: Once

you’ve set your line-in-the-sand Sell price, never adjust it down. You usually will regret it.

Nov 2—Price rose

but closed lower

than the open.

Nov 5—Price Rose.

Nov 6—Price rose

Nov 7—Price fell 8%

RIM—Price piercing upper Bollinger Band is a bearish signal

Prior to market open Wed, Nov 7, Agrium

(AGU:CA) and (AGU:US) announced earnings of

$1.34. Pretty good, but down from $1.85 a year

ago and .48 cents less than the $1.82 forecast.

Predictably, AGU was hammered in pre-market.

It was down over 7% even before the TSX

opened. No prior stop loss (Sell on Stop limit

order) would have protected investors from this

price action. So what can you do? There’s no

book on this that I’m aware of, but here is what I

believe are an investor’s only options:

1. Sell at the market open. It protects you from

a further loss, but unfortunately that’s often

the worst price of the entire day.

2. Place a tight stop .10 to .25 cents below the

opening price. For that small cost relative to

damage already done, it protects you if the

stock continues to fall. If price does rebound

from the opening price, you can leave your

Stop in place or start raising it proportion-

ately a few cents at a time. You might at

least get out at somewhat of a better price.

3. Take no immediate action. You can let price

fall where it may and do a more complete

assessment of the damage and the stock’s

prospects before the next trading day. Quali-

ty stocks will often recover from large de-

clines based on unexpected bad news, but

no guarantee and it will likely take time.

The action you take may depend on such things as when

you entered the position, your risk tolerance, investment

goals, time horizon and your view of the company’s pro-

spects for recovery. Update: AGU opened at $98.37,

down $8.03 or 7.55%. Best price of the day came 12

minutes later at $99.17, a recovery of .80 cents or 3/4 of a

per cent. Things got progressively worse from there with

AGU closing at $95.03, down $11.37 or 10.69% on the

day. It gained a bit back TH and FR, closing FR at $96.07.

Agrium: What can we do when a stock we own misses earnings or other bad news?

Could savvy investors have seen this coming? YES. VV subscribers anyway. We could see a

growing divergence between price and Relative Timing (RT). RT is a smart indicator of short-

term price momentum. RT peaked on Aug 17 and was trending down since. VST, which com-

bines fundamentals with the RT technical indicator, also peaked Aug 17. Subscribers are

taught that a down-trending RT can be an early warning after a price run-up. A stock may

push through the warning, but most often it’s not worth the risk. Better to take some profit.

You can always buy back in if it’s a false warning. Agrium seems to follow RT quite well if

you look at what happened last May. VV signaled a NEW BUY for AGU on June 18 when

price was about $86. It was up about 23% until that big earnings miss.

40-MA

STOP Line

21-MA on STOP Line

Divergence between

price and RT trends

Trendlines

40-MA

STOP Line

RT Combo Green Light Buyer (market timing signal)

RT Combo Red Light Seller (market timing signal)

Support Line at $5.54

Support Line at $4.96

Nov 7 Facebook—”Investors have been piling

into DeeThree Exploration (DTX:CA), an oil and

gas explr/production company with projects in

Alberta, including my hometown of Lethbridge.

The stock is up 58% since getting a VV new BUY

recommendation July 19. But relative timing

(RT) momentum leveled off the last several

weeks and fell sharply the last two days. There-

fore, I would have DTX on a tight leash. It seems

to me the risk/reward potential is not in favour

of holding the stock much longer if it continues

to slide. The good news is that yesterday the

bulls fought back after DTX hit an intraday low of

$6.01, right at the 40-day MA. This created a

short-term bullish hammer candlestick for-

mation. But will the bulls continue to hold the

stock up? A lot will depend on whether the mar-

ket can sustain a rebound after the presidential

election and other news. There is a support for

DTX at $5.54, but would you really want to hold

the stock all the way down there hoping for a

bounce at that level, but with no guarantee? We

have a new DEW/Dn signal in Canada and there

hasn't been a green light from the RT Kicker

Combo since Oct 4. Those things weigh against

holding DTX if it fails to hold the trendline as

shown at right and especially if it falls below the

40-day MA. Draw the trendline from the most

recent low to the low of today. It looks similar to

the trendline that you can draw from the low of

in late, you may need to recognize that you might have missed the

best part of the party.“ Might as well wait for a new breakout.

Update: DTX fell 2.4% the 2 days since this Nov 7 post. It still

might be best to protect profits if you haven’t already done so.

DeeThree Is Looking Tired After Fantastic Run From July 19TH

New Buy

Dec 12, 2011 to Ap 30, 2012. Once price broke below that

trendline, it fell about 40%. It's always a personal decision,

but if you've got a nice profit, there's no need to wait until

VV’s SELL REC to lock in some or all of your gain. If you got

Is it time to Sell Royal Bank? Ask yourself the 5 Questions.

40-MA

STOP Line

21-MA on STOP Line

Trendlines

1. Buy—Dec 5

$49.17

2. Sell—April 11

$56.10

3. Buy—Aug 20

$53.52

4. Sell—Nov 8

$56.14

Nov 9 2012 Facebook—Is it time to sell Royal

Bank (RY:CA)? The fundamentals are still solid

with earnings trending higher. However, using

technical analysis can help us find an exit point

to reduce risk and avoid a significant loss. In my

“When To Sell” Guide, I set out 5 questions we

should ask ourselves when we own a stock

where price is starting to weaken. If the answer

is “YES” to 3 or more of the questions, it may be

time to SELL. Here are the questions and how we

would answer them today with regard to RY:

Q1. Is the market in a potential sustained down-

trend? A. Yes. VectorVest’s DEW signal is down.

VV’s RT Kicker Combo signal is down. VV’s guid-

ance says, “move to the sidelines”, the strong-

est early warning to prudent investors delivered

in the nightly strategy section. Q2. Has price

crossed below the 40-day MA. A. Yes. Q3. Has

VV’s Relative Timing (RT—price direction and

smart momentum technical indicator) lost up-

ward momentum and started trending down? A.

Yes. RT is in a significant downtrend. Q4. Has

price gapped down? A. Yes. On Oct 23 price

gapped down from $58.60 to $56.94. Q5. Has VV

given a SELL Recommendation? A. No. VV’s sell

recommendation is a 13-week moving average

of price, adjusted for the company’s fundamen-

tals. It is intended as an investor’s “last call to

action” to avoid a catastrophic loss. Technical

analysis using the 5-questions guide will often

signal a sell recommendation before VV’s more conservative SELL rec-

ommendation. With RY, 4 of the 5 answers are “YES”, so we need to

consider selling. You may also recognize a bearish Head and Shoulders

pattern, another bearish signal. Action to take: Consider the reasons

you own RY. If it’s purely for income, you may decide to wait. If you’re not

prepared to take a significant capital loss however, you may consider reducing

your risk by selling some or all of your shares, or placing a tighter stop that you

can move up if price reverses up. Never lower your Stop price however.

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