WHEN TO BUY BP

BP gapped higher at the open this morning and the MACD histogram on my Intraday graph in VectorVest 7 RealTime turned positive at about $32.40 per share. Is now the time to buy?

Some investors think so. The stock hit an intraday low of $29.00 per share on June 9th and it has been consolidating ever since. A big-time investor, who invests in distressed companies, appeared on CNBC's Fast Money show last week, saying that BP has incredible financial strength, it will survive and he's buying the stock in large chunks. I believe his comments had a lot to do with stifling BP's downward movement. Moreover, Ms. Maria Bartiromo also said last week that Dubai was rumored to be buying the stock.

On the other hand, numerous money managers and other assorted guests have appeared on CNBC, saying they are not buyers...it's too dangerous, its problems aren't going away soon and it may go bankrupt. So when would be a good time to buy this stock?

The time to buy this stock is after it has stopped going down in Price. When, pray tell, would that be? It has stopped going down when it starts going up, and that's not a joke. For example, the positive MACD histogram indicates that BP's Price has started to go up. But it's a very preliminary signal that only Aggressive Investors or Traders would use. I've been Short BP since mid-May and I covered my position this morning, but I'm not buying just yet.

As for Prudent Investors, they should consider buying this stock only on a much stronger, more reliable indication that it has stopped going down and has started to go up, i.e., when it passes, "The Acid Test." I wrote an essay about "The Acid Test" on December 8, 2000 and it is well worth reading.

To see how well "The Acid Test" works, let's take a look at Yahoo!, for example. Please access an All-Weekly Graph of YHOO. Delete Stop Price and RT, change MA3 to a 30-week period and add MA1 to show a 10-week moving average. Now remove Price so that you can clearly see the 10-week and 30-week MAs. Note that the 10-week MA crossed down through the 30-week MA on 05/12/00 at $62.84 per share and stayed below the 30-week MA until 12/21/01 when YHOO was at $8.46 per share. It had an "H" Rec and the rally failed. VectorVest finally gave YHOO a "B" Rec on 10/11/02 even though the 10-week MA was below the 30-week MA. This up move lasted until 03/04/05, when YHOO was $32.36 per share. A similar analysis on BP indicates that downturn has just begun and it could be a while before "The Acid Test" signals When to Buy BP.

P.S. While you wait for BP to get a "B" signal, you should consider buying Clean Harbors, CLH, who should make a fortune from the disaster.

THE PAYDAY PORTFOLIO REPORT.
I gave my presentation on the PayDay Portfolio last Saturday and it was very well received. It was videotaped and is now being edited. We hope to have the report, including PowerPoint slides and CD, ready for delivery shortly. As of last Friday, June 11, 2010, the $100,000 paper portfolio which was started on January 8, 2010 has received $16,159.00 in deposits from Dividends and Option Premiums.

SWING TRADING WITH KILLER BREAKOUTS.
Three weeks ago, Jerry D'Ambrosio gave a dazzling presentation on Killer Crossovers. Not to be outdone, Mr. Todd Shaffer, Manager of Research, has been working feverishly on an equally dazzling set of searches. So join Mr. Shaffer at the VectorVest University to see his equally dazzling "Strategy of the Week" presentation, "Swing Trading with Killer Breakouts."