Beeks System -- Rules

Rules for the Beeks system (as of January 2008)

Beeks is a primarily a momentum system, which looks for stocks in an uptrend...but at the same time is a shorter term countertrend system, looking for stocks that have taken a quick breather, attempting to get back in as the stock gets its second wind and takes off on that next leg up.

Entry criteria:

• Stock must be behaving well; that is, RSI needs to be in "overbought" range at some point over the last month.
• The stock then needs to have slowed, as measured by 3 to 4 down (or very small up) closes.
• Volume condition: Average volume over last month must be over 100,000 shares, but the prior day's volume needs to be not more than 3 times the average volume over the past month.
• Volatility: this system takes higher volatility stocks as measured by the stock's average true range -- the range needs to be at least 2-2.5%.

Exit criteria:

Exit at some point the day following two consecutive up closes; or a break of the 5 day SMA. Do not hold for any longer than 5 days.

Position Sizing. There are no stops in this system; all risk management is done through position sizes -- so any one position should never be over 5% of your trading assets -- and preferably would be less.