Not a good time to go long...
The market is currently facing some major upward resistance. Economic woes such as rising oil prices, housing and subprime troubles are striking fear in the average investor and trader. The last few days were rather topsy-turvy. One day we're up, the other we're down. Looking at todays market in more detail, there seems to be more of a bearish stance at the moment as the major indices have changed to an intermediate down trend. Its going to take a string of successful strong up market days to combat this and restore the bull trend. It may happen, and it may not. We'll have to watch and see. In the mean time, in order to get through this and survive until the next bullish phase, you've got to keep new buys minimal. Better yet, it is better if you do not add any new buys. Work with what you've got. If the current holdings in your portfolio are not performing well, cut them loose if they fall below 7 or 8% of your purchase price/level. Use key moving averages as sell indicators. If a stock fails to hang above the 50 or 200 day MA, sell it. Again, do not make too many new trades. Just sit back and relax.
posted by Nick M. @ 10:40 AM
5 Comments:
Every single one of my positions is below my purchase price right now. In fact, my "best" performing stock today fell 3%. My equity is actually now down below where I started out when I opened this account a little less than a month ago. Due to a few bad mistakes (such as selling AMZN the day before it jumped $17 per share), but also a lot of horrible luck.
I don't know what convinced me to buy RRST, but it's looking like a huge mistake. It wasn't even performing that well when I bought it. It's now down 9% from my purchase price. I think from now on I'm only purchase stock that's seen constant gains for at least a couple of weeks; no pullbacks at all. Even if that means slower gains.
Mateo,
Sorry to hear about your string of my bad luck and misfortune. I'm not exactly sure when you first bought RRST, but its a good idea to sell your position if you are down 9% on it. You don't want your loss to escalate. I understand your frustration as today was quite frusterating. I do not recommend that you go long any new stocks unless the market is done with its correction. It is getting quite dangerous out there. Yesterday, I sold several of my position for profit and some for losses. Whatever you do, don't go all crazy and try to buy the dips on stocks. No ones knows how low the market will dip. As long as you preserve your capital, you will have the cash to fight another day. Be patient...
By the way, what made you sell AMZN the day before earnings? If you are already in a position before earnings and you are up on it and the stock is performing well, you might as well hold through earnings. What you shouldn't do (unless you don't mind the risk) is buying a stock right before an earnings announcement. I got lucky with ARTW like that but now, with the stock retracing its whole move, I don't feel so lucky. Well, hopefully I'll get a bounce at the 20 day MA. Otherwise, I'll have to sell it for a loss.
I wasn't up on AMZN and it wasn't performing well. Even on the very good days it was only up a few cents. I sold because I thought the stock had peaked and that I had jumped on board too late. I didn't think that earnings news would help the stock (since the Harry Potter sales hadn't), but obviously I was wrong. I'll probably never sell a stock before earnings again, unless I'm certain it's bad news.
I think I'm going to hold on to RRST through the weekend. I want to see if the market bounces back (i'm guessing it does, slightly) and if RRST is affected by that. If it doesn't, then I'll get rid of it.
Just make sure you keep a close eye on it. The stock needs to get back up over the 20 day MA, otherwise it will head back down to 20.
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