"Cut your losses. Let profits run." Traders chant this mantra all the time, but what does it really mean? I went over my trades in Account 1 last year and here is what I found:
CLR -$1446
CMP -$234
ENER -$620
FCL -$209
FSLR $3018
GU -$419
IPI $6948
NSC -500
PCLN $226
PCX $10085
POT -$102
V-$131
In 2008, I made 12 trades in this account. Only 4 were winners. That translates into a 33% winning percentage; yet, we still made over a 100% return!
My takeaway from this review exercise:
1. Be patient and wait for the proper chart setups.
2. Once your entry price is triggered, take your predetermined position size.
3. If you are wrong get out. (Cut losses!)
4. If you are right, sit back and objectively observe the trade. (Let profits run!)
5. If you are trading well, the charts tell you when to get out.
I know this is easier said than done. But do not worry, as the year progresses we will certainly have some money making opportunities. And when the trades do appear, I will walk you through them so we can make some $$$. So stay tuned!
Friday January 16, 2008
The above chart shows a typical business cycle and the points at which various economic sectors tend to outperform the broader market. Financials and technology typically lead a new bull market. Yesterday the financial sector took it on the chin, so it could be a while before the next bull run begins: BAC -18%, C -15%.
Meanwhile, the markets tested and then rallied off their lows to end a bit higher on Thursday. Volume was higher than Wednesday. The previous November 21 low is still intact. Look for a confirmation of a possible rally in the coming days and continue to build your watch list in the next coming days.
Summary: Wait for market confirmation and proper chart setups.
Markets: Below 50 and 200 day MAs.
Sector: School stocks
Stocks: watching LOPE, AIPC, MYRG, CFL, LZR, MAXY, DL, URG, TIS
Positions: None
Sector: School stocks
Stocks: watching LOPE, AIPC, MYRG, CFL, LZR, MAXY, DL, URG, TIS
Positions: None
Thursday January 15, 2009
If you are not in cash, I would certainly raise cash. Two weeks ago, the markets went up in lower volume and then last week the markets went down in increasing volume. The weakness has persisted this week. That is an ominous sign. Overnight the Nikkei was down 4.92 %, Hang Seng and Straits Times each off over 3.5%. This could get ugly.
AAPL certainly has a large question mark hanging over its head with Steve Jobs announcement.
The best way to spend your time these days is to objectively review your 2008 trades. I will post a review of my trades from 2008 this weekend. I think readers will find it very interesting.
Summary: Be patient and stay on the sidelines. If you must trade: sell short into low volume, non news breakouts and/or sell technically weak charts.
Markets: DJIA looking to retest 8000; NASDAQ already below 1500.
Sector: Looking for weakness in School Sector: STRA APOL CECO COCO
Stock: Watching short: AAPL, BIDU, CF, MON
Positions: none
AAPL certainly has a large question mark hanging over its head with Steve Jobs announcement.
The best way to spend your time these days is to objectively review your 2008 trades. I will post a review of my trades from 2008 this weekend. I think readers will find it very interesting.
Summary: Be patient and stay on the sidelines. If you must trade: sell short into low volume, non news breakouts and/or sell technically weak charts.
Markets: DJIA looking to retest 8000; NASDAQ already below 1500.
Sector: Looking for weakness in School Sector: STRA APOL CECO COCO
Stock: Watching short: AAPL, BIDU, CF, MON
Positions: none
Wednesday January 14, 2009
A viewer mentioned Cramer's discussion of POT on his Monday's Mad Money program (which I do not advocate). Cramer himself will tell you he is more of a "fundamentalist" when it comes to stocks; and it showed, because his "technical" analysis of POT's double bottom did not include volume! I'm not crazy about the fertilizer sector; and as most of you already know, stocks that lead in one bull run rarely lead the next bull.
Summary: Be patient and stay on the sidelines.
Market: Weak
Sectors: Very little leadership
Stocks: Leading stocks are not acting well. Watching LOPE, LDR, HTS, AGNC, RGLD
Positions: None
Summary: Be patient and stay on the sidelines.
Market: Weak
Sectors: Very little leadership
Stocks: Leading stocks are not acting well. Watching LOPE, LDR, HTS, AGNC, RGLD
Positions: None
CSKI January 12, 2009
I sold CSKI today January 12, 2009 for a small gain. I was hoping for a big gain but the charts told me to get out so I got out. I have been asked about my approach to CSKI and here it is in a nutshell:
As the market was cratering in September and October I was short. When my shorts stopped going down, I covered them and I started creating a buy list in early November. By December, it was clear to me that CSKI was strong, relative to the rest of the market and it also had good fundamentals. It became my #1 stock and I started watching it more closely. CSKI then broke its dowtrend on 12/04 and then I made my first purchases on 12/08.
Overall, the markets are weak. Sit on the sidelines and wait for the charts to tell you what to do.
As the market was cratering in September and October I was short. When my shorts stopped going down, I covered them and I started creating a buy list in early November. By December, it was clear to me that CSKI was strong, relative to the rest of the market and it also had good fundamentals. It became my #1 stock and I started watching it more closely. CSKI then broke its dowtrend on 12/04 and then I made my first purchases on 12/08.
Overall, the markets are weak. Sit on the sidelines and wait for the charts to tell you what to do.
2008 Final Results
ONE YEAR RESULTS
Account 1: Starting Value: January 1, 2008 $20,895.40. Ending Value: December 31, 2008 $41,962.82. Gain of $21, 067.42 . One Year Return on Investment: 100.8% .
Account 2: Starting Value: January 1, 2008 $13,464.83. Ending Value: December 31, 2008 $24,175.33. Gain of $10,710.5 . One Year Return on Investment: 79.5%.
THREE YEAR RESULTS
Account 1: Account 1: Starting Value: January 1, 2006 $13,859.07. Ending Value: December 31, 2008 $41,962.82. A Gain of: $28,103.75 Return on Investment: 202.8%. Annualized Three Year Return on Investment: 67.6%.
Account 2: Starting Value: January 1, 2006 $10,270.21. Ending Value: December 31, 2008 $24,175.33. A Gain of $13,905.12 . Return on investment: 135.4% . Annualized Three Year Return on Investment: 45.1%.
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