How To Stay With A Winning Stock
I’m Dave Landry and I approved this column.Â
How To Stay With A Winning Trade
The great thing about swing trading is that occasionally, a
longer-term move begins out of a short-term pattern. Newmont Mining
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PowerRating)
provides a great example (so far!). Since recently mentioned, the stock has
moved nicely lower out of a pullback Then today, it gaps lower on Monday’s
open. This provides a great opportunity to take additional profits (i.e., scale
out). Since the remaining shares are now profitable, those with a longer-term
view can then trail a stop more loosely (than a swing trader). Prior pullbacks
or consolidations can provide a great place for this longer-term
stop. Â
Don’t Pick Tops, Wait For Transitional Patterns
As a trend player, I believe that picking tops and bottoms
is a loser’s game. It’s much safer to wait for signs that the trend could be
changing and then look to enter on the first correction. Ask Jeeves
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PowerRating),
mentioned recently (a), provides a good example. Notice how the stock sold off
hard after just making new highs. It then pulled back. This action sets up a
First Thrust (email me if you need the rules). So far, it has made a very nice
short-term move out of this pattern. It will be interesting to see if this turns
into a longer-term top.Â
On Monday, the Nasdaq gapped lower on the open and
continued to sell off throughout the morning. It found its low around mid-day
and began to work its way higher. However, it stalled out in early afternoon
trading and generally drifted lower for the remainder of the day.Â
That puts it below its 200-day moving average.
The S&P put in a somewhat similar performance but was
stronger in late-day trading.Â
This action has it approaching its 200-day moving average. Â
So what do we do?  The fact that the
indices closed off their lows has many thinking that we will bounce. Me? I
dunno. Yes, we’re oversold and due for a bounce but so far, I don’t see any
reason to step in and be a hero just yet. However, since we are oversold,
probably the best course of action is to take partial profits on existing trades
and trail a stop lower vs. initiating new positions.Â
As far as setups, Cymer
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PowerRating), mentioned recently,
still looks poised to continue lower out of a Persistent Pullback.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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more, or to order.