Best of the Battle Plan: Operation Selling into Strength
There’s no fooling anybody. This is one tough market.
Every day in the newspapers we are reading about hedge funds that are struggling. Many mutual funds are down 20% or more so far this year. And half the traders you see commenting about the current market in the broadcast financial media are in all likelihood losing money in 2008. It’s been a mean season for stock traders.
We’ve taken our lumps, like everybody else. But one thing we can hang our hats on is the fact that we continue to make far more profitable trades than unprofitable ones. Our trading methodology, as borne out in our BattlePlan for Stocks subscription service, has allowed us to buy stocks when they are on sale, and sell them when they are in demand. As such we are grateful – extremely grateful – to be in the green in a year that continues to take its toll on traders, professional and part-time.
Let’s take a look at a recent trade in the Battle Plan this week.
We spotted Knoll Inc.
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PowerRating) back on September 18th. At the time, the stock was pulling back from highs not seen since the fall of 2007. And down four out of the past five days, KNL’s 2-period RSI has moved lower and lower, from more than 85 on September 11th to less than 3 on September 18th.
The pullback in KNL also resulted in the stock’s Short Term PowerRating climbing to 9. As a 9-rated stock, KNL belonged to that category of stocks which according to our research have outperformed the average stock by a margin of more than 13 to 1 after five days.
We picked up shares of KNL on intraday weakness on the morning of the 19th. As always, we set a limit order 2-6% below the previous close as part of a strategy that often helps us take a position as low as possible in the stock. Our entry on the 19th was at 14.88.
Four days later, KNL closed above its 5-day moving average – our standard exit. Our goal is to always exit on strength – and to move on to the next trade rather than “overstay” our welcome. As of its close above the 5-day moving average, KNL was up approximately 68 cents for a gain of more than 4.5% in four days.
Have you tried a free trial to our TradingMarkets Battle Plan for Stocks? Every day we’ll provide you with incisive, before-the-bell commentary and analysis on the day’s markets to help put your trading in context. We’ll give you suggested entries and exits for trade opportunities that may be only hours away. And we’ll give you what many other people can’t: model-driven percentages so that you know the historical win rate going back to 1995 for every single trade idea-long and short.
Give the TradingMarkets Battle Plan a read before the next market open. Click here to start your subscription or call us today at 888-484-8220. Come see what the TradingMarkets approach to trading can do for you.
David Penn is Editor in Chief at TradingMarkets.com.