4 steps to follow if you’re long
Timothy J. Truebenbach is the President of True Capital Management and
general partner of True Capital Partners LP, a hedge fund. He uses a
disciplined model that trades on the intermediate-term time frame. For a
free trial to Tim’s Nightly Stock Analysis Report href=”https://tradingmarkets.comsubscriptions/details.cfm?item=5915&subc
at=it”>click here or call 888-484-8220 ext. 1
The
market we are in right now is doing everything in its power to confuse each
and every investor out there….present company included!Â
Yesterday’s action saw a nice follow-through day to officially begin a new
rally. Today’s action handed us exactly the opposite: heavy distribution as
selling overwhelmed the NYSE-related indexes. The NASDAQ also finished lower,
but volume was less than Wednesday.
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One thing that is going
through my head as a human being filled with emotion after watching these
moves is to step out of the market, do something else and come back when it
gets better. The only problem with that way of thinking is then it is too
late. I have found that the positive behind that way of thinking is that most
other investors have the same belief. “Bull Markets climb a Wall of Worry.â€Â
Whoever stated that quote was right on. I also believe that much of the
confusing environment we are in is a direct result of the severe bear market
we suffered as the decade began. As I watched today’s session, I have no
doubt there is plenty of fear built into stock price declines.
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As we move forward in this
uncertain environment there a few things I can suggest that may make your
participation much easier. First of all, pursue a game plan. Decide before
committing any capital what you would like to achieve by trading stocks, or
any other instrument for that matter. Secondly, do not put all of your eggs
in one basket. By this I mean that we should only allocate part of our
investment dollars to the market primarily because it will help eliminate much
of the emotion involved with trading right now and let you stick to your
primary objective. Lastly, do not break hard and fast trading rules, i.e.
don’t chase a stock; have an exit strategy; follow a proven plan, etc.
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The market seems to be
trending higher, but it is occurring in a very slow and grinding fashion. We
advanced to new highs from the end of April into August and appear to have
just wrapped up the intermediate-term correction yesterday. Options expire
tomorrow, so trading could be skewed. If you look at individual stocks, stick
with leaders such as Apple
(
AAPL |
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PowerRating)) and Google
(
GOOG |
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PowerRating).Â
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Consider spreading your
portfolio out with the use of broad-based ETFs such as Biotech HOLDERS
(
BBH |
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PowerRating),
and buy them into pullbacks.
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There is no doubt we are in a
tough market and if you trade, then that translates to being in a very tough
business. Stick to your plan and success should ultimately be yours. Please
feel free to email me any questions or comments at a newly created email, as I
will use them structure future articles and commentary: Comments at True
Capital Management; this is a dot.com address. (This has been spelled out to
help reduce spam.)
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Good Trading!
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Tim
Truebenbach