Here’s A Technique That Might Help You Avoid A Losing Trade
Wait For Entries
In last week’s audio/visual presentation, I spent a considerable amount of
time discussing how to enter a stock (email me if you would like to view it).
Let’s take a look at Amerada Hess
(
AHC |
Quote |
Chart |
News |
PowerRating), a stock mentioned recently
as a potential short. Based on the rules described, notice that the stock did
not trade (significantly) below the prior day’s low(s). Although the stock
refused to go in the intended direction, waiting for an entry kept you out of a
losing trade. I’ll follow up on this and other recent examples in next
Wednesday’s interactive presentation.
On Friday, the Nasdaq dipped in early trading but quickly found its low and
then generally worked its way higher.
The S&P put in somewhat similar performance.
So what do we do?
Longer-term readers know
that this is about the time where I give my “damned-if-you-do-and-damned-if-you-don’t” speech about overbought markets. Here is goes: if you buy an
overbought market, it’ll correct from overbought shortly after you enter. If you
hold off on buying, you watch in agony as overbought becomes more overbought.
I’m okay with the latter, though. I’m willing to forgo an opportunity vs.
doing something risky. Therefore, continue to wait for a correction
(i.e. a pull back) before looking to buy. This of course, if the trend resumes after
the pullback.
No setups tonight (Friday). On a pullback, we should see a
plethora of setups.
Have a safe and happy holiday!
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.