How To Manage A Winning Position
Recently, I discussed money management techniques that
could be used on Healthnet
(
HNT |
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PowerRating), a stock mentioned on 06/23/03 (see
archives). To review, I talked about how partial profits (half) could have been
taken and the stop could have been raised to breakeven. This way, barring
overnight gaps, you essentially have a “free” position with the potential of it becoming a homerun.
Further, I was discussing how that remainder could be managed through trailing
stops either below support or on a point basis. Since the stock continues to
move in our favor, the stop should continued to be trailed higher. In this case,
a two point trailing stop could be used. This would raise the stop (a)Â to
a level right even with prior support. If the stock continues to move in our
favor, a somewhat looser stop could be use to (hopefully) capture a longer-term
move. Should this occur, I’ll keep you posted. Feel free to email if you have
any questions regarding money management and position management.Â
Looking to the indices, on Tuesday, the Nasdaq started
firmer but dipped in early trading. However, it quickly found its low and began
to rally nicely. Then, after some mid-day consolidating, it resumed it uptrend
late in the day. This action has it closing well, at new highs for the year, and
keeps it well above its recently trading range/breakout levels.
Â
The S&P continued to lag. It remains below the top of its 1-month trading
range.
Looking to the sectors, technology remains the obvious big
winner. Semis are just shy of 52-week closing highs. Ditto for software.
Various other forms of tech such as computer hardware (especially sub-sectors
such as peripherals) continue to hit new highs. On the soft side, sectors such
as biotech and homebuilders, though up again, remain somewhat
questionable.Â
So what do we do? Tonight (Tuesday) was one of those
nights where I found myself tooling through my scans over and over again looking
for something worthwhile to trade. Because my methodology, in a nutshell, is
based on identifying trend and then looking for a pullback, it stands to reason
that hardly anything is setting up. In these cases, I have learned that I’m much
better off waiting for the market to come to me as opposed to chasing it.Â
No setups tonight. Remain patient, on a pullback we could
see a plethora of setups in technology.Â
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. I still feel that your book is the best book on the subject and
offers me the best methodology for swing trading. In short, your method is outstanding….”
Michael M.
