What It Would Take For Me To Get Aggressive On The Long Side
Email Of The Day
“Your formula expressed in that article works only in retrospect, where a dreamer fancifully points to a chart and says, “I coulda bought here, sold here, bought again here, sold here, and I would be a
TRILLIONAIRE!!!”
I’ve yet to read or hear one broker or analyst make one helpful remark in five years. Stops indeed. Stops only help you in a bear market. In a bull market, stops will invariably work this way: the stock price will fall in the morning to your exact stop, dump you, and then rally without you. I SAID INVARIABLY!!!
“
As far as hindsight:Â
My basic rules: where to enter, where to place stops, where
to take profits, and how to trail stops have been public for years though my
books and articles. I also make these basics available free via email to anyone
who is interested. Whenever I follow up on a stock mentioned in this column, I
adhere to those rules. And, following those rules, 10 out of the last 12 stocks
I mentioned here would have resulted in profitable trades (see the archives).
This is not to say or imply that the next 10 will be profitable. My point
is, anything mentioned as a money management follow up is not in hindsight.
As far as stops:
I believe that you must use stops on every trade.
Yes, you will get stopped out of every trade if set them too tight.Â
On Monday, the Nasdaq gapped open and initially continued higher
but soon found its high and began to work its way lower. Then after chopping
back for most of the day, it sold off going into the close.Â
This action has it reversing after tagging its 200-day
moving average (the blue line below).Â
Ditto for the S&P.Â
So what do we do? So far, the S&P and
Nasdaq are holding above their recent breakout levels. However, the fact that
they were unable to hold on to their earlier gains suggests that they could be
correcting. Therefore, since I am a trend (and not reversal) player, I think the
best play would be to wait and see if the market has an orderly pullback. And if
it does, look to get aggressive on the long side.
No setups tonight. If the market pulls back as mentioned
above, we will likely see a plethora of setups.
Best of luck with your trading on Tuesday!Â
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.
Â