What To Do When A Stock Moves In Your Favor
Smoke ’em If You Got ’em
PowerRating), mentioned recently as a First Thrust short, has sold off hard as of late (a). When blessed with such a nice, quick move, make sure you lock in partial profits and trail your stop lower on your remaining shares.
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On Thursday, the Nasdaq gapped lower but soon found its morning low and began to rally. However, it found its high by mid-day and began to slide again. It bounced once more in late-afternoon trading but then sold off hard going into the close. This action puts it at multi-month lows and at new lows for the calendar year. It also keeps it below its 50-day moving average.
The S&P also sold off hard. It too is at multi-month lows/new lows for the calendar year. It also remains below its 50-day moving average.
So what do we do? I think the charts speak for themselves (read my 1/10/05 column for more on this). Therefore, I still see no reason to buy this market. However, since we are oversold (again), manage existing positions (trail stops lower/take profits—see above) vs. initiating new ones.
No setups tonight.
Best of luck with your trading on Friday!
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.