Why Money Management Is Important
On Thursday, the Nasdaq opened firmer and initially traded
higher but soon reversed and began to sell off. It found its low fairly quickly
and chopped back and forth for the remainder of the day. However, it did manage
to finish on an upswing. This action has it closing at new highs for the
year.
The S&P put in a similar performance but wasn’t quite
as strong. However, this was just enough to put it at new highs for the year
too.
So what do we do? The indices appear to be losing
a bit of their steam. Further, for the first time in a while, I’m beginning to
see some distribution in selected areas. So far though, this has been fairly
isolated. In other words, overall, the big blue arrow is still pointing higher.
Therefore, continue to focus on the long side but make sure you are taking
profits as they are offered and tightening/trailing your stops. See the APA
example below as example of why this is importantÂ
Looking to potential setups, Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating),
mentioned recently and in the strong semis-equipment
& materials sub-sector (the green line below), is in its first pullback since its melt-up out of a
base.Â
Why You Need To Take Profits And Trail Stops
Apache Corp.
(
APA |
Quote |
Chart |
News |
PowerRating), a stock mentioned recently
(a)Â in
my trading service. Quickly rallied to hit the initial profit target (b) but
then reversed (c). As you can see, this potentially losing trade actually ended
up as a winner by taking partial profits and moving your stop to breakeven.
Note: Devon Energy
(
DVN |
Quote |
Chart |
News |
PowerRating), mentioned
recently in this column, could provide us with a similar example.
Email Of The Day
Dear Dave,
This is an excerpt from an article by Al Thomas. I really liked it and thought you might also.
If it walks like a duck, quacks like a duck and looks like a duck it must be a duck.Â
In the stock market if there are more buyers than sellers, more stocks are going up than down and the trend of the general market is higher it must be a bull.Â
Not a duck, not a squirrel, not a possum and especially not a bear.Â
There may not be any logic in the market going higher, but I don’t need logic when it is going up; I just get on board for a profitable ride. My regular readers know I believe in the trend and right now the trend is up. Don’t ask me when the trend will end. I don’t know, but I will be watching what Mr. Market is telling me and act accordingly. As long as it has four legs, horns and moos like a cow I will stay with it. When the tune changes – goodbye.
Sharon
Thanks Sharon! Well said Mr. Thomas! I couldn’t have said
it better myself.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. I just wanted to thank you again for opening my eyes to swing trading. If nothing else , it keeps you in the mkt. (without great risk) at all times so when the big runs come, you don’t miss them. I’ve combined your entries with intermediate-term patterns, entering cup and handles on the pull-back of the handle instead of waiting for the pattern to complete and with very good results. I can’t recommend your book enough to my friends…..”
“Toro”
Â
