Education Center
Today I intended on buying EMLX as per your recommendation in last night’s commentary. I missed the boat due to being tied up in another position. Now, your buy point was 40.19 I believe. By the time I was able look at playing EMLX it was already at 41.70 but in he process of pulling back. Then the question occurred to me that maybe buying at the initial buy point after running up like that might not be such a good idea. So, my question is, your buy points: is that after breaking it for the first time, or is a run up over that level and then pullback to that level just as good?
You have hit on something that we often do when we too miss the buy point on the first move. EMLX was moving again on solid volume for the session. Often when a stock is moving well and breaks over the resistance point, it will come back to test that level to some degree before […]
When you talk about buying aggressive point like on MCTR 8.40, is this at the 18 day MVA and is the next [buy point] at 9.57 a break above the 200 day SMA? Also you mention that you wait to buy usually after the first hour of trading; is this a good rule to follow, and do you ever buy pre-market?
There is not any set 18 day MVA or 200 day MVA label on buy points that are called aggressive or breakout. When we use the aggressive label, the stock is usually making a test of a recent move and is starting up off of the support; it is more aggressive because the stock still […]
Could you tell me how I can use your advice to the best advantage since: I have a full time job and cannot do day trading. I usually review info in the morning before I go to work and can make trades then. Most of your advice however, is based on the stock getting to a certain price and with a certain volume. Is there a way I can place trades in advance based on that criteria?
I am not a day trader either, though I do day trade the indexes daily sometimes. What I try to stress (and am not doing a good enough job at) is that using the methods where you let the stock break out of a pattern or above a definite resistance point allows you to enter […]
Wondering if you could shed some light on managing positions, especially during this time of market acceleration. I’m finding that I constantly am holding more positions than I can truly effectively manage. So many good stocks are breaking with good patterns that I find I want to take advantage of way too many of these… then I end up with two or three times the number of positions I can really keep my eye on. How do you keep this under control and manage a portfolio. I feel that holding 5 or 6 positions should be plenty and my intentions are fine, then I keep ending up with 15 positions! Any rules for behavior management?
Ah, the problems of an improving market. I fully agree that most investors should avoid investing in a lot of positions; you get to where you are having to compute too many variables at once and you end up making bad decisions because you miss something. What happens is you are like a small mutual […]
A question on stops and profits vs. losses: How do you deal with a stock that breaks out, then comes back to retest? My example is CBR. I bought it on the breakout (as per the Daily) at 9.20 on the breakout and it moved up to 10.95 three days later. The Daily target price was 11. Next day it dropped to about 10.25 with a low of about 10 and has been moving down to test the breakout point (today’s range was 8.81 to 9.49, with a close on the high…looking like the test has been successful). [Editor: it since moved back up to 10.88 and closed today at 10.61] My question is, how did you play this stock? Did you buy at 9.20? Did you sell some or all at 10.5-10.75? Did you hold on and let it come back and test? Did you/will you add to your positions here at 9.5? Do you move your stops up as the stock moves up?
How I deal with tests usually depends upon the market. If it is choppy as it was before 9-11 and immediately thereafter, I am quick to take a 20% (or very close thereto if the stock appears to be topping) on any stock move. Now that breakouts are holding up better and are giving successful […]
Regarding stop losses, I have heard that they are visible to market makers and that they can manipulate stock prices to result in your stop loss being triggered and then the stock runs right back up. Are stop losses really good protection?
We use stop losses carefully, and we discuss their various types and uses in our online seminars. One main theme we teach is that stop losses are not perfect by any means, and they can fail you when you need them the most, e.g., when a stock has bad news and plunges. Your story is […]
I’ve heard mention of “Bellwether” stocks. How do you tell which stock is the bellwether for it’s Sector/Industry? Are there technical criteria (like the highest average volume) or is it more of the ones that get the most press? Another publication just referred to AMAT as the Semiconductor Bellwether, but I hardly ever hear of it. Or, is there just a generally accepted list of Bellwethers for each sector/industry that more experienced traders know about?
There are key sectors in the economy. Within each such sector there are leaders in market share and innovation. When these companies experience increases or decreases in business, that can be read as having an impact on the sector and the greater economy as well. That would move those stocks as well as related stocks. […]
I’m wondering why, under the current conditions, you’re not suggesting a short of the indexes (especially the QQQ’s) or a short on AMAT or KLAC? It seems that they look like obvious candidates. Am I missing something?
When news hits as did INTC, what happened with AMAT was pretty much as expected: a big cap down. There was more selling, but in both AMAT’s and KLAC’s situation, just $1 of a $4 and $5.30 loss on the session. Gaps to the upside and the downside are some of the hardest moves to […]
At what point do you pull the plug as a rule of thumb on stock and/or options? [Is it] a point drop or percentage drop? Also, when you give a price target on a position is there a time frame attached to those targets? [For example] XYZ’s target you proposed is 20.00, is that for today, the next trading session, long term?
As a general rule of thumb we pull the trigger on stock purchases when they fall 7% to 8% below our buy price. Now that is assuming we got in on the buy within 5% or so of the buy point. Usually what we are doing is trying to buy as a stock breaks some […]
I was watching CNBC and heard several times that if/when it was announced Bin Laden was captured the market could probably expect a +/-500 point run on the news. Well, last night I heard several Military analyst’s say they expect Bin Laden to be captured more than likely within a week. My question is, do you subscribe to the “victory rally” theory the financial analysts’ are speaking of? If so what would be a good play for this? OEX ,SOX, QQQ? Furthermore, if indeed we did see this type of reaction from the market, how do you feel it would play out? 500 points over a span of one trading session, two or three days?
Around the Thanksgiving holiday I opined that Bin Laden’s capture was days away. At that time I believed that a big move would occur on the news. The market was giving signs of that as the QQQ traded up sharply on a story that his capture appeared imminent. Now for the last week there has […]
