The response to my first two posts has been unexpected and welcome. Thanks to a link from a most valuable investing blog (www.thekirkreport.com), I received over 1400 hits Tuesday. Some emails/comments asked for more trading details. That will come as I become accustomed to this medium.
I have found that the daily news breaks cause only minor effects on the market– temporary deviations from the market’s trend. So I do not pay much attention to tonight’s earnings announcements from INTC and YHOO. Yes, we may get more of a bounce in the techs, but still within a solid downtrend. A 56 point rise after a 400+ point drop in the Dow is quite puny and reflects a sick market. The DOW could rise another 300 points and still not break the downtrend. The NASDAQ composite would have to rise to 2,000 before I would begin to question the bear trend.
After the market confirms a real turn, there is plenty of time to get on board with buys. We are interested in a trend that lasts months not days. I don’t let the pundits scare me into the market prematurely–there is plenty of time to ride a real bull. The successful traders say there is a time to be out of the market–why trade long before the market meets my conditions for maximum success. Real bottoms typically take time to form with at least one re-test of the lows.
So, right now I am sitting with puts in stocks in housing, auto-related, employment related and mortgage related industries. My puts are good through June or beyond, so I can wait for the decline to resume. (I buy deep in the money puts so there is little time premium to pay, but more risk.)
XMSR is looking sick to me—maybe the decline in car sales will hurt their subscription growth. I originally bought XMSR when it was $2/share and traded it several times. The company still has no earnings. (I don’t have a position in it now.)
Because I swim with the tide, I should own no stocks now. However, I could not resist nibbling on a drug store stock (MHS) that has been hitting new highs. I think new medicare prescription benefits will take effect early next year. Perhaps MHS and LDG are benefiting from this. I set a close stop one point below my purchase price–I know the odds against a long profitable rise are against me. In a weak market traders take profits quickly, thus truncating the rise.
I have no reluctance to take quick small losses. I make a purchase and set a sell stop and forget it–take the emotion out of it. Every loss brings me to the next gain. It took me 30 years to get to this point. Trading is about making money not being right. A big ego gets in the way of successful trading. More on all of this later.
Thanks for listening.