GMI:+6; CUTR collapses; On stops and parachutes

The GMI remains at +6.  Gmi1213 There were 256 new highs on Tuesday in my universe of 4,000 stocks.  Between 64-70% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes advanced.  More than one half of stocks (53%) are now in a short term up trend.  Stocks that have doubled in the past year remain strong and 24% of them hit a new high on Tuesday.  Tuesday was the 30th day of the QQQQ up trend (U-30), and the QQQQ has closed above its 10 week average for the past six weeks……….

A few weeks ago CMTL crashed, and on Tuesday, CUTR, another leader, collapsed (-34%).  Cutr I have read the ostensible reasons for the drop, but I know from past experience that when leaders hit huge air pockets, it is often a sign of an extended market.  So, I raised all of my sell stops so that I can get out at the first signs of weakness. For CUTR, a stop loss at the ten day average (dotted line) or the 30 day average (red line) would have minimized losses.  The fact that CUTR had found support repeatedly at the 10 day average since its gap up in October, made it a good place for a conservative protective sell stop.  To trade growth stocks without stops is to go sky-diving without a parachute………………………..

NOTE:    A NEW SECTION TO THE BOTTOM RIGHT PROVIDES LINKS TO MY FAVORITE PRIOR POSTS.  THESE INCLUDE MY STRATEGY POSTS, DEFINITIONS OF THE GMI COMPONENTS, AND MY ANALYSIS OF WHY THE TRADING TECHNIQUES OF THE GREAT NICOLAS DARVAS WORK BEST DURING BULL MARKETS AT ALL-TIME HIGHS.

How have you used this site to inform your trading?  Can you send me some experiences I can post for others  (anonymously, with your prior permission)?  Please send your pearls of Wishdom to me at: silentknight@wishingwealthblog.com

1 thought on “GMI:+6; CUTR collapses; On stops and parachutes”

  1. Hi Eric,

    A protective stop at the 10 or 30 day average still would have been very painfull as the intraday action for CUTR showed an almost immediate drop from ~$42 to ~$32, and knowing the lag time before your order might be filled, I expect you’d get a sell price way below the stop point. I hope you weren’t caught in this downdraft! Keep up the good work with this blog. Cheers, GcR

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