We have touched on this subject many times on this site and older forums. Today is a typical example of chasing the breakout action. Here's a trading idea for some of you. On a strong index day when a lot of things are up, you definitely want to concentrate on the "GREEN" stuff to participate in the rally of performers rather than to anticipate the recovery of the "RED" stuff. Because when you are debating whether to add on a pullback, there'd be lots of opportunity passing you by with strong gains, especially on a good index day. When the index is not doing much or down just slightly, that's when you look at pull backs more assuming there isn't that many "strong green" stocks to play. Always prioritize your trading list and go with the strong beta first. Just because you bought the stock couple of days ago and it isn't doing much for you doesn't mean that you can't cut it lose and go into something else. We did that with OSIR today, we're not going to give up what we earned the last couple of days and blow a call from between 25's to 28's. It's definitely easier to play break outs than to play pull-back. The strategy is also dependent of your portfolio size as well. We knew a guru who would hold 200+ positions on a day like today. For most of us that would just be impossible to manage. The point is, if you have a big account, you can afford to hold many positions and even consider buying on pull-backs. If you have a small account, consider going with the stocks with the best action on a daily basis. There will be a lot of trading for you but unfortunately it's part of our strategy and part of the game we play. When a stock drops below 9 ema, it simply looks less attractive to us, pullback or not. When you have so many stocks breaking out, the last thing we want to be doing is to be stuck on a consolidation play and "hoping" it'll breakout. When it does breakout, we'd be there. Our mentality is that we participate a run, but we don't anticipate one. Also again, before we are moderators and writers of this site, we are traders. We spend most of the time trading for our own accounts and writing-updates for this site is just an extension of what we do. Of course, our priority is to write and alert/update on the stocks we think that are showing the best action(opportunity) for the day. Whats there to talk about SNCR or AAPL today?. The fun was had and now take the consequences of a stock going 14's to 17.50 in less than a full trading day or one going mid 80's to high 90's the next day. Going through the entire list of DJIM watchlist every day may need full time attention. Use the charts to help paint a picture. Maybe we can do a weekly recap on some special requests on some of the stocks we seem to have missed..so far we have not heard back from those public requests..if we don't know the stocks, we can't help. Now onto some today's movers....
VOL, this one probably overwhelmed the most optimistic traders given its 3 day action. Again, we are not saying today is the end of this run-ups but it does feel a little tired at this point. As far as trading tactics, there was a question and answer in the forum yesterday. In the example you can see how you can take profits around 60 and then buy the strong close which leads to another 3-4 points today. You sold the 51-59's run to lock in partial profits, then buy maybe the same 1/4 back into the strong close and walk away with another 3-4pts today on the full lot you played. This is what we did reducing our exposure and now are in a wait and see mode with a very slim position. In fact, how can you not resist taking some profit at this point?..
CCOI, This one has institutional prints all over it today and you can see the large number of blocks traded from its time and sales. It wasn't over at $ 19. Plenty of people buying a stock up $1.50 at $19 early, these traders are not contemplating a pull back, they are buying a ticket on a train!. Same goes for SNCR yesterday. The first thought of a successful trader/investor cannot be when and where is the pullback going to be.
MFW, it seemed as little as two days ago there were concerns of chasing this stock in the 26s or 28s. Well we had a dip and dip was quickly bought on that day. What followed is today's advance and if you blink, you'd missed it. The pullback you saw the other day off a NCH is one of a few you should consider. You know its a hot stock and a pullback is extreme. Thats called opportunity. A .50 cent pullback on a 20 buck stock is not a pullback in our book, it's life..life of a stock.
EDU, now out of all of the China based(quality) stocks, we like this one the best today and yesterday. See, sometimes we don't have to predict, we just let the stock show us the path. This is actually a new closing high and we believe it's ready to challenge its all time high. Instead of looking for a pullback what has been happening for months is we trade a EDU for a MR and back and forth with HMIN. They take turns it seems and with these names there is no need to wait for a pull back. A move comes and that's when you buy back.
ABM, it sure tried to breakout today and it closed about mid way between the day high and day low. At this point, we think this is the right direction and momentum is definitely on the upside.
HLYS, we alerted this one late in the day only because this one has had a history of intraday fake break-outs. Hopefully, and keep our fingers crossed, that this one may get some kind of follow through after today's near day high close.
GLDN, was a rocket again as it climbs with some news. MTRX is a piece of work while this oil massacre continues, just one nice oil day should pop this higher.
PTT from premarket is a 'trade' like NWK was. If the flow keeps on we'll be there, otherwise we have no love for keeping this long.