doesn't necessarily mean that there are opportunities in individual stocks. We are looking at some pretty wild swings in the index's today and this has to be expected given the magnitude of the sell off we had on Tuesday. There's a camp of participants that just don't believe that the correction is done and refuse to chase any bounce/rally so soon. Even though we don't have a bias on market direction, we do maintain a very cautious attitude and refrain ourselves from tip toeing back into the this market other than maybe a quick trade here or there. Frankly, it's very easy to go back in and start buying and it's just as easy to start losing. The question is... do we see any opportunities to buy right now given a lot of the "opportunities are abound talk by many of the gurus out there"? One thing we need to have is trading opportunities WE are most comfortable with and are familiar with. We just haven't seen it yet!. For those who have a 3 year or even longer investment horizon, everything may seem like a bargain compared to 3 weeks ago. For us, we are short term traders and that's what got us to this point and we'll stick to it. Our discipline saves us from making unnecessary risky calls/trades and that's the way it is. Come think of it, making good trades in a good market is not that hard of a thing to do, but not losing a SINGLE penny in a bad market is probably the hardest thing for any trader. Trading is often like fighting a battle, you only go in when you sense favourable odds on your side.
There are a few facts about this kind of market environment. Market won't go away, market participants won't go away and we won't go away but the only thing that can go away is your capital if you don't know how to protect it. Opportunities will come sooner or later and when it comes, your capital better be there to make it good. Regardless how big your portfolio size is, we just don't believe in buying anything now for better days ahead. We just don't know how much worse this correction can get and we are definitely not putting our own money in to find out an individual stock we loved a week ago has another 10 or 5% downside left. Also, when the markets do bounce back meaningfully and resumes its uptrend, how do we ensure that the stocks we buy today are even going to participate in the rally? At this point, we don't know and we can only wait and see. Strong EPS plays are only good when the market is in a favourable condition and there is money chasing them. Take GEF today, we said.. "What the market will do with new earning play possibilities is up in the air as of Tuesday, so we will be cautious and go with what the institutions are doing with this today". GEF would have been up 10-15% a few weeks ago on the numbers they did. This morning we dipped in to see if there would be any earning momo as the market started showing signs of a reversal early. It moved a quick $3 bucks, but that was it. By the afternoon the market showed it didn't give a damn about NEW earnings plays and this is what we feared in our cautious note on it. Simply, we followed the institution flow and traded accordingly which included letting the small piece go. Let time be your friend and not your enemy at this point. Knowing that we can afford to wait on plays like GEF or any other play is our biggest advantage here. Now its on radar again and we shouldn't miss a move up if it comes soon. If there is no momentum shown, what use is it hold and risk downside at this point or just sit in a flat stock. Perhaps by next week, we may all be in a buying and holding overnight mood but just not today and probably not tomorrow, a Friday.
There were some stocks near(ing) 52 week highs such as CSV ENR ABM, but in our opinion these are NOT the kind of momentum movers that may benefit once the market does turn around. Once again today, we mostly sat in front of our screens to watch the volatile action and listen to CNBC to be amused by their guests. We are simply looking forward to the weekend.