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Thursday, April 15, 2004
Market Recap
The good news today is that the NASDAQ made a nice recovery at the end of the day and managed to close above the all important 2000 level, bouncing from the oversold level I had mentioned before. The bad news is that the NASDAQ also closed below the 50 SMA, and unfortunately, this puts us right back in the same situation we had a few weeks ago.
The NASDAQ is now stuck once again between its 50 SMA and 200 SMA. It is not a good place to be, and we can now consider the NASDAQ to be trapped in another trading range. I have been selling stocks where I can lately, and we are now 50% cash and 50% long. The market is over sold so I do not want to go to 100% cash in case we bounce, but I do not want to be 100% long in case support fails and we head lower. We are back to sitting on the fence until the market decides which way to go.
Romancing the Stock
How many of you have taken the sanctity of love and extended it to your portfolio? Are you holding a stock that you love but is going nowhere fast or are you holding a stock that has done nothing but suck your bottom line dry? Why do we hold stocks that treat us this way? Why do we “love” the stock in the first place?
I am guilty of holding stocks myself; we have some stock we are stuck with in the portfolio. But I assure you, it is not because I am in love with these stocks. I am holding these for different reasons.
There are some stocks out there that deserve a longer term relationship. Solid companies with a very strong, long term chart. We do come across those and we are in the process of creating a long term portfolio for our service. For the most part, our swing trading style is like dating. We take them out for a night or two, and then move on to our next date. We are playing the field and there is absolutely no reason to be loyal to these stocks at all.
Why should we be loyal? Our stocks are certainly not loyal to us, and two can play at that game. Sometimes these “dates” end up turning out really well. Other “dates” end up going bad and we have to call it an early night. Other times our date plays us for a fool and leads to a real bad time (that is, a stock may gap down unexpectedly). But we keep our little black book (our Bulletin!) filled with other dates that we can call up at a moments notice.
The other day, a member asked our moderator Joe his opinion on what stocks he really likes best. His response was a good one. He said that he hates all stocks, because that prevents him from falling in love with any of them. While hatred is not exactly what we want, he has the right idea. By not allowing himself to fall in love with a stock, he detaches the emotions from owning the stock. If it turns on him, you can bet he is going to be looking to get out quickly and move on to another.
Too frequently we see people who ask what to do with a long term position in their portfolio. Some have been relics from the internet bubble. It is amazing to see people holding on to stocks for that length of time. They could be putting that money into other stocks that could possibly make back all the money that was lost. It is very emotional to sell a stock for a huge loss so, many will simply choose to hold a loss rather than admit that they made a mistake.
Like any relationship, if it is not working out, you must accept it and move on. Sometimes the best option is to admit to yourself that the relationship with the stock is over, you can only take so much mistreatment, and it is time to kick the stock out of your portfolio. Tell it to find some another portfolio to take up space in because it is no longer going to be in yours.
Short List
Depending on how the markets close tomorrow, I may bring the short list back for Monday.
OTC BB watch list
- GASE
- GUSH
- KDMV
- USTT
As always, thank-you for your support past, present and future! Have a great night everyone; we will see you on Sunday evening.
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