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Thursday, October 27, 2005
Market Recap
There isn't much good news to report tonight. This sounds like a broken record but it is what it is. This market is doing nothing more than churning and making fools out of anyone who chooses to enter a swing trade. The pattern continues to be up big one day, down big the next with no gains able to hold more than a day. Tuesday's rally has been wiped out with today's losses. The Bulls rushed for the exits again as selling accelerated in the afternoon when the Bears took over and never let up. The relentless selling went right into the close and the indices finished at the low of the day. The Dow fell 115 points, the Nasdaq dropped 36 points and the S&P was hit for 12 points. The Dow is back near the 10200 support level tonight, and it will most likely head down to the 10000 area before a big sustainable rally can hold. Yesterday morning the Nasdaq ran smack into its 50 SMA resistance level we talked about at 2120. This proved to be a brick wall and today this index closed back below its 200 SMA. All three of these big market leading indexes are back below their 200 SMA's. I do not know how anyone can be bullish when the markets are in such technical turbulence. After the bell today, MSFT disappointed on both its number and on upcoming guidance so this will not help matters and should be a drag on the Dow tomorrow along with the tech heavy Nasdaq.
Trading Invites Raiding
Knowing full well the risks and after stating many times that this market is in trouble, we still took on some trades. After all, we are a swing trading service. It turns out that not trading at all and keeping our cash at the ready would have been a better choice. Our open trades are raiding our portfolio of profits right now so I wanted to talk about that tonight.
We have been saying for awhile now that “swing trading isn't working” so it is almost as if we only took those trades to prove we were right (Just kidding of course!) In all seriousness, we put ourselves in this position by trying to trade through these whipsaws even though we know the best position right now is cash. I will be the first to admit, getting stuck in some of these trades was a mistake. Some of these trades should have been stopped out with small losses such as FTO, VPHM and NTES. 3% stops should have been employed, but if you chose to keep stops that tight in this type of market, you are begging to get stopped out and this is why we say, “Cash is king”.
We might as well be in cash if we are going to keep stopping out with small losses, so we let them go a little longer than we should have. And as most often happens, they continued down past our mental stops. In hindsight, it was a mistake to let them fall past the 3% loss limit but at the same time, how many times have you stopped out with strict stops only to have the stock bounce right back after shaking you out? We just never know how they will react once we stop out and considering the pattern the market has been in lately of not selling off for more than a day at a time, we held for a rally the next day.
No Control of Some Trades
The gap down on HGSI could not be helped. No stop would have prevented that loss, and there is nothing that could do about that one. Today, VIVO was another trade we could not do anything about. It dropped 10% in the blink of an eye. If you had a stop in place you would have been stopped out way below the stop because the drop happened so quickly. This is another example why it is difficult to trade stocks with little volume. There was very little volume on it all day, then all of a sudden, volume picked up as it fell off the cliff. We will admit our mistakes as in VPHM, NTES and FTO, but I do not consider HGSI and VIVO trading mistakes. It is not a mistake when you have no control. When you have control and you let the trade go against you, then that is your fault. Stops are listed in the bulletin most of the time and should be adhered to. If you do not receive a sell alert, you have to make a decision whether you want to hold the trade or not. We try to help as much as we can but we cannot come into your trading room and click the sell button for you.
We accept full responsibility for our trades and our performance record. Although not proud of a couple of these bad trades, we still have a 21% gain this year while the overall market is trading flat. Even if we closed out the current trades we would still be up 15% for the year. True, we admit we have made some mistakes, but a 15% gain in this market this year, is very good considering the tough trading environment we have been in most of the year.
Consistent Performance Over Time
Past performance never guaranties future results, but the STHQ return since inception in May 2003 is now 493%. Not a bad return for 30 months worth of trades. This is not to toot our own horn but just to remind those that may have just became members recently and have seen a few losing trades. We remind you that gains over time is what counts most. Do not judge your trading by one day, one week or even one month of trading. Trading is an ongoing process and consistency over time is what you should judge your trading on and judge our performance on. When the market environment is more conducive to swing trading, we can out perform 95% of the market participants anywhere. For now, patients must be exerted. “Cash is King and GOOG is the prince”.
Stockcharts listing
Please vote for us once a day at Stockcharts.com.
http://stockcharts.com/def/servlet/Favorites.CServ...
Thank you all for voting
STHQ Chart Index
If you go to the chart index in the left side menu, you can review and study charts we have annotated for each stock listed in the past.
Earnings Calendar
We have added the earnings link for each stock on the bulletin. To access the link for earnings you can either use this link below or click the link on the bulletin for the corresponding ticker. Click the online bulletin in the left side menu for access to the earning calendar for each stock listed. It is not recommended to hold a position through earnings. You can always buy the stock back after the dust settles.
http://www.earnings.com
For New Members:
For all the new members with us, please make sure to read the link “How to use Bulletin” at the bottom of the Bulletin page on the website. It is critical you know how to use this trading tool before trying to trade the stocks mentioned. The effectiveness of your trades will diminish if you do not completely understand how the information is presented.
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