Archive for December, 2007
Don’t Forget to Prep for 2008
December 23, 2007 at 11:28 am
Lately everyone’s discussing the so-called Santa Claus rally, and I suppose that is rightfully so given the recent upside. Rarely does the Santa Claus rally actually come on time, because the market is so forward-looking. Often it happens early or simply not at all, but this year it is right on time.
OK, so that’s kinda nifty but let’s talk about something that really matters: 2008.
The holidays are officially here, giving each of us the ideal time to reflect on 2007 and look ahead to the coming year. We can review what we’ve learned and consider ways we’ll apply those lessons going forward.
The idle time between now and January 2nd should offer you an
occasion or two to find some quiet time and get real honest with yourself. Take it and put some effort into reviewing your year. Don’t just run the quick numbers on your P&L – take a good look at where you can improve. Look at your trades, look for reasons why you lost and made money, and determine how to avoid the former and increase the latter.
Do you need to improve your skill set? Find a trusted resource where you can learn about tools you’re lacking. Understand the chart patterns. Educate yourself on trading psychology. Learn to improve your execution and expand your use of various order types. Whatever it is, equip yourself with the tools necessary to be a better trader.
What about your discipline? Are you slow to cut losing trades, hanging around in lame stocks when you know you should be bailing out and moving on to the next opportunity? Discipline applies to winning trades too – make sure you’re allowing your original game plan to play out and don’t cut the legs out from under those trades which are working in your favor. And are you exhibiting the discipline each day to do your homework and get prepared for the trading day? If not, create some new habits for yourself come January 2nd that will improve your odds of success.
Every single one of us has ways we can improve as traders, and it’s an ongoing process. What is holding you back from achieving the trading success you want so badly? Let me encourage you to find that area of your trading you feel you’re lacking in the most, and make it your focus to improve it in 2008. It could mean a major difference in your performance going forward, and that progress is exactly what each of us wants.
So spend some quality time with loved ones and friends over the holidays, but be sure to reserve some time just for you so that once January hits you’ll be right on track with your objectives and goals.
Merry Christmas & Happy New Year!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Take Cues From Failed Patterns
December 18, 2007 at 6:35 am
Chart patterns are great for selecting trade entries, but rarely do I see them being discussed from the perspective of risk management. One of the best things about them in my opinion is that they show me clearly when I should be in or out of a trade. When they fail, the signals are clear and I can limit my loss. What else could I possibly want when I’m wrong??
Take SOLF for example. This stock recently tripled in just a few short weeks, putting it on the radar of every momentum trader around. With ample liquidity and lots of strength, it’s no wonder it hit my watch list. I particularly liked the symmetrical triangle pattern it formed as it consolidated recent gains, creating a nice pivot point for an entry on the long side.
I bought it on Friday morning for a trade as it cleared $27.25 at the upper trend line of the triangle, but the stock couldn’t hold the breakout and failed soon afterward. I took a loss of 2% on the failed trade (I’ve certainly had worse). Although a losing trade isn’t any fun, I definitely felt the setup deserved a chance, and if faced with the same opportunity again I’d take it. However, I limited my loss because the pattern failed.
The stock is now 10% below my exit price just one session later. Taking my cue from a failed pattern really prevented additional pain, allowing me to move on to the next trade and protect my capital rather than babysit a stock which had reversed and hope for a comeback.
Here’s a look at SOLF and the failed symmetrical triangle pattern:
(Click for full-size image, courtesy of TeleChart)
Trade great setups which offer big potential rewards when you see them, but be sure to let the patterns you’re trading guide your exits as well.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Recovery Facing a Test
December 16, 2007 at 6:24 pm
The current recovery is facing a test at this juncture, as the rising channels which have formed from the November lows are starting to give way to some selling. This of course introduces the threat of new lower highs if the bulls don’t step in quickly, and that places great emphasis on the next few days as we wait to see how the buyers respond.
Be sure to check out this week’s Market View page over at TheStockBandit.com before you start your trading week for a closer look at the index charts and some market commentary which were posted tonight (and every Sunday). It’s actually the top portion of the nightly Bandit Broadcast (without the trading ideas), which is published on the Market View page as a weekend bonus for readers of this blog – hope you enjoy it!
Trade well this week,
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Beware Late-December
December 14, 2007 at 12:54 pm
The end of the year is a great time. If you’re like me, you’ll enjoy the holidays, pig out on great food, and spend some quality time with family. There’s also that end-of-the-year examination of how our goals went this year and what adjustments we need to make for next year.
As we enter into the final couple weeks of the year, keep in mind that things are as tricky as ever. Cross-currents of all kinds are swirling during this month that aren’t seen at any other times of the year. Performance anxiety of fund managers, rebalancing of indexes, tax loss selling, and a host of other things will motivate market participants in unique ways.
Considering the already wild market environment we find ourselves in (the past few weeks have truly been volatile), December might just add fuel to the fire of confusion.
Let me caution you as you review where your year stands not to make bold year-end bets in order to reach your goals. Stick with your game plan, trade the good setups when you see them, but mostly just remember to take what the market offers. Don’t increase your size or take sub-standard plays for the sake of finishing big and trying to go out on a high note.
I’m a positive thinker and I love to trade. I like to set lofty goals and work my tail off to reach them. But these next couple of weeks aren’t the time to go big or make unusual plays. Cruise into the New Year with your objectivity intact, and focus not on what you need between now and December 31st, but instead on what you’ll want to aim for once January 2nd arrives.
Just don’t let December’s whirlwind of cross-currents throw you off balance.
Happy Holidays!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Bulls Breathing New Life?
December 9, 2007 at 10:45 pm
Last week, the bulls bought a dip for the first time since October, and the major averages reached new recovery highs. The August closing lows for now appear to have been successfully tested, opening the door for some additional rebuilding if the bulls can stay in gear. Of course, the lacking element last week was volume, which is a necessity for lasting upside if we are to see it. To see it light in front of this week’s FOMC meeting on interest rates (Tuesday @ 2:15pm ET) isn’t surprising, so the key will be if we can see some follow through this week on improving volume levels.
Be sure to check out this week’s Market View page over at TheStockBandit.com before you start your trading week for a closer look at the indexes and some chart comments which were posted tonight (and every Sunday).
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
