Saturday, December 29, 2007

Top Stocks of 2007 - DRYS

This is the first in what I plan on being a series of studies of the best stocks of 2007. By studying these major moves, I hope to learn what to look for in these types of stocks and also how to handle the run up and not get stopped out early before reaping the rewards of juciest part of the move.

The first stock I looked at was DRYS, which by my accounts made a move of around 500% this year if sold properly when it was topping. It went from around $20 in January all the way to the $120 area in October. Over the last two months it has lost almost half its value. Looking at this stock in detail, it was quite a wild ride, and I don't know if it would be possible realistically to sit through it perfectly. I know I would have had much difficulty at certain points not being stopped out, which I mention on the charts. But it is worth looking at and studying this type of move if you ever plan on catching them in the future.

First Chart - The Base and First Run-Up

Second Chart - Some Pullbacks, Another Base, Another Run-Up

Third Chart - Final Run-Up, Top, Decline

Charts from Telechart 2007, Courtesy of Worden Brothers, Inc.

Unfortunately, I did not own DRYS at any point this year, although I do remember watching it break out around $20 and thinking that it wouldn't go much further. Great call by me! I don't think I really looked at the fundamentals of this stock, which were superb, as well as the strength of the entire group. Perhaps focusing just as much time on the fundamental outlook of big stocks like this can help reduce the anxiety on some of these major pullbacks that would have likely scared me out of my position. I also should remember to never be surprised at how high a stock will go price-wise. You just never know when it will stop, and I can see several points on this chart where I would likely think, "it has run so much, it can't go any further." Let the chart tell you when to buy and sell and not your personal feelings.

Next up I will try to look at FSLR, which by my calculations has made almost a 1000% move this past year, from around $25 to its current area of around $275. Wow!

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