Tuesday, July 15, 2008

Some Morning Thoughts

Obviously the selling continues without even a little break. The VIX is finally over 30 here, but I would like to see it get higher. I am watching my main Market Monitor scan to see if it gets below 200, but we're not there yet. We are inching our way closer to a possible intermediate-term bottom, but we really need some panicky selling. We need a 400 or 500 point down day - perhaps we are on our way to getting that soon.

I took FDG and XEC as shorts this morning - I just had to do it. To be honest, I don't have high expectations for these - a big part of me expects to be stopped out for a small loss - but since the potential losses were small (no more than 3%) I felt I had to take a shot. Maybe, just maybe, the technical patterns will turn out and these stocks will fall.

I sat and stared at DUG during the pre-market, thinking that if I get in around $30.10 (which is where it was at) I was not risking much and it had a lot of potential to move. For some reason, I just kept staring and staring at it without doing anything. I don't know why I pass on opportunities sometimes - it is frustrating when you see those positions you don't take work out well.

I did take some partial profits in a few of my positions - SOHU and DGP - as per my selling rules. I didn't cover the entire position, but will trail the rest with stops. Perhaps this is stupid, but I still think the market could turn at any moment, so locking profits in as you go is probably a good strategy right now. When we do eventually reverse, it will be extremely quick and powerful in my opinion, and you don't want to be left holding the bag short.

Be careful out there right now. If you can preserve most of your capital now and keep most of your profits on current positions, you will be well positioned to take advantage of any rally we eventually (I hope) get. I am out of here for most of the afternoon - right now, I think watching this action is not smart for me to do. I have my stops in place but don't want my emotions to get me out of positions too quickly. I'll be back later - good trading!

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Anonymous said...

It's so funny reading some of your comments because I find myself starring at certain stocks and locking up trying to justify why they won't work- then to watch them move in my favor. I should just let the market and my stops do all the work.

Nice Post!

Mac said...

All I can say is trading is never easy, and most of the problems are not with the stocks, but with ourselves.

Thanks for the nice words.