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In the last episode of how the trading cookie crumbles before the pre-holiday break, I asked the age old question, “Is it time to quit if your chart picks crushed the market?” The answer, of course, is, “Yes.” But I did not heed. I took the time off nearly fully short, with no stops on new picks, and now must find the best way to extricate from these trades and minimize the losses that wiped out a good part of the previous month’s gains.
Prior to Christmas, the previous Friday’s screens had 24 buys and 72 sells. So I went into the holiday period overconfident that I’d be sitting pretty with all shorts.
In the Christmas week, which I took off, the last screen before the holiday had 67 buys and 16 sells.
That should have been the takeout signal for the shorts. Unfortunately, I was enjoying a little vacation, and working on my French long term stay visa application. In other words, asleep at the switch.
So now the question is, given where these picks now stand on their charts, what’s the best course of action. This Friday’s screens had 16 buys and 34 sells.
After reviewing the charts, I decided that rather than bail immediately on the shorts, I want to give them just a tad more rope, because there seems to be some potential for a pullback. At the same time, I want to set my stops at a level where it would be appropriate to abandon hope, all ye fools who enter there. So the list now has tight stops on all picks.
The charts of the current screen output are mostly trendless, jiggly, and muddy. I saw nothing compelling either as a buy or a short, so I’m adding nothing to the list this week.
The list now has 8 open picks, ending the week with an average loss of 0.8% on an average holding period of 29 calendar days. That wiped out a gain of 5.8% on an average holding period of 22 calendar 2 weeks earlier.
The table and charts of open and new picks are below (subscriber version only).
Table (subscriber version only)
Charts (subscriber version only)
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The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.
These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk.
