In my last post before the holidays, I saw what I thought was the great idea of buying the lagging dogs. Based on yesterday’s market action, maybe that wasn’t such a good idea after all. It’s too soon to know for sure, but I started the review this morning with the idea that it would be prudent to place stops below key support levels, in case no rebound is coming. Non-subscribers click here for access.
12/20/23 As the market has melted up the screens continue to generate far more buy signals than sell signals. Over the past 3 days there have been 145 charts with a second buy signal over the prior week and just 39 with second sell signals. These buy signals mostly came in the context of charts that had already been trending upward for weeks. In some cases, the signals indicated trends that appeared to be heading for a parabolic stage.
On the long side I am not prepared to chase buy signals on stocks that are going parabolic. The exit signals are likely to come too late to snag profits. However, there were a surprising number of good traditional setups. These stocks are laggards. There are always late-stage movers in any big market move. So I chose to add 9 of these that will hopefully be in that class. I am adding these without stops as usual.
My conclusion about those lagging positive setups now looks misplaced, but I’ll give them a little rope, placing stops just below key trend support levels. I still like the structures of most of the patterns, so I’m not ready to cut and run yet. Non-subscribers click here for access.
In reviewing the screen output, I wasn’t moved by any of the longs. There are enough on the list already. Non-subscribers click here for access.
On the short side, most of the sell signals came on charts just coming off a new high. Normally I don’t like to short stocks in uptrends, but I had an urge to go top fishing here, so decided to go for limited exposure while being willing to accept a bit of short-term pain. I settled on 8 charts that I liked the most. These are listed on the table below. I decided to start the tracking based on adding a half position at the opening price and a half at the closing price, as of today January 3, 2024. Non-subscribers click here for access.
We started with 12 picks since the last update, all longs. 3 hit stops over the 12 days since the last report. The rest are open. As of Tuesday’s close, the average theoretical gain on the existing picks, including both those still open and those closed out was 9.9%, with an average holding period of 25 calendar days. That’s down from the prior report’s average gain of 16.6%, with an average holding period of 26 days, thanks to the last group of picks getting crunched yesterday. Non-subscribers click here for access.
10 picks were closed out in December. 8 were profitable. Including all closeouts during the month, the average gain was 12.8%, with an average holding period of 23 calendar days. Non-subscribers click here for access.
This was the best monthly performance since I started this exercise 3 years ago. The tweaks applied over that time have trended in the right direction despite a few bad months. Non-subscribers click here for access.
Table of picks and performance in the subscriber report. Non-subscribers click here for access.
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. This is a developmental and experimental exercise, for the purpose of providing experienced chart traders with ideas and concepts to use or not use as they see fit.
Nothing in this report is meant as individual investment advice and you should not construe it as such. These picks are illustrative and theoretical.
The public facing report is not the complete report. Only subscribers have access to the full report and regular tracking of the theoretical picks and closeouts made in the reports. Non-subscribers click here for access.