We had a market rally on Friday but I would still be careful
not to go long on any positions for more than a day or two. Although the bulls have most of the strength
overall any unsettling news could derail this rally fast (as we have seen
before). I missed getting into a
position on GE and WMT but I didn’t feel comfortable getting in when WMT is
reaching all time highs. You don’t know
when it will turn around on you. As I
pointed out before analysts are looking at WMT getting to $79 so we’ll see if
that holds up. I will definitely get in
on a pull back next time now that we have tested these new highs.
This is what I had mentioned before about GE. If you look at how it has been tested over
these past couple weeks and it still charges back up despite market news, you
can feel comfortable about getting into a position. I saw a profile description yesterday on one
of the day traders I’m following on Twitter. His philosophy was spot on…
”My trading approach is technical focusing on stocks that
are trending and have a catalyst behind their movement.”
It is very important to keep this in mind when choosing a
stock to trade. The technical setup will tell you when to get into the trade
but if there is no trend then the stock can go either way…”the trend is your
friend.” If there is no catalyst or
reason for the stock to move higher like analyst expectations, growth in the
sector, or a new product release, then the movement in the stock won’t be
strong enough to make a profit. Lastly,
I would like to add one more piece to his philosophy: the fundamental
analysis. The stock has to be
undervalued for it to be a good buy.
Just like you buy clothes or food on sale, if a stock is on sale people
will be more inclined to buy it.
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