Take Profits When You Can

So just took my profits on Tesla today because of several reasons:

• The 20 period moving average crossed the 50 period moving average
• It’s the beginning of May and people usually “sell in May and go away”
• The stock is starting to get overbought on the slow stochastics

I’m going to wait for the pullback and get back in because I know this stock is going to go higher.  As I said before when you invest in Tesla you are investing in more than just a company you are investing in Elon Musk’s vision.  He is a tenacious owner and he has a way of surviving situations that is commendable.  As they say the best indicator of future behavior is past behavior and his ability to build his businesses and grow them amidst a chorus of naysayers bodes well for the future of Tesla.

Great simplified approach to trading

I know I mentioned this guy's trading technique before but I want to post another one of his more recent videos that describe in more detail his trading style.  He has also developed a software service that gives his daily setups.

Market Update 8-3-12

Ok, I woke up late this morning but thankfully I hit my target price on Walmart this morning.  The market looks poised to rally today and I see a bunch of great setups.  Microsoft (MSFT), GE and DNKN all look good.  The three stocks that have been giving me problems these couple weeks all have a bullish candlestick and are moving up on strength.  MSFT and DNKN are oversold in the stochastics, they also had a stochastic crossover, and are at the bottom of an upward channel.  All of these are red hot signs of a nice upward move.

Alright, the jobs report was better than expected.  It’s the best month we’ve seen since February.  Around 50,000 more jobs were added than expected and the market responded favorably to it.  You can never be sure what the market will do even when the news is positive because many traders are waiting for QE3 (Quantitative Easing 3 from Ben Bernanke and the Fed) and the Fed won’t intervene unless they have too.  That’s the reason why the market has been going up sometimes off of bad news and down on good news.  It seems contradictory but ….that’s the market.  Thankfully this time around the market went up off of good news.

Market Update 7-16-12

There is a lot of uncertainty in the markets for tomorrow’s session.  Earnings are still coming out and Bernanke’s going to speak this week.  The market had a strong rally on Friday so look for a pullback tomorrow but truth be told, the market could go in any direction this week.  I’m going to stay out for the first hour to let things develop.  When the market is reacting off news its best to stick to fundamentals, play the pullbacks on a percentage basis and time your entries off Bollinger Bands, moving averages and stochastics, but make sure you are out of your position before any news announcements.

I’m still looking at Walmart but I’m a bit cautious now that it’s pushing up to the analyst target of $79.  The value of the company may be priced in at this point in the current market conditions.  On the other hand Warren Buffet increased his position in Walmart so he may know more than everyone else. 

Stochastic Price Divergence

Here's a great video from Day Trading Rock Star talking about stochastic price divergence set ups.

Stay Focused

Here are some key things to focus on for all equity trades (stocks, options, forex):

• pick one or two stocks (whose industry that your familiar with) to follow at first so you can see how they move and react to market conditions.
• mark the trend... is it going up, down or sideways (not changing price) - the trend is your friend
• mark the areas of support and resistance (where does the price consistently stop rising or stop falling)
• use technical indicators to time your trade (stochastics, RSI, MACD, Moving Averages, Bollinger Bands, Candlestick setups)
• set your entry and exit points (limit and stop loss) and monitor daily to make adjustments if necessary
• take profits even if it seems it may go higher - a trade completed is better than a trade defeated or a bird in the hand, etc....
• take emotion out of the game, the market will play you like a fiddle if you don't have a plan
• stick to the plan unless all hell breaks loose... otherwise if the setup was there and you took it, don't get out just because of one bad candlestick...let the trade develop... you have your stop loss there for a reason, it will take you out of the trade if necessary

And in the words of Kenny Rogers:

know when to hold em, know when to fold em, know when to walk away and know when to run....

Key Technical Indicators

• Learn how to use Moving Averages to time your trades
• Learn how to use Stochastics as a reliable indicator
• Learn how to use MACD as a key informer
• Learn how Candlesticks can show you entry and exit points
• Learn how Bollinger Bands can show you when price is going to move