Much like what we said yesterday still applies today:
"This morning we used some weakness to pick off some names on the long side here. Now we made our bed and have to sleep in it. What this means is that per the mechanics of reality with regards to the stock market one of 3 things will happen to us from here with those issues and quite frankly this applies to every trade you will ever make for the rest of your life.
A. Make a gain
B. Wash
C. Stop out at a loss
This is how you frame your reality with open positions. This is how you stay centered — you know (and accept) your outcome. The moment you hit the enter button you are at the mercy of the market. Whatever happens is going to happen and you have no control except to manage your risk because at that moment you have no gains to manage so everyone is a trader at this moment in time.
You can say you are an investor and that’s fine but you still have to deal with gyrations and stops until you can actually be an investor with gains to manage in this market. One step at a time folks, it’s as simple as that."
As for the indexes? When you have news driven events like this it basically screws up the charts to a large degree and the super short term charts can be thrown out the door. However, there is some order in this chaos. One look at the 60 minute index charts tell the story, and that story is compliments of this guy!
Leonardo Pisano aka Fibonacci. It’s also one of the reasons why the market stopped where it did on the opening nervous Nellie lows thus far.
Why don’t we react negatively? Why do we stress managing our emotions around here?
Today’s open is a good example. Because had you played nervous Nellie?
You would have sold DECK at 78, now at 81.04
You would have sold WLL at 60.43, now 63.10
You would have sold CVX at 97.98, now 100.00
You would have sold COP at 71.13, now at 75.08
You would have sold NXPI at 24.32, now at 25.44
Now you know, live and real time learning all from your friends at All About Trends. Given today’s action how can you not like what’s going on here — that is unless 90% of your whole game is to be emotional, shoot first and react.
In addition to that today is also a good example of using trade size position risk management IE not biting off more than one can chew and keeping position sizing small. In so doing the worst that we were down near as we could tell was a whopping $1,200.00 at one point. On a 168,000 virtual portfolio? That’s less than 1%. It’s also why we use trade size risk management because you just never know when something is going to come out of the blue, but you can be prepared for it in advance by using virtual portfolio management tools.
In addition to that? We have the issue of cash on hand and why we always have a large cash position. When you get events like this it allows you to step into the face of fear and pick off some opportunistic trades IE AAPL this morning. After all isn’t one of the buzzwords around here OPPORTUNISTIC? And how about those who jumped on FFIV this morning? Nice job folks! You’re already up 5 points!
"Thanks so much Dave for the timely heads up email this morning. Your reminder about not trading with emotions was an excellent reminder for your subscribers. Am also sitting on a tidy profit from buying Aapl thanks to your alert this morning. Just wish I had the guts to pick up Ffiv but wasn’t following it this morning. Keep up the good work sir!" Ben –Squaw Valley, CA
So you see folks there is order in the chaos and a method to the madness if you will. Sure we are feeling some in flight turbulence but we already prepped you for that in advance, in fact by using trade size risk management you are always prepared for that.
What are we going to do right here? We are going to manage our positions and HONE IN ON THE WATCH LIST as there are a lot of names that are all STILL INTACT! In fact when you look at them make sure you look at the notes in each chart. Lots of education in them. AND? They all are still looking decent.
Nothing wrong with nibbling on weakness you know, case in point? Have you seen AAPL since we bought it today? Have you seen FFIV since we talked about it in the pre-market?
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WHAT EXACTLY DO I WANT TO ACCOMPLISH WITH MY OVERALL Virtual PORTFOLIO IN 2011 REGARDLESS OF WHAT THE MARKET DOES OR THROWS AT ME?
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SHORT SELL WATCH LIST
NONE believe it or not.
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LONG SIDE WATCH LIST
If I were to put money to work here. Where do I put it?
A lot of new names here folks!
RAX
CVLT
ALTR
KLAC
FFIV
Yesterday we said:
"Little different animal but as you can see it has stabilization at the 200 day. Any weakness and we are fine picking some off to sit with for awhile."
CAM
NOG
XEC
XOM
CXO
See any problems with these issues? Neither do we.
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All About Options In The World According To All About Trends
NOTE: The exchanges recently started WEEKLY EXPIRATIONS of options. Going forward, make sure that you check to see which ones you are buying. Let’s stay with traditional options expirations which are the ones that expire the 3rd Saturday of every month.
CALL OPTIONS
Current Holdings
DECK We are now long 1 April 70.00 Call at 14.80 as we post they are currently trading at 12.10
CVX — We are now long 1 April 90 call at 9.85 as we post they are currently trading at 10.35
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CURRENT POSITIONS
"Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
WLL (We are now LONG 200 shares at 62.57)
DECK (We are now LONG 200 shares at 83.55)
CVX (We are now LONG 150 shares at 99.24)
COP (We are now LONG 200 shares at 75.44)
NXPI (We are now LONG 325 shares at 26.56)
AAPL (We are now LONG 50 shares at 341.25)
SHORT SIDE POSITIONS
NONE
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To our NEW SUBSCRIBERS
What we’ve tried to do is break our watch list down into chart pattern recognition structure from a visual standpoint. Learn the patterns and the components of patterns and you’ll blow those Wall Street MBAs away. You don’t need a $3,000 software program either. All you need is a BURNING DESIRE to be the best that you can be and we’re here to help.
We have a lot of new folks here and we thank you! We want you to take it easy, get to know how the routine works around here for awhile and to feel comfortable.
We hope you all aren’t here because you are chasing performance. For us it’s more about educating and making you the best you that you can be first (that’s what we focus upon!). Like many of our long time subscribers they have all found out that they have no use for traditional Wall Street (and we don’t blame them) and it’s our hope that over time you’ll have acquired enough knowledge from us to say the same with conviction.
One of the most important things we want to stress is that of RISK MANAGEMENT via POSITION SIZING. You don’t need to stack your account with just a few big positions as we’ve seen it time and time again that those who get into trouble are the ones who take large positions and do not employ any risk management system IE shoot for the fences. Those are the people who live on the fringes of extremes and yes ultimately get burned.
As a guideline a good initial system is that of the following example.
Let’s say you have a $100,000 virtual portfolio and let’s say that as a guide you never place more than 10% ($10,000) into any one position. Now let’s say that one day a news driven event hits (over which you have no control over anyway) and one of the positions tanks 20%. On its own that position is sporting a $2,000 loss, while that may seem devastating on its own its really no big deal overall.
Why? Simple its all about risk management being properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the virtual portfolio in this example.
Answer: A whopping 2% LOSS. Now you know why we say no big deal.
We can also tell you new people here that you will get stopped out of names and you will take hits. There is nobody on the planet living that has ever hit 18 holes in one and there never will be. We’d rather get you grounded in reality right away vs talking about pie in the sky all the time like a lot of other sites. In so doing your head is screwed on straight from the start and when those days happen (and they will) mentally it won’t mean a thing to you. To us that’s what’s most important is YOUR state of mind as it’s your most important asset. We hope you appreciate our honesty.
We have a very good retention rate here at All About Trends and a lot of great outstanding people here. We like to think that a part of that is being upfront about what can happen (in both directions). Verses those up 500%, I turned $50,000 into $3 million or some other absurd number to get you to bite. That’s not who we are.
WELCOME ABOARD!
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Lastly with regards to taking any trade:
Remember the moment you take a trade you are at the mercy of the market and have no control except when to sell. If you are not willing to take the risk and are not willing to pay that price do not take the trade. We are willing to take that risk knowing full well the end result could be a loss. That said make sure that virtual portfolio management trade size is used accordingly. With any position you may take make sure that should something go awry the amount of total impact to your account does not devastate your acct. Try to stick to a 5% position That’s the key to virtual portfolio management, not biting off more than you can chew.
Remember the mechanics of reality with regards to the stock market states a stock can only do one of three things: Up, Down, Nowhere. The moment you hit the enter button you are at the mercy of the market therefore the only control you have is when to sell/cover. You can’t manage your gains as you have none to manage initially. Knowing this in advance it allows you to stay in outcome, that being you will either:
1. Make a gain
2. Wash
3. Get stopped out at a loss
Remember the market IS the boss. IT is going to do what IT wants to do.
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SUBSCRIBER ONLY WEB SITE
Don’t forget you can view updates in the middle and the end of each trading day complete with current charts, along with our current performance at our subscriber only web site.
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