Sunday, February 08, 2009


Should be a great trading week, but direction wise isn't a sure thing.

My plan as of now is to sell all my longs into Guitner. So many pundits are all over last week's rally as though this is the "bottom". You've probably guessed it, but I view this action as nothing more than a Bear market rally, the notion of it being anything more is absurd. Now, it is possible that the master plan could garner some hope that would propel us higher short term. That's what I'm hoping happens, but I think your safest play is to short the news and use tight stops so if we do plow higher Monday post news that you just stop out. The other way, and safer way, to play it is to use the 10 am rule. That will allow you to play the break down or bust up. Just don't play it off the impulse reaction to news, wait til that gets sorted out.

Either way, I'm a seller before the news breaks. I got some emails about riding winners, and I pride myself in doing so, but you also don't want to overstay your welcome!

When you get 50%+ moves in a day or two on stocks you have to be willing to take a lot off the table, and/or tighten stops to avoid giving much back. It's a fine line, we need to take it on a case by case basis. We played the rumor on Thursday, buying FITB, BAC, FAS, etc. OK, BAC and FITB have moved at least 50% in a day, FAS a huge mover obviously as well. If it wasn't a news play we might be willing to ride
them even harder, but you know the oldest trend in the books, right? Buy the rumor, SELL the news! And, there's a better than average shot that that's what happens.

Now, there is that chance the news is just sooooo good that we rally even harder, so best play may be to just trail the stocks with stops (tight) so if the news comes and we tank you don't get caught in a bad place where BAC goes from $6s to $3s and you're a deer in a headlight. Setting stops allows you to take the emotion out of it. I can't stress how important that is, the market should be moving VERY quickly Monday and potentially throughout the week, so I would really try to avoid putting your account in a position where you are guessing. Setting stops allows you to avoid those issues.

GOod luck this week, lets catch some really nice moves! I'm hoping we get a nice pop early in the day into Guitner, should set the day up for a pretty whopper of a move late day, yummy!



No comments: