Monday, Jan 11, 2010	Permalink
Watch out for "Close, but no Cigar"
By Invested Central
Monday, Jan 11, 2010 07:13
Everyone knows that expression, close but no cigar.  You get tantalizingly close to achieving something but not quite.  The same thing can happen when you are looking for a stock breakout - it gets very, very close but then out of nowhere, down it goes. As an example, say you identified a stock that showed strong resistance at $25. The stock starts getting close, say $24.90, and you get very tempted to make your move. The stock moves up another 5 cents to $24.95 and you can wait no longer. You make your move figuring what's one lousy nickel? You get your position settled then notice that the stock price starts to drift down, close to the $24.50 range. You figure no big deal, the breakout is still in sight, but then realize the volume is extremely light and you have just been sucked into a false breakout. If this has happened to you more than once, you are not alone. It happens to traders on a regular basis, because they become impatient and want to get ahead of the pack before an actual breakout occurs. Unfortunately, it is one of the big reasons many traders get hit in the pocket book. You need to practice waiting very patiently to see a breakout actually confirmed. Who are you hurting but yourself if you act prematurely? Just wait for the actual break out to occur, make sure the volume is there as well, make your move and your chances to succeed will go up dramatically.

Friday, Jan 08, 2010	Permalink
Trying to Catch a Falling Knife
By Invested Central
Friday, Jan 08, 2010 09:24
Do you know what it means, in trader terms, to try to catch a falling knife?  It means buying a stock that is spiraling down, because you think it must be near a bottom when in fact you have no clue if that is true.  In most instances you will end up getting cut up because unless you get lucky and catch it at the exact right moment there's no telling how low a fast falling stock might go. For example. Let's say you saw a stock falling fast as a result of an earnings warning. Before you know it, the stock has fallen 10%. You start to lick your chops thinking you've got a real bargain on your hands. You jump in and pick up some shares, only to see it fall another 5%. At this point, you decide to double down, thinking the fall has to stop soon. Unfortunately, it falls another 5% and you are dazed and confused. Perhaps someone got lucky and caught a little bounce, but the reality is when a stock is in a precipitous fall the best thing to do is get out of the way and let it settle down. Watch for capitulatory type volume - way above the average volume - and then for the selling to start drying up and a reversal to start before you consider jumping in. Trying to play a plummeting stock for a bounce can be the equivalent of trying to catch a falling knife; and if you've ever caught a falling knife, hopefully you were able to catch it by the handle!

Tuesday, Jan 05, 2010	Permalink
Take the Money and Run
By Invested Central
Tuesday, Jan 05, 2010 10:14
In a whip saw market, those stocks that do manage to breakout successfully are pretty rare. Occasionally a stock's momentum carries over for several days but when the market is having trouble firming up that is not often the case. So, since the name of the game is to make profits, do not hesitate to take nice profits off the table, stash the cash in your pocket, and reload and watch for the next profit opportunity. And...if the stock you sold continues to go higher, let it go - you made your money.

 Next