Yes Jack, there have been times when my "Next Buy" after a long string of "vealies" has actually been above my last "Sell." It's sort of a mute point in my way of thinking.
When we use the "vealie" concept, we're consciously accepting an expansion of risk - even if it's only a percent or two at a time. We do this when there's been plenty of cash on hand relative to market risk. We do it because we anticipate the stock or fund is seeking a new "trading range" at a higher plateau than the previous one. The 'vealie' acts as a step up to that new level. Yes, it brings along the next buy price as well. However, if it didn't, we'd be left with a buy price far enough below the new "current" trading range that we might not exercise a buy under the new conditions.
Another thing that happens is that usually the market risk rises as general prices rise. So, usually the 'vealie' trend ends when our cash reserve is diluted to a percentage less than what the market risk is indicating it should be. So, if we're lucky, just as the 'vealie' trend ends, we'll be selling and maybe it will show up right where we want it to be - at a current market high water mark. So, yes as market risk rises, usually the price momentum slows for our stocks. AIM's then asking us to sell, our cash has been diluted, the Idiot Wave is rising, so yes, we then execute the trade and look brilliant!!!
Remember that usually in a long upward trend there's a mix of 'vealies' and Sell Orders. So, sometimes we get lucky and have that Sell right at a near term peak!
As a rule of thumb, I rarely buy back shares if the price/share is still above the 26 week moving average of the stock. This is an old habit that has nothing to do with AIM. However, if we're faithful to AIM in the Sell mode, sometimes with a rapidly rising price, we'll find our Next Buy price quite a bit above the current 26 week M.A. It's a coincidence that you brought it up. I just refreshed the UOPIX history that I invest for my college alumni buddies. You'll see what I mean about the current buy price being way above the MA at this time. Take a look at
execpc.com
Best regards, Tom |
