Understood. I was just documenting that rather than follow my original game plan, I was actually buying the rally. None of the stocks picked up over the past 4 days or so has been an outstanding performer, though I did have exit points I could have taken on FBF and BAC Friday.
Running TA against individual stocks, I think, should be reserved for looking for entry points once a sector and company has been identified.
My theory is there are three significant types of risks in equity investing. Market Risk, Sector Risk and Company Execution Risk.
Your SCY ratio and VIX look at Market Risk- which in my paradigm loosely means a rising tide lifts all boats and it's opposite.
Sector Risk is the potential of investing in the 'wrong' sector even though the Market is rising and the companies are performing well. Like buying a cyclical stock based on a low PE at the cycle peak. Buy the Semi Equip sector at the wrong part of the cycle, and it don't matter that the DJI or S&P gain 25%/year.
Company Risk is the idea that even in a Good Market, and the Right Sector, a company can mess up execution so badly that they underperform.
My philosophy is to minimize Company Risk by diversifying over three-five companies within a sector, to minimize Sector Risk by focusing on Sectors already out of favor and minimize Market Risk by dollar cost averaging, or legging into positions over time while maintaining a healthy cash balance.
Where I think your TA Skills would provide the most value for your effort expended, would be in monitoring the various sector indexes- ie RLX, BKX, SOX and so on. Once you identified a sector under accumulation, you could pick up a few of the best names (or options on them) and avoid the opportunity cost of the dead money that my current strategy encounters. |
