Dave-Indexes- Beaten down stocks- How to operate in a treacherous market? Some non-sensical advise from an old hand!
I thought this may be a good read,
Subject: "IDEA OF THE DAY"-Trading in&out for profits.
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To: +Yaacov (1259 )
From: +IQBAL LATIF Jun 27 1997 1:17PM EST
Reply #1261 of 1261
Yaacov- SOXx is Phlx semi conductor index, although we have many others but this is most liquid and representative of the market, symbol is $SOX.X. I think trading with some benchmarks is always good, I learnt one thing that mostly as a new entrant we put an order irrespective of market direction, why not to take advantage of market direction, if you look at indexes they help you form an opinion and a judgement when to enter.
My philosophy is based on my 2cents worth of modest understanding of these vicious markets, I firmly believe thay only thing that distincts a new comer from old timer is 'small details' thats how pros do it, I tell you one thing life for pro's is much easier they can lose a big bet and still be in a job, but our business on this thread is more difficult, you make a wrong calll and you lose crediblity. So if you are trading CSCO INTC IBM alone with charts only, you can still be wrong since on stand alone charts a buy signal sometime gets buried in the'torrential landslide of correction'. That goes for your first question why triple watching with corresponding indexes.
Yaacov, I am a strange character, I have never read these things anywhere but I find them standing well to tests, I share knowledge because I think if I am wrong someone will correct me, I have made some good returns on dead- beaten stocks, recently I was long big time on UAP, a French stock, it kept on slipping and I folllowed it to its deepest depths, finally it was taken over by AXA, I made a decent return but always it is conviction about a stock and then direction.
I am long DD's , I decided to add QNTM and WDC to my portfolio today but my order is to buy at any price as far as SOXx is at 314, I will like to buy in an uptrend atleast like to be filled in an uptrend, but continue adding at every 5% drop, that's the best strategy for falling stocks. I did that with networkings and semis all the way, ofcourse you need to condition yourselve to a certain pain threshold another integral and important quality of a good trader.
Your troubled sector allocation should be a minimum of 25% of your total exposure, it is returns on 25% which makes your performance look great. I am also quietly adding ASND. KLIC MOT AMAT KLAC are some in my portfolio I picked up very cheap. If you see KLIC had fallen from grace last month I doubled my position on KLIC in low 20's and went out to recommend.
Let your profits run cut your losses fast- if Nick leson would know this he would not put a whole bank in bankruptcy- on this point my friend Chuck does not agree although Bart quoted me once and Chuck came back with a one liner- pigs get fat, hogs get slaughtered.
Sorry for going tangent to your original querry-
CSCO and INTC, I am biased towards entire tech sector on long side, but keep reminding on this thread strategies to save our neck in case of crisis, everyone can guide you thru rising markets but I feel that knowing your way out and diffrentiating btw actual sell off and market manipulations is equally important, if I can save one person selling in a panic, it would mean a lot to me.
S&P future contracts are tools of compulsive traders who rattle the market to ignite the sell off- by selling the futures down they try to build momentum for stock sell off, for last few days they have been successful but I think New York boys have learned the trick, today when they tried to take futures to 895 no stock selling followed, so what happened they have to run for cover otherwise if Futures become cheaper than arbitrage possiblities makes it attractive for stock owners to make some money off Chicago boys.
This is how we see this tug of war evolving. I am sorry to take so much of your time since you asked a basic question, I thought you might as well know the backdrop of how futures pits works, who drives them and who gets sucked, if this becomes a common knowledge, we might see some less fluctuations.
I like MO lot of negative publicity but it is going higher like INTC IBM MSFT and other stocks in tech. I am long and will only change my opinion if fundamental picture changes i.e. growth and inflation.
Ofcourse in the meantime I make some change for my living on back of Chicago boys the pit masters of the dreaded "FUTURES' locking horns with them is a fun... |
