OT Michael,
Thanks for your thoughts. From a strategic perspective, the only thing I question is the wisdom of trading your favorite stocks from the long-side while their sector is obviously "out of favor". Nothing wrong with accumulating them LT if you have strong convictions that their fundamentals are bright enough to outshine macro or geopolitical concerns.
"The trend is your friend" refers not to fundamentals, but to the direction of the market. In a downtrending market, it should be easiest to make money on the short-side. I think that the reason the semi-equips are getting hit so hard is not so much from fundamentalists, who are discounting an early peak to the cycle, but from hedge funds who tend to view SCEs simply as the high-flying darlings of the previous upcycle, and therefore the most vulnerable to the downside.
ST the fundamentals of individual companies don't carry much weight. There are many macroeconomic and geopolitical factors that can weigh on investor enthusiasm, even if business may be improving in particular sectors. Even good companies tend to get dragged down in a bear market. So I don't really get the tendency to buy techs with stops in this market, where these stocks are like falling knives, or to try to put too fine a point on it by adjusting the stops.
I would think it would be easier for a ST trader to make money in this market by confining purchases to high relative strength stocks in defensive industries, e.g. WOOF in animal health industry (I don't own it).
With all the red out there, it's clear that a short could practically throw a dart and make money today.
Sam |
