To All -
One caveat to anybody trying to trade these stocks using technical analysis OR momentum investing. I have looked at the 1997 Magic 25 list, and found that those stocks whipsaw a LOT more than your typical growth stock. Which means, that as nicely poised for growth as many of them are, you could actually do a lot WORSE trading them than if you just traded a more 'conservative' growth stock (e.g., CSCO).
I think it's because these stocks are so highlighted, discussed, hyped, whatever, that the volatility is accented. Which can give lots of false buy/sell signals in momentum analysis or other types of TA.
I subscribe to the Cabot Market Letter, and I just thought those stocks were volatile! Turns out the returns from trading Cabot's 1997 stocks are MUCH higher than that of trading the 1997 Magic 25 stocks.
Now, you could say, just forget TA, pick some good ones and hold them. That's true... if you are sure you picked the right ones! As we know, some will probably prove to be real losers!
Loren
P.S. If you do use TA with these, I suggest you tighten up your 'sell' rules to make sure you don't drop too much before the sell.
Other thoughts? |
