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Ugh. So I have been entirely unable to get this stock right. It's a terrific stock. Basing above the 50 dma which I couldn't resist for an entry with reduced size just above the 20 dma.
I didn't follow my rules to buy only a pocket pivot volume launch from the rising 50 dma, 20 dma or top of a quality CAN SLIM base. Now the market reminds why I use those rules.
This trade and a few other pull backs bring my account to up 1.6% for the year. Not much to be proud of when the Nasdaq is up 12.74% and the mutual funds in the 401K are up 20% (using IBD timing)
Still I know I am going to catch two or three of these stocks running up 25% with 25% of my trading account in each of them by the end of the year. Ideally that will yield 6% each and put me up 19.5% for the year. Now if only I can stick to my rules and avoid straight up mistakes like this TFM trade.
Watch out Paul Tudor Jones, 'cause I am only getting better at this.
The gentleman that wrote an introduction to the Kacher/Morales book, Fred Richards, has his own set of rules that he applies to CAN SLIM, and he has done rather well. Up over 17% this year. I'm not affiliated with him, I just think he presents some very workeable rules for these markets, utilizing CAN SLIM.
Abe, when and where did you enter?
Are Mr. Richards set of rules available?
I know exactly how you feel. I broke a few rules the last time RGR reported. I was watching all the earnings reports from Quarter One with great stocks making amazing pops the day after they reported. Well I decided I would get mine and double downed on RGR a few days before the report. Well RGR decided it would go down the three days or so before the report. So when the pop came, it only basically brought me back to even or just above even. And I decided to hold on the coming move. Well the only move was down….. And since I doubled down on the stock….. the down move was very painful to my equity! I know I would de better if I always followed the rules I have set for myself! Don
How do you trade funds with IBD mkarket timing in this market one day it market in uptrend the next day it is market under pressure and who knows what the next day brings. It is going back and forth like a yoyo. Which if volitility is a concern is not a very good sign.
I don't think you want to trade funds like stocks. Funds are long term Investments. In Bill's book it talks about this.
Looking at TFM stock chart, there are some minor flaws in the chart. The right side of the base looks good, but the first time it pulled back, the stock gave up the entire prior days move. Also, in the handle (if we can call it that), there are mostly down days. If you look at some of the strongest stocks charts, they move up over several days, and there are typically only a few sporadic down days, where the stock gives back very little, usually on light volume.
Which Mutual Fund is up 20% using the IBD system or timing? Can u share the symbol or name pls
It's not the fund per say as much as it is studying price, volume and time duration of historic market moves as described in HTMMMIS. The two trades made this year in the Dodge & Cox Stock fund illustrate the gain. It was held at 12/31/2011; sold on April 9th with 10% gain for the year and bought back after three waves down on June 4 adding 6.5% through today. So currently it's up 16.55% YTD.
I've been pretty well in sync with the mutual funds at the extremes. We were up 13% in 2011.
I can see how investing in TFM can be frustrating due to the whippiness of the price action. WFM is the leader in this group and it was due to report earnings within days. In hindsight TFM followed the action in WFM. Lets assume 100 shares were purchased on Jul 17 at $55. An 8% loss is $440. If $440 is our risk capital an alternate way to take a position in TFM would have been to buy a slightly out of the money butterfly in August for somewhere around $1.50 or even a 55/60 vertical spread for just under $2.00. The position would expire prior tp TFM's earnings on Aug 29. Risking about $400 and letting it ride through the third week of August. With so much time remaining in the trade when it dropped to $50 you could have easily held on to the position for the bounce back and for what now looks like a winning trade - the yield would be at least 100% in the case of the vertical and possibly a lot more for the butterflys. As attractive as TFM looks the options are not liquid and have wide bid/ask spreads. WFM options are far superior - they are liquid and the bid/ask spreads are about $.06 - $.07.
When Bill speaks the Investment community listens!
Update on TFM. On Jul 17 the Aug 55/60 call vertical was selling for $1.60 and is now worth $4.00 a return of 150% in 17 days. The 55/60/65 butterfly was selling for $.95 and is now worth $2.70 a return of 184% in 17 days. Buying 100 shares and assuming it was held during the 10%+ dip would now be worth $60.87 or a return of 10.6% in 17 days from the original buy price of $55. All option prices are based upon the mid which in the case of TFM would have been hard to fill since the bid / ask spread is so wide. Currently the Aug 60 calls are bid at 1.05 asking 2.45 a whopping $1.40 width!!! There are only 301 contracts open. Contrasting that with WFM the Aug 95 is bid 1.95 ask 2.00, a nickel width and an open interest of 2,969 contracts. The takeaway on this is that using option spreads in this market is a lot easier to stay in a position, realize decent returns while at the same time limiting risk than it is to go long stock.
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