I got burned by the correction this week. The world decided it was a good time to sell. Did any of you read the signals right and sell before it got bad? If so what do you use to determine the start of a correction?

Hi,

I sold my GPOR and my RES first thing Tuesday morning.  An 8% loss and 4.5% loss respectively on those two trades. I opened GPOR on Monday morning's high volume launch and kicked myself for not closing Monday afternoon when GPOR tightened up at the lows after breaking down through the upward sloping trendline on the 30 min chart.  7% rule would have saved me a % point on the GPOR as well.  A major failure all the way around.  Normally I like to keep my losses below 4%. 

RES was just a fast moving busted trade but my rules(high volume selling; tightening at the 30 min lows; holding 2 -3 hours below the 10day; kept me with less than 5% loss.  A bit of a big loss but within the 5% acceptable limit.  8% loss on GPOR is way beyond the acceptable limit.  GPOR started so well Monday morning. The late morning sell off seemed like a routine shakeout.  It looks like the low volume, barely rallying blue bars at 13:00 and 13:30 along with distribution at 14:30 were the indication to sell.  Since my sell signals are a function of price, volume, and duration, I don't use hard stop orders.  It looks like this time I could not turn myself from being a buyer to a seller in less than one day. Must fix that hole in the boat.

MCP, RES, and GPOR show us that this 1st week of May was a time for a big institution to draw in the strongest traders and then kick them squarely in the teeth.  Thank you Sir, may I have another?

Hi,

Notice that the day's trade has been something like this.... Opens strong, has the typical mid-day slump, then attempts to power ahead by 2:00, but looses steam.

We like to see the opposite. Open undecided, and close higher. Or..... better yet, open with conviction and close with much more positive conviction.

-Hope this helps,

Tom

I sold some.  I kept oils.  I bought LULU @ 93.  I sold more after IBD made it "official."  I bought gold.

Another site I watch is Decision Moose.  He switched from the Russell 2000 to gold before IBD (Sunday night).  Check it out.

He invests in about 10 ETF's.  He's all in only one at a time.  He changes positions about six times a year, and only on Sunday evenings.  He's turned a $100,000 into almost $1,000,000 over a decade.  His switches sometimes align with IBD changes.  I emailed him once because I was presentating his Website at our local Meet-Up.  He replied that his system is very basic and uses relative strength.  Very good website.

Keith

Different philosophies at work here.  I've bought and sold MCP, GPOR several times. These are good companies. Nobody can time the market perfectly all the time. Sometimes you just get it wrong, but with good, solid stocks like these, why sweat it? Look where they are now.  I'll often an opinion, at the risk of annoying CANSLIM devotees. "Rules are for the guidance of wise men, and the blind obedience of...."

We all like to turn over our money quickly. I bought WLT in force on 7/15/11 at $111.05 and knocked it out 7/22/11 at $131.24 and I bought GPOR on 7/15/11 for $31.25 and banged it out for $35.76 on 7/22/11.

But, if I had gotten it wrong, let's say I was really down today, I wouldn't sweat it. Sure, I note a 4% drop, or an 8% drop, but if it's a good, solid stock, what the heck, I laugh and ride the dervish. Remember the tsunami? If you were religiously running 8% sell stop losses, you got burned BAD.

Now take AFOP. Different kettle of fish. Much smaller cap. I bought 7/21/11 at $8.32, with a feeling that the many Smartrend devotees had excessively beaten this stock down.  Looks like many others might have agreed with me.

Now that is a riskier bet, and an 8% loss on that one really would set of mild frustration. It's $8.58 as I type.

I have read all O'Neil's books, and they are excellent. But balance it with Peter Lynch's offerings. Also, I suspect some of the big traders know exactly what the small fry are doing, and will jiggle the market to shake the rigid 8% stoppers right out of the tree. Nowhere was that more in evidence than after the tsunami...

RES is dependent on the oilfield, and is so heavily oil price related, which is a short term up and down thing, that it doesn't make any sense to me to take a loss on RES, or APA, or GPOR, or any of the big players. Try and get it right, but laugh it off if you get it temporarily wrong. Those are not stocks to take a rigid 8% loss on, and then beat yourself up over it. 

Francis