9/2/16
Bought ATVI at 43.10
This is a trade that I really liked at the time I made the purchase, but now I'm a bit conflicted on this stock.
What I saw when I made the purchase was a strong setup in the chart with great fundamentals. However I missed a detail that concerns me now - there was more distribution than accumulation in the flat base that setup the breakout.
You can see in my notes that during my review I suggested NTES is a better purchase, but I'm not sure that is the case either. ATVI doesn't have the strongest RS in the group - BUT it's RS was making new highs prior to the stock price which is something I find very bullish.
Overall I'm not unhappy with this purchase - but think there are probably better options available.
After the close of the market on 9/2 Market Edge came out with the weekly report and changed the market posture from bullish to bearish. I have not yet come up with a hard and fast rule about how to handle my portfolio when the market outlook is bearish. This is something I have to resolve, as it's critical that I'm not trying to go against the market.
There are a number of options available and I'll need to refine/define my approach to ensure future success.
When the market posture becomes bearish:
- Go to cash
- I'm not a big fan of this approach. It feels a bit too knee-jerk and thoughtless. However, I do think it's more important to focus on preservation of capital than to be worried about missing a gain.
- Halt new purchases
- This would seem to be a good choice, however there are times when LEADING stocks (the kind I am targeting) will ignore a mild pullback and continue to make solid gains.
- Let the action of my portfolio determine direction
- This is the common-sense approach. If breakouts are failing, if new purchases are not making progress, if I lose money on two or three trades in rapid succession SOMETHING is wrong. It might be me or it might be the market - either way it's time to take a couple of weeks off and regroup.
- Use my existing buy and sell rules - with caution
- This is what I have done during the current bearish outlook. I'm using a small portion of my portfolio, 10-20%, to purchase only the stocks that I feel have excellent potential and I'm watching them very closely. I arrived at this approach AFTER several failed trades which I'll outline in a future entry.
-Geo