Our lack of experience with short term directional stock trades has caught up with us (our wheelhouse is option spreads). Despite a market that's been cascading upward, we have been stopped out of most of our recent swing trades, though with very small losses, mostly because of unrealistic stop loss orders just 1 percent below the 10 hour EMA. Way too tight. Our theory was that as long as SPX price was below the long term Chaikin trend, we were best cutting our losses at the first sign of weakness It's not how we like to trade, and our inexperience neon sign is burning bright. However, we are still riding LLY and WDC, and we'll stick to our rules until we have enough datapoints to reassess.. See all of our trades here. Winners still much bigger than our losers.
The Chaikin system helps overcome even bad swing trading rules!
Our Sector Analysis has confirms the 2 sectors worthy of full-sized bullish trend trades, with reasonable stop losses (3 percent below the 40 day EMA). The XLK (tech) and XLV (healthcare) meet all of our trend trading criteria, and both are outperforming the SPY -- with a rising Chaikin Trend Line, price above trend and positive money flow.
We entered a trend trade in MSFT (part of the XLK ) at the open today. Mr. Softy gave a Relative Strength Breakout signal today, met 10 of 10 of our bullish trading criteria, and threw off a positive 10/40 EMA cross on both the hourly and daily charts. Earnings are in the rearview mirror and despite a short term run up, we entered, knowing that our risk parameters could endure a slight pullback. We set our stop 3% below the 40 day EMA at time of purchase and will adjust accordingly.
Marc Chaikin told us that for anyone who signs up for a FREE Chaikin Analytics trial we can release 4 of the stock selections he's made for his 2014 Model Portfolio. These are 4 of only 20 personal stock picks--companies poised to significantly outperform the S&P 500 this year. So why not sigh up.