Trailing Stop Losses
Research for Online Investors

by John Dalt

Oct. 31, 2008

Today was a very quite day. Market was up and down on light volume. Mutual funds were adjusting holdings for the end of month, with late buying and selling. The DOW moved down 225 points then back up 100 in the last hour. 

I reopened a position in CVA. It’s a great company that will survive economic turmoil and should enjoy good growth ahead. The DOW closed over 9300; this helps us hint at a tradable rally, the S&P needs to close over 980 to confirm it. We need to let our positions work and continue pulling profits as we find them. A new month and the presidential elections should put us in position for profits next week. I think the market just wants to get past the election. That being said, I’m going to cut losses quickly if the market moves against us. 

The dollar dropped in value 2.6% this week. This could signal a rally in commodities, precious metals, shipping, and stocks for companies that live on exports. 

We need to keep it front and center in our minds that the market could begin a sell off at any time. Some little piece of good or bad news could trigger fear that starts the selling. This past week the market ignored bad news. Higher unemployment, lower earnings and forecasts of a slowing economy could have easily triggered a sell off, but did not. Two weeks ago, good news caused a sell off. Go figure.

Oct. 30, 2008 

This has been a hard day. The market is going up and we have taken small profits on some of our positions. I so wanted to jump on the bandwagon as stocks went up. We sold out of the BUD @ 5% gain after 6 days. Discipline is tough. I am going to stay with my plan that we are in a bear market and will see a retesting of the lows. Rallies are an opportunity to sell and take profits! 

We opened a position in GLD; I’m going back for precious metals. Sooner or later inflation will make headlines. It seems that the U.S. Dollar as the world’s reserve currency has retained strength irregardless of how much money the Fed is printing. This cannot last; eventually our policies will be seen for what they are. Also, the Euro and other currencies are taking it on the chin right now because their countries problems. Either of our two presidential candidates will have to inflate the economy to get the masses feeling better, and to pay for all the promises they have made. Woe to our country. 

We also opened POT. I owned this before and let fear keep me from getting back into it when it sold off. The strength on this is very strong. It didn’t sell off yesterday or today so I bought it in the last minute. You could criticize me for jumping on the bandwagon of a momentum stock. I plead no contest, but it’s worth $120, if the market wants to give it to us we should take it

Oct. 29, 2008

This was a good follow through day for the market. Everything was great, till the last ten minutes. Then we repeated the automated sell order routine. I closed out the APWR for 7% gain on strength and CVA for 6% with thirty minutes left in the trading day. I anticipated the sell off. POT took off this morning and never looked back. It gained almost $10 per share. I wanted to buy in on weakness but there was never a chance. I hesitated to buy at $61 Monday at close and now it sits at $79! 

BUD lost a little ground. AAPL took off at open, blowing through $100 to $107 before backing off at the close. 

Where do we go from here? I think tomorrow will be another rally day. If it starts selling off the sellers could really dump quickly to protect whatever profits they have made in the last three days. I will open positions if I find the right setup. I’ll send out an alert on my next find! Sign up today for the daily market newsletter here.    

Oct. 28, 2008

GLD & Oil up a little almost everything else up 10%. The market acted the way I thought yesterday was going to go. Tomorrow will be somewhere in between. How is that for a prediction?   Somewhere between a $400 loss and a $900 gain. I think I am safe on this prediction.

I opened a position in CVA; it’s a good profitable company that generates electricity from waste. I was researching coal miners and suppliers when I came across these guys. The more I looked the more I liked. They work overseas so we aren’t just operating in our own back yard. This company is not going to make us rich, but it might make a good long term holding. You should look at it to see if it fits for you. The only thing I don’t like about it is lack of dividends. But, with double taxation, a profitable growing company is a good asset. I sold one position in BUD for a 6% gain. It was up higher this morning then started down so I took it off the table. POT is acting like a schizophrenic teenager. Up, down, then up to close on a high for the day. I tried to get in twice, but fear overcame my greed.

The FED is set to cut rates tomorrow. The market seems to be gaining some confidence. Nice rallies are meant to sell into.

Oct. 27, 2008

Like Coach Mangino said, “We got an old fashioned but kickin’ today”. The market moved up early then slowly trailed off till the last ten minutes when the DOW dropped 200 points!

BUD is up, there is heavy volume of puts and calls on this stock. I should have taken the profit on this and APWR (close to 10% on each one). The market was acting so healthy till it tailed off after lunch and then dropped. Lesson learned. All of our stocks were up today. Ninety percent of the heavy volume was up today. I didn’t open any new positions in the last ten minutes. It was a bit shocking; I had convinced myself that the market was ready for a rally that would last more than a few hours.

We will look at POT tomorrow, its back down below $64. It wanted to rally today till the end. 

Oct. 24, 2008

I talked to one of my old friends today. He is ready to sell it all. He believes he can buy it all back cheaper in a few weeks. Who am I to tell him he is wrong? The market is scary; you wake up to news that ‘circuit breakers’ on the options market have indicated a lock up. This is before the market even opens! Makes that morning cup of Joe a little hard to swallow.

I am ready to start buying, but after talking to Greg I may wait a few days. Most stocks set new 52 week lows in the first 30 minutes of trading this morning.

I initiated positions in BUD and APWR in the first hour as the dip began to turn to a gain. These are both positions I have played for 5 to 25% gains. I sold the POT an hour before close for 5% in two days. It was volatile and with a good chance of a sell off in the final hour it was time to take gains.

The sell off didn’t materialize, in fact the market rose the last hour to close down about 200. I say that as I am leaving 10 minutes early to go the Football. KU vs. Texas Tech. We will reload for Monday! 

Addendum: The sell orders showed up in the last 10 minutes knocking the DOW down to close at -312! Most of our portfolio held up pretty well but traders dumped positions for the weekend. 

Oct. 23, 2008

POT beat the street and their projections on earnings reported this morning. Why not play the BUD trade again, it’s worked so well a couple of times, lets make it a trifecta! We missed filling an order on APWR by .02 cents, maybe tomorrow. The market finished strong with late orders coming in to boost it in the last 30 minutes. This is the way it’s been going. Programmed sell or buy orders come in just before close. We don’t get the benefit of Cray computers; we just have to muddle along buying low and selling high.

I am looking at some new companies for the Edge newsletter. Coal and other natural resources along with the servicing companies that service these industries are really looking attractive for a strategic long term investment. These are great companies that own things, and produce resources the world needs. Their intellectual property, and high cost to entry form a moat around their business that keeps out competitors. The cost of energy has dropped in the last few weeks. Do you think oil will stay cheap very long? Your answer to this question should tell you were to look for the best long term investment.

Oct. 22, 2008

Are we there yet? Again, we rope a dope our way through the daily grind. Oil stocks took it on the chin. Apple was up over 10% this morning on good earnings. Then trailed back down close to its opening price before staging a rally at the end of the day. News of bank failures overseas, destruction in commodities, and missed earnings by some techs kept the market on the defensive. I picked up POT just before close. I am treating this as a short term trade, but if it takes off may hold for a good ride. I had buy orders on BUD and APWR but didn’t get filled.

The weakness today surprised me. It wasn’t panic selling, just orderly progression down till the last hour, then it got exciting. I read a couple of articles in the last 24 hours touting we were now in a bull market. I don’t know mom it doesn’t look like a bull market! 

We have some losers but they are good positions. Ride this one out just like the last two times down. If you’re sitting on solid positions, stay the course, this too shall pass. 

Oct. 21, 2008

Today continued the trend of up one day and down the next. We are see sawing our way higher. I sold out of BUD and APWR for a nice profit early as the market was heading down and I was afraid they would be taken along for the ride on the slippery slide. APWR closed higher for the day. This is a rocket ship full of fuel; it just needs an agreeable market to advance. I will be looking to get back in on any weakness.

Oil and oil stocks closed lower even though OPEC meets later this week to cut production. Word on the streets is they will cut production 1 million barrels a day, but that is not enough to stop the slide in price according to “experts”.   Now comes news that Russia, Iran and Qatar are meeting to set up a cartel on Natural Gas. They control 60% of the overseas production. This is bad news for Europe, luckily the U.S. is self sufficient on NG but it will drive our price as NG can be shipped as LNG. There are ports under construction to import/export LNG.

BTU closed down, in sympathy with oil I suppose. KOL was up slightly. We will watch these and GLD tomorrow. GLD has formed a double bottom; soon the public will become aware of the inflationary increase in the money supply. Short term there is a good play developing on GLD, with a possibility of a long climb.

Oct. 20, 2008

The market exhaled today, and the Dow went up 413! Oil and ag. stocks led the way. I think we are going to have a good week unless earnings spoil it. The market started up and gained through out the day. Visa and Mastercard were down over concerns of less transactions in a slowing economy. Rimm dropped because an analyst walked through a cellular store and asked the clerks about sales. He reported that sales had been slow for the last month! So, the market decided to erase a $5 a share off the stock on almost double volume! Never has so much been made of so little. This is the market we are in, any bad news or perceived bad news will cause panic selling.

I am going to take profits on some and move into more ag. and oil as opportunities are presented. POT and DRYS came up on an alert today.  

Oct. 17, 2008

We have closed out the week 401 points higher than we started. We have been all over the field but we closed out the week 4% higher than we started! The trades I made yesterday paid off well today. BUD is up over 7%, APWR up over 5%. I’ll look for sale on these with 10% or more on Monday. This is a great traders market. Some of the positions I was caught in when the market gapped down, but I think we’ll get a chance to get out of some of those next week. 

I think we have hit a short term bottom. Continue to play this as a bear market, take profits on winners. I’m looking for a good rally next week as retail buyers come into the market.   If they buy in and get greedy, they will bet slaughtered. BE CAREFUL. Take your profits quickly. Till next week. 

Oct. 16, 2008

I’ll never forget family vacations; my daughters always asked “are we there yet?” It was a great joke then as now. Are we there yet? I don’t know. The DOW dipped to 8197 at 11:15 this morning. I talked to one of my fellow traders and we expected another 700 drop, with a chance to buy in the last hour. The buyers came out, the sellers disappeared, and stocks began to climb a wall of worry. I sold KMP at a 3% loss. There are just too many other great stocks with much more upside potential. I opened a position in BUD at 58.25 and APWR at 5.00. With any market strength at all these two have more upside potential.

Tomorrow is sell day. Take advantage of the first hour for sales. If you can sell into the opening strength you may avoid the weakness later in the day. Tuesday it only lasted 10 minutes before we were in the tank. You may want to put sell orders in above our entry prices for automatic sales if the market cooperates.  

Oct. 15, 2008

Have you ever wanted to kick yourself for missing a trade? It’s not the first and it won’t be the last time I’ve missed one, but it doesn’t make it any better. The chance to sell V and KMP in the first 10 minutes yesterday for a gain was missed. Now those positions have turned to losers! The market opened lower this morning and just got worse.

We retraced most of the gains from Monday. I thought we would retest the lows from Friday, but didn’t think we would get there this fast. I had hoped to sell out of some positions on rallies. Almost, but no cigar. We will come roaring back once buyers see the value of some oversold stocks. We need some steady money that isn’t hot to trade.   KOL ETF was down 15% on light volume, APWR was down on 25% on almost 4X volume, mostly this morning trading even. It rolled over on a slippery slope! If you have money available this is high beta, quick jumps, if your heart can take it! BUD is back down closing at 59.75, you can put back on the same trade we did last week. 

Oct. 14, 2008

Today is my wife’s birthday. She reminded me when the alarm went off! This was very considerate as she kept me from going very long with out wishing her a Happy Birthday and being in the dog house all day. The market gave me less time to sell into the rally. The DOW was up 400 for all of 10 minutes. By the time I entered my orders, it was gone. It’s not surprising that we lost 76 on the DOW today. After yesterday, I thought the loss would be much more. I am just sad I missed the fast rally to sell into. I had some 5% gainers go to losers today. We will try again tomorrow.

I picked up a position in UNG, to play the natural gas market.   I watched KOL and another stock my daughter in the business school told me about, APWR. I had looked at it last week when it was tanking with everything else. It is taking off like a rocket. But, for how long? I may look at it for a fast ride when money is available from selling out of some WINNERS!

Good luck, and always remember sell into a rally and your wife’s birthday!  

Oct. 13, 2008

Today saw the biggest one day gain, ever. DOW closed up 936 @ 9387, we sold the BUD for an 11% gain in one day. I was going to hold it longer by selling the November 65 calls, but option premiums were tight today. This indicated to me that the market is not convinced the rally is for real. I agree with this sentiment, and felt good about 11% in one day; we will look to play it again if we have forced selling again. All of our positions improved today. I will look to sell tomorrow for any small gains.

We have a lot of quality stocks, but cash is a good thing to have to buy stocks on dips. I am not looking to buy this rally. 

The coal sector looks really interesting. Coal is a great natural resource that has gone down in price along with oil but not as much. The companies stocks are beaten down along with the rest of the market. I am looking at some of the big names, but may just use KOL ETF to play this sector off dips.

9:00 a.m. CST 

I think we may have seen the bottom this morning. The market opened down 500 then quickly recovered. Presently down 200. I bought BUD for 57. This, to me, is a slam dunk. Check this trade, I have written about it for the last few days. This low gives us an almost guaranteed 20% return. I will sell Covered Call against it later today for over $2 lowering our price to $55. Cash on the ‘ol barrelhead in December of $70. This looks pretty good to me. 

I added to the position in QQQQ @ $30.

You may want to add to a few positions to average down. I am not doing anymore at this time. I will wait for the market to start up and confirm a rally.

The VIX went over 60 yesterday. A historic high. 

I think we saw the bottom this morning @ 7882, if we close higher today, I think that it will be confirmed. Then it is off to the races. 

3:00 cst

Let me add to this mornings commentary. I sold the QQQQ position about 40 minutes later for $31, a quick 3% gain. I am not a day trader, but needed to go visit one of my daughter’s college professors and was going to be gone for a few hours. The DOW moved into positive territory for a while, then closed down. I don’t think this was forced selling, just traders that didn’t want to be long over the weekend. I do believe next week will be a good one! Have a great weekend. GO KU BEAT COLORADO! 

Oct. 9, 2008

The DOW dipped to 8595. You had to be quick to catch it, but it was there. This was the next level of support. The buyers came out in the last 30 minutes and filled their buckets with companies they wanted at cheap prices.

Google got downgraded; GM was put on Credit watch. The bad news just keeps coming. If we are not at the edge of the canyon, I can see it from here.   GM is now trading at 58 year lows! Who can understand these clowns? They are going to bring out an electric car, in 18 months! First they have to build a new factory! What about all the factories that they have closed? They are burning through one billion a month and they build a new factory to build a car that takes them almost 2 years to get to market! What about the electric car they built 6 years ago, and crushed. That would be too simple, actually bring a car to market NOW that people want and will pay for.

I expect tomorrow to be a quite day. I think it depends on the talking heads, the more they talk the more Joe six pack starts to worry about his 401k. If people want to sell in this market, who are we to stop them. I just don’t want to catch any more falling knives. We will wait till we can confirm a rally.

Our BUD trade just kissed $61.50, if you got in, good. I’ll try again tomorrow.

I will be at the University of Kansas for Dad’s day to see my daughters and meet their professors. I’ll run back to the hotel a few times to monitor the market. 

Oct. 8, 2008

The market is trying to rally. Gold and silver are headed up, and our stocks with them! Most gold stocks were up around 20% today! You can still get in, but the train is not going to wait much longer. 

Short sell rules on financials go off tonight. In the meantime the boys had a little fun this morning with one of our holdings. KMP was sold down to 35.59 on heavy volume. I was puzzled until they turned the market and started buying back. Closing at $44, up 1.10!!!! Volume was 10X normal. This is the danger of having trailing stops entered in your computer. It’s like telegraphing a pass in basketball.

I am not sure we won’t see new lows. Right now we are in a mood to sell anything with a 5 to 10% profit, depending on charts. I am going to continue to play it as a bear market. Buy on dips, sell on jumps.

If you have money burning a hole in your pocket, and want to buy something.   Here is the safest play I know. Buy BUD under $61.50, Inbev’s purchase is scheduled to close by the end of the year for $70 cash. This will net 13.8% in 2 ½ months. If you want to go exotic sell the Nov 65 calls for $2.20 against your holdings, this lowers your cost to $59.30. If you get called in Nov. you make 9.6% in 40 days, if not called in Nov. then you make 18% in 80 days! Not bad work, and it will keep your money working in a relative safe play. This is a freebee, for more subscribe to SwingTrader.

Oct. 7, 2008

Hello, is anybody out there? The buyers are absent, a search party has been sent out to find them! If buyers don’t show up at 9500, then maybe at 8600! We have some great positions. Should we stay with our positions as the market works through the trough, or sell to buy in later? Do you think you would pull the trigger before they were higher priced than they are now? These are the questions that try men’s souls.

Bank of America led the market down today as they cut dividends and guidance. The sell off gained velocity in the last two hours after Bernanke didn’t announce an emergency rate cute today. The market started over the cliff after his remarks didn’t include the magic potion we were all waiting on.

Gold, Silver and Oil were up. It became public today that the Iranians challenged a U.S. warship in the gulf on Sept. 6. The shiny stuff would have rocketed even more if the aforementioned rate cut would have been announced. Maybe tomorrow.

Cash and gold. Buy quality companies you want to own at these great prices. One I am looking at is CEP. You may recognize it; Berkshire just bought its majority owner. This exploration and production company pays $2.25 per year, closing today @ $7.86! I wonder what premium Buffet and company will pay to get it all? BUD closed @ 62.85. Inbev’s purchase is at 70 to close in December! Buy it and make 9% in a little over 2 months! Let’s watch them tomorrow.  

Oct. 6, 2008

But I thought the $700 billion bailout package was manna from heaven! Oh, that’s old news. Now it is “confidence” not fundamentals that causes the market to tank. The VIX hit 56 today. Perhaps I was early calling for purchases of your favorite stocks. The deals got even better today, till about 2:30 when the market bounced off -800 then headed for a close of ONLY -369 I don’t know if we found a bottom today, but it should give buyers a reason to enter the market out of greed if the market returns to the mid 9000’s.

Let’s continue to play a bear market for short term gains. If you want some great companies for investments, you can take your pick. They are all on sale. Here is one I love KMP closed @ $44.90. KMP is a limited partnership that owns pipelines. They transport the gooey stuff and the natural gas we all use. They pay $3.96 (8.8%) a year dividends! Buy it now and you can hold it for the dividend or sell it for the capital gain you are sure to enjoy when sanity returns to this market.

There is still money sitting on the sidelines. Today we saw “fear” rule the markets till “greed” reared its ugly head. We could use some more ugly “greed” to get this market going. Buyers need to feel pressure to buy because they will never get this good of a deal again.

Gold looks good, it’s up today. How do you say “emergency rate cut”? It could be on the table this week! That will ignite stocks and gold! 

Oct. 3, 2008

The MSNBC talking head told us to remember this day to tell our kids. This would be a day studied in the future as “the day the U.S. nationalized the home mortgage market”. WOW, we truly live in historic times. After the bailout bill passed, the market tanked. Everyone that had sold this bill as manna stumbled to explain how this could happen. Like drunks who wished to ride a bull, or go car surfing they realized what they had wished for. Uncle Sugar is now the biggest player in your backyard!!! In fact they are a bully! Chris, Nancy and Barney get to tell you again and again “Greed is bad”. That is, unless the government is greedy, then it’s payback for following the rules and laws they passed to finance bad credit risks with no down payment. Something no sane banker would do. I forgot, Fannie and Freddy were not banks, they were GSO’s that lined the dem’s pockets. It’s patriotic to pay more taxes. Suckers! God, protect us all.

This may encourage buyers to come into the market next week. Continue to treat the market as a bear. You can fight it for short periods, be careful of your entry points and take profits quickly. If you’re a long term investor, a year from now you will kick yourself for not taking advantage of the current prices on some great companies. Could they go lower, sure, but you can’t always buy at the lowest or sell for the highest prices. 

Oct. 2, 2008

The market didn’t like our positions today. Dow closed down 348.22. I am looking at HPQ and MCD. Both are in good up trends in the lower part of their trading range. Cash is good to have, but if you are afraid to deploy it for great companies at low prices, you should put it in a money market. While I like quick hits, I don’t mind good long term gains in quality companies. The DOW closed at 10,482. Can it go lower? Sure, but you can never buy at the exact low, nor sell at the exact high, so it’s best to identify great companies and look at the long term. 

Our position in Mosaic took a hit today after missed earnings. Presently, I am convinced to hold our position for recovery. It fell past my stop and continued going down for the day. 

All positions are under water for now, but are in good companies or commodities. If the Bailout pkg passes congress the market should rally 15 to 20 percent. When that happens I will go back to selling for small profits and finding new positions. 

Good luck to you. We all need some, but it is not a trading strategy.  

Oct. 1, 2008

Today was a sideways day. The market was down almost $200 this morning. I had buys in for some great stocks, but sentiment reversed and closed down only $19.75. Gold and silver were both higher today. Our gold stocks had a great run but gave it all back by the end of the day as confidence in passage of the bailout package increased.

I opened a position in FWLT at 33.40. This is a great company that works worldwide. We are presented with opportunities to invest now for great payoffs. I also am watching HPQ, we didn’t get it today, but watch it tomorrow. Any softness will present a great opportunity.

Tonight the Senate will consider Bailout ver. 1.02. Dear reader, we can only hope the house will stop this socialist plan. The big banks Citi, JPM, Bank of America are up big today because they are about to unload all their bad crap on Joe Sixpack. Then, they can then turnaround and loan us more money to pay our taxes! If you don’t think it’s a small club, notice they didn’t bring in a small town banker to run Treasury. Or even worse an economist that actually had some idea other than taking care of his friends.

Even National City was being resurrected from the dead on hopes that the plan would pass and a great transfusion would occur in intensive care.

We still suffer under the “New Deal” and “Great Society” programs, how long will the hangover from this “Bailout” last?

WARNING:   The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it’s your money. If you lose it, it’s your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

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