Marc Faber, said in hos blog, noted that "The market very near term has become somewhat overbought, and the correction should essentially follow, but I doubt it will go and make new lows in the intermediate future. The lows in early March at 666 in the S&P will hold, and we’ll have another push up into July." Should I bail out of Sino now, and come in later at a lower price?
Advantages of bailing out now:
1. Sino looks tired, and price has not been able to test recent high. In fact, it essentially close at same price last Thursday (9/4).
2. Bailing out now will conserve me cash to come in later.
3. Saves me opportunity costs of having to hold the position throughout correction.
4. Most importantly, avoids me unnecessary potential loss of $600+
My strategy:
Candlestick patterns/ stochastics/ current overbought market suggest price can indeed come down in near term. To compromise between basic principle of sticking to my trading plan and avoid impending correction, instead of manual exit (as it is impulsive), I will tighten my stops to 4.98, a tad below the recent low. If Sino comes down to that level, all I will lose is just my recent profit from Sino. Just risking the house money.
Sunday, April 19, 2009
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