Wednesday, June 23, 2010

(Do not buy sliding stocks below 30 day MA)----Number One on Blunder list

Got into DPZ, when it was declining form its high of 16$, bought it at 12.6, got out at 12.04 for a loss of a couple of hundred dollars. The confusion comes when one thinks of long term prospects at the same time with declining stocks. Since this stock moved from 8 to 16 in a rally last quarter, there is a greater downs side to this stock when compared with stocks like VZ (verizon) or BKS (barnes and nobles).

VZ and BKS are have not moved high in the last quarter and have been revolving around the more or less the same price. These are more like cyclicals. there is not so much down side with these stocks since the volatility is not high. The stocks the recently touched their 52 day high need to be shorted not bought and kept long term. This is the greatest delusion I keep falling to all the time and loosing money. All my gains get wiped away with this delusion.

I should have shorted the stocks after they passed the 30 day high. I would have made a ton of money and would have been in the positive side. I did not do that. I kept buying DPZ even when i was sliding down its 30 day MA. Why? Instead of shorting it. 

Rules change when the market is above and below the 30 MA. One has to reverse the mode. Cannot be prejudiced to ideology when facts are showing some other thing. 

And on Verizon which is a cyclical, which needs to be held on even is bad markets to let it come back, i sold it earlier. It is hard to hold stocks when they move lower then our buy price but when it is a cyclical and this stock has been going up and down. what is the reason to sell it at a loss?

Now is the time not to loose the capital.Devastating thing to do.

Feels like avenues of making money are over. This is the time to short the stocks not to hold them long. And especially not on stocks that have just visited their 52 week highs. Short. short. short.

I found BERX...look at this stock. Short this stock. It just touched its 52 week high. Coming down now. Observe its behavior.

Using Google stock search, I found some very interesting stocks that declined almost 50 percent. There was a trend of stocks that went to their 52 highs and retrieved back to almost 50 percent from the top.

the problem is that one only knows stocks that one sees in the portfolio. There are thousands of other stocks out of which some are behaving the way I want to be. But if one does not search them and take a moderate risk in shorting or buying them, then one has lost many opportunities. At least once a month stock screening is necessary. I could have shorted many declining stocks last month. But I did not get the idea of stock screening.
As stock that has considerable volume, with negative eps, or high p/e a good pick. after seaching I found so many stocks that I cannot believe. All I was doing was looking at my portfolio of good stock that do not decline. And in the case of DPZ it was just a stupid mistake, expecting it to move up when it was moving down 30 MA and going down. What foolishness.

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