Nice rally from 10 to 29, then there is a high volume sell off. People are booking profits. Stock down 15 percent, now at 24.
I am averaging at about 24 with 600 stocks. will sell 400 if stocks goes below 21.99. Stock has potential according to Investor.com ranking. Hmmm
Kind of tense situation when you are hanging on the average. 30 day MA at 22.5. That is another 7 percent down from present position. Since the company is good, where will the stock go now?
After all the selling is over, it is only left with buyers. But if the stock goes down below its 30d MA of 22.5 then it is good to sell off 50 percent of position to cut back losses. If the stock hangs around that range for some time, that means it is forming a new base. If the stock comes down sharply, to 20 or 19, then it means the trend is over for now. I have to sell off everything at 21 and get out for a modest loss.
Treasure hunt comes with a certain risk. If it is 10 percent , thats ok. One has to cut losses max 7-10 percent.
Lets see what happens. At the same time one should have the patience to hold when other are taking profits and when there is a healthy correction to the stock above the 30 d MA. Nothing wrong in that correction.
Today stock only declined 1-2 percent. Sellers and buyers on same page. Selling is almost over. Have to watch if more selling happens tomorrow. Then stock will come down, its 30 day MA. that is danger zone. But till then one has to wait. The great virtue of a true trader is to buy on those low points on or above the 30 day MA. That is the skill and power of knowledge.