I enjoyed last night's Atlanta MTA meeting with Dennis Gartman. He talked about his history and some of his trading rules in a very entertaining fashion. I don't think I'll ever forget the way he told us not to average down on a trade. It was something like this -- "Don't ever, ever, ever, never, ever, never, never, ever, never, never, ever... never average down on a losing trade." :-) He also reinforced his mantra of 'do more of that which is working and less of that which is not working.' Then during the Q&A session he gave us his view on several different markets. It was good to hear him for more than the few minutes he gets on CNBC once or twice a week.
Back to today's market... News of the unemployment rate jumping to 5.5% has put a damper on the bulls' after-party from yesterday. I'm really interested to see if the Nasdaq can stay above its 200-day moving average today.
On Today's Calendar:
- 10:00 -- Wholesale Inventories
More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic
Potential swing trades:
See one of the recent 'Chart Reading' posts for some potential swing candidates. Also be sure to check my typical swing trade entry & exit rules.
Potential day trades:
(From Briefing.com)
Gapping Down
In reaction to disappointing earnings/guidance: FMCN -9.6%, VCGH -8.9%, TSL -6.1%, PSMT -1.1%... Select European financial names showing weakness: BCS -4.9%, RBS -3.8%, LYG -3.0% (sets aside funds for U.S. payments probe - Bloomberg.com), CS -2.3% and UBS -1.6% (downgraded to Sell at Societe Generale)... Select airline stocks showing weakness with crude trading higher: RYAAY -7.3%, AMR -6.4%, UAUA -5.0%, DAL -5.0%, LCC -4.8%, CAL -4.5%... Other news: GENT -41.9% (announces update from data safety monitoring board review of the phase III treatment trial of Defibrotide for severe Veno-Occlusive Disease; concluded that there were no safety concerns), GEOI -13.2% (announces a 1.53 mln share common stock private placement offering priced at $22.50/share), MTG -6.0% (Fitch has downgraded the ratings on MGIC Investment Insurer financial strength to 'A+' from 'AA'), BE -4.5% (discloses that CFO resigns), NCC -2.8% (is under U.S. scrutiny - WSJ), AIG -2.2% (SEC, Justice scrutinize AIG on swaps accounting - WSJ), WIN -2.0% (Cramer makes positive comments on MadMoney), PVTB -1.9% (prices a 4 mln share common stock offering at $34/share)... Analyst downgrades: VLTR -5.5% (downgraded to Neutral at Piper), MVL -2.2% (downgraded to Hold from Buy at Stifel Nicolaus), ASIA -2.1% (hearing removed from Conviction buy List at tier 1 firm), BBY -2.1% (downgraded to Hold at Deutsche Bank), CCI -1.3% (downgraded to Neutral at UBS), GHL -1.2% (downgraded to Market Perform at Wachovia), SAFM -1.1% (downgraded to Equal Weight at boutique firm).
Gapping Up
In reaction to strong earnings/guidance: PARL +17.6%, SORC +9.8%, APWR +7.8%, NSM +7.6%, ZQK +5.8%... M&A news: TMWD +48.0% (Sopra Group will acquire Tumbleweed stock in cash at $2.70/share)... Select oil/gas stocks showing strength with crude trading higher: FPP +7.0%, PDO +5.0%, ROYL +4.8%, NOG +4.7%, CXO +4.5%, CHK +2.5%, PBR +2.0% (finds oil in S-M-1288 block in Santos Basin; has not declared oil find commercially viable - Bloomberg)... Other news: ASMI +16.5% (announces receipt of unsolicited offer for ALD and PECVF front-end business activities from Applied Materials ), XJT +7.2% (continues to explore strategic options signs agreement with Continental), RCH +5.3% (profiled in Inside Wall Street section of Business Week), AGX +4.4% (wholly owned subsidiary, Gemma Power Systems, to partner with Invenergy Wind Management for wind farm projects), CFC +3.6% (Bank of America receives Federal Reserve approval of Countrywide purchase), BUCY +3.0% (Cramer makes positive comments on MadMoney), TAP +1.3% (Federal regulators end investigation of Miller, Coors deal - DJ)... Analyst upgrades: CTC +4.3% (upgraded to Buy at Deutsche Bank), PNRA +3.6% (upgraded to Buy at Piper); BTU +2.3%, MEE +2.3%, ACI +1.9% and PDE +1.2% (all upgraded to Buy at Merrill).
Disclaimer & How I use this list
Well, just plain old crap. I forgot, and my calendar didn't remind me. Grrrr.
Thanks for the heads-up on him coming. Unfortunately, I'll have to wait until next time.
Sorry to hear that you missed it. I guess I should have posted a reminder yesterday. I thought about it but then decided no to. :-(
What's wrong with averaging down? I thought the whole point of investing is to have a sound reason behind the long (or short) position. I've always done much better when I've had a good position but I got in too early. Averaging down works.
Where the caution is warranted is when the losing position becomes an emotional investment. I always say to myself "would I buy this position right now if I didn't already have a position?"
The other thing I've found important is to always, and I mean ALWAYS, have cash available and be able to ride out an irrational market spike. People get killed when they bet the farm and then get scared and capitulate.