Leading Off…Afraid to Scale Back In?

May 30, 2014

Screen Shot 2014-05-05 at 9.13.38 PMTim Reazor
Chief Investment Strategist
NorAm Asset Management

Your brain tells you that the market should not be going up.  Your heart tells you that our GDP was really bad so you should short this market.   Your eyes tell you from looking at the charts that you’re missing / going to miss the move higher or worse that you’re positioned on the wrong side of the trade.  With all of this confusion what should you do?

 Wade back in… with a lifejacket.

 Develop a watch-list and start to take small positions in one or two potential leaders.  Several of the stocks mentioned on the radio and in my videos are already on the march.  Sanchez Energy (SN) is already extended, but there are many more setups out there.  Enable (ENBL) is still in an IPO base if you care to take a look.

 You need to put yourself in a position to succeed.  Do the following to help yourself find success in the markets.

• Identify a potential leader, not junk, not low-priced or something you think is undervalued.  Look for genuine leaders.

• Know your stock’s proper buy-point.  Don’t chase stocks that are extended.  There are many reasons to not chase to list here.  I’ll cover the reasons on this Saturday’s radio show and video.

• Set your stop at no more than 5% below the proper buy point.   You need tight stops in the markets.  Gains are hard to come by.  If you have two stocks and one is a 20% gainer and the other a 20% loss you’re at breakeven.  If one stock gains 20% and the other is a 5% loss you’re still 15% ahead of the game.  I know this seems simple and easy, but how many of us have forgotten about this during the heat of battle?

• Set profit targets at 15%-20%.  If you’re afraid of missing a huge move then sell all but a 1/3 of your position when you hit a price target.  This way you’ll still participate, but you’ve harvested profits while limiting risk.

To see my watch-list and game plan for this week watch this video http://vimeo.com/96256833

You can listen to the radio show, Your Money, live on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true

You can also listen via the iHeart Radio app.  Simply download the app to your smartphone and search for 1190 AM Dallas.  There is even an alarm you can set to remind you of when our show is on.

If you want to come into my office and learn about credit spreads send me an email.  It would be a pleasure to meet, bond and talk stocks together – [email protected]

I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor

I hope today’s newsletter helped.

Best Regards,

Tim

The information presented is for educational and entertainment purposes only.  Opinions and information expressed are based upon information considered reliable.  However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.  

Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.

 

Investments involve risk and unless otherwise stated are not guaranteed.