Tim Reazor
Chief Investment Strategist
Noram Asset Management
This is the second Monday in a row that has spooked the markets. Leading stocks appearing to break down in the morning session – you can almost hear the commentators on wall street shouting from high on horseback – the correction is coming! The correction is coming!
It very well may be in fact that a correction is coming, but you need one thing to really pull the ripcord from this market. Do you know what we’re missing? Do you know what key ingredient wasn’t present the last two Mondays?
Volume. Volume has been absent from the last two Mondays of selling. Volume is the signal that you should look for when trying to distinguish the natural markets ebbs and flows from markets looking to correct.
You should always protect your gains. If you’re down 5%-8% from a proper buy point you should consider selling. Also, if your stock has two consecutive closes below the 21-day exponential moving average (EMA) consider selling. But, if your stock is finding support at the 21-EMA or 8-EMA – consider this support. I also use a three-bar trailing stop to help me lock in my gains.
Stocks I mentioned on the Wall Street Shuffle Radio – Trina Solar – TSL and Jinko Solar – JKS on Saturday are finding support around their 8-day EMAs. I’ll keep an eye out for weakness in these two names and keep you updated via this newsletter and on twitter.
You can reach me anytime by email – Tim@NoramCapital.com and @TJReazor on Twitter.
Best Regards,
Tim
