Chief Investment Strategist
NorAm Asset Management
After the ugly reversal Tuesday in leading stocks and in the indexes everyone wants to know… Is this the big sell-off? Before you dump everything and buy puts let’s talk.
Most of the stocks that I track as well as the SPY & QQQ indexes have breached their 8-day exponential moving averages. This means that a quick trip to their 21-day EMA is most likely in order. A trip to the 21-day isn’t catastrophic for your stocks. As long you didn’t buy extended you should be able to hold through a mild pullback. I expect stocks and indexes to find support at the 21-day and then resume higher.
If the pullback accelerates into a selloff I have a plan. You should have one too! What if what I think about support at the 21-day is wrong? You have to always assume you’re wrong and have a plan.
Most investors that I meet have trouble selling. This is especially true in down markets or markets that are about to decline. It seems crazy on the surface that an investor would have trouble selling a stock that is going down in a down market. As crazy as it sounds we’ve all been there.
How many times have you reasoned, while your stocks are going down, that nothing has changed at the core of the companies you own? You sell yourself on the fact that it’s the market and not your stocks – because they’re the best of the best – you just know that they will come back in time. You watch as a 15% gain becomes a 10%er and then a 10% gain goes flat. You reason that you really didn’t lose anything – you’re flat on the trade. I disagree – you lost 15% because you didn’t harvest your profits.
Before this happens to you – again – write down your selling rules. Write down your plan of action that dictates what you’ll do incase your stocks should falter.
I’ll be conducting a complementary workshop this Thursday June 26th at 7PM that will give you this plan of attack. I’ll teach you how to sell to maximize your gains and minimize your losses. If you want to learn how please join me on Thursday evening at 7. I’ll also be teaching you two specific strategies that will help you grow your account.
Seating is limited. If you’d like to attend please click this link to RSVP – http://noramassetmanagement.com/workshop/
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