jimvin
173 posts
msg #98448
- Ignore jimvin |
1/5/2011 10:41:22 PM
I know of some common wisdom that says to put in a buy at 5% below the open, since stocks can fluctuate and drop before climbing.... However I would caution - from my experience - that every market is different, each model/filter has its own "personality" and there are few (if any) universals.
For example, one of the classic rules of technical stock analysis is to look at the RSI: above 70 is dangerous, above 80 is very dangerous, and above 90 is suicidal. Yet this summer stocks in their 90s were still going up as the market climbed.
Again, one of the classic technical factors is the P&F Chart...yet (in my analysis which only covers about 3 months) the P&F Chart has no predicitive use in analyzing penny stocks; a stocks can rack up an amazing sell-pattern then suddently reverse and shoot up like a bottlerocket.
Among the few near-certainties I've noticed after a few years of tracking factors is that a gap-up us usually followed by profit-taking that drops the stock price significantly.
My bottom-line suggestion is to pick a filter, track it for a few months and watch the pattern: if the stocks you select tend to decline in the opening trading, put in a sell at a reasonable discount (say, 5% to 8%) with a corresponding stop-loss should they continue to decline. I would also note that in this market there aren't a lot of long-term plays for the stocks I select; investors tend to grab their profit and run, so I set a sell-order at +5% to +10% depending on the average return for the model I'm playing...better to take a little each time than go for a huge win and lose more often than not.
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