Market Sheds 5% in Six Days, January Lows Tested

Blain Reinkensmeyer
Posted on Fri 7th Mar, 2008 05:25:12 PM

The week is finally over and the damage has now been done with the NASDAQ down a staggering 5.1% over the last six trading days. January lows have now officially been tested.

For the NASDAQ it was the break out of its wedge, and for the S&P 500 the ascending channel told no lies. Ever since last Friday, March 1st the market has simply taken a beating.

Some things I’ve been reminded of this week:

  • Don’t go long on stocks when the market is significantly selling off
  • Taking profits is not a bad idea, regardless of what hot industry you may be invested in
  • Stop losses save lives… and portfolios
  • Don’t trade will full positions when chaos is among us, only place bets with 50% allocation (If you are used to investing say $5,000 per trade only invest $2,500 per trade).
  • 3 out of 4 stocks follow the overall market trend
  • Shorting is really easy when 3 out of 4 stocks are going down anyway
  • Don’t buy speculative stocks when the market is free falling (DRYS anyone?)

It is times like this that discipline really makes all the difference. After conducting some simple math I realized I was knocked out of (via stop losses) over 5 positions this week, average loss roughly 3.5%. If I was to still be holding all of those positions still I would be down a staggering added 8%… on my WHOLE portfolio.

Because of discipline (and shorting) I can lick my wounds this weekend and hit the saddle again next week ready to roll. One thing is for sure though, I will be a lot more careful playing with fire.

See you on Sunday with more Nightly Insight.

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2 Responses

  1. I have a gold stock (Yamana Gold, ticker:AUY) that I am currently up about 25%+ on. I was considering taking profits off the table, but the market for gold remains strong. Do you have any technical insight to lend about this equity?

Other Websites Referencing This Post

  1. Sunday Night Market Insight, March 09 2008 | Stock Trading To Go

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