Protecting Your Gains

Tuesday, June 20, 2006 | 07:17 AM
in RR&A

This note went out at 7:17am to subscribers of RR&A. This is not investment advice, and has been posted here in chronological order of when it was emailed as a courtesy to blog readers. For more information, see the disclaimers at RR&A.

"A quick note to those of you who are sitting on some gains, thanks to the recent snap back rally of last week following our "Tradeable Low" call of Tuesday June 13:

Anytime we have fast profits, our rule of thumb is to let them ride as long as we can, but at the same time protect our cash.

The way we do that is to move our stop losses up to our purchase price. If the markets head further south than we expect, you preserve your capital.
(We never let a profit turn into a loss)

If you missed last week's trade, or only made partial purchases, traders can add long exposure on a pullback towards the Tuesday lows, as a "retest of the bottom" this week is possible; Traders means you can nibble on the Dow (DIA) from 108 down to 106.80; On the S&P500 (SPY) 124 to 121.80;  On the Nasdaq 100 (QQQQs) 38 down to 37.14.

Note that buying on the retest is for traders, not investors.

Two additional notes:

We should have a major Macro-economic commentary out (late this week/early next week), followed in a week or so by a discussion of Asset Allocation for various types of investors. 

Second, we are upgrading our email system; in the near future, we will give you a menu of choices as to what you want to receive. The idea is to make sure that you only get those investment calls which are relevant to you. Long term Macro-economic Commentary, Investing, Trading, Options, Short Term Trading. (We appreciate any feedback you have on this).

Tuesday, June 20, 2006 | 07:17 AM | Permalink | Comments (3) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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We are in full Sell the Rally mode right now. I thought this mornings action would qualify as a successful retest but perhaps we want to try it from a little lower.

Posted by: Mark | Jun 20, 2006 2:25:50 PM

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