9/23/2013 Morning Blog

Morning everyone. Markets seem to be in a quiet mode this morning, futures swinging from positive to negative. AAPL is making big news this morning and is up 30 points premarket. Sure would like to have that one back, got away from me earlier last week closing above 469. Can’t catch them all. China reported better than expected news overnight that pushed the futures higher and now it just may be typical end of September market forces pushing the futures DOW. Today the Trader’s Almanac (that I suggest every investor have) states DOW down 17 of last 22 years on this day with an average loss of 1.2%. In fact the Almanac is negative on the market through Oct 2^nd. We have many unresolved government issues that will be coming to the plate and any of those can cause market turmoil.

Now I would like to touch on a subject that comes up over and over. Dave, can you give us exit points? Sure I can, the sweet spot for the Core and Special plays is a modest 25-50%. If you want me to give you something other than that, it is not going to happen. Core plays come with no initial stop loss, why, because if it opens against us on the first day you cannot change that stop and you will get out at the low of that morning no matter where your stop is set. Once the Core gets underway if you want to set a 25% stop that is fine, I don’t recommend it. Once you have 10-15% cancel any hard stop and replace with a 25% trailing stop, worst you will do is lose 15% if it fell as soon as you put that trailing stop on. Second, in my opinion setting a stop loss is a negative way to view your trade. Negative thinking brings negative results, bottom line. Turn that thinking around and set limit orders in a modest zone of 25-50% and think positive. I know you are going to leave money on the table but nobody rings a bell when the move is over. Take what the market gives you and move along. Our Special Plays are a bit different. We still have the same sweet spot of 25-50% but this one come with a set -25% initial stop loss. Once the play goes up 10-15% start the 25% trailing stop mentioned above.