Wednesday, April 11, 2007


First, you know that I make no claims to having any investment prowess. But I've been interested in drillers and oil service. I have a position in BAS. Here's a chart of BAS over the last 5 days (CTML):

I find that little circled dip an interesting activity prior to the stock taking off. We'll see what happens today with BAS.There is a short position, so it might be a short squeeze. But I have HERO, and that did the same thing:

My point--if your stop losses are too tight (I don't use them and I know the admonitions for them) you'll get shaken out. Your stop loss is a public advertisement of your pain level. I've mentioned that I had a couple of stocks where my stop loss was tripped and the stock immediately bounced back--and then took off just as you see here. I'm not suggesting that you throw your stop losses out--for SL's are a prudent capital management tool. But, if you believe that the markets aren't entirely free and objective (like I use to believe) then just be informed.

It's also helpful if you know your support in the stock and watch the stock and how it acts and certain price levels. That's how I feel that technical analysis supports fundamental analysis. It's helped me.


Anonymous said...

You may recall I had a similar experience with LEND in early April. There must have been many people with the same psychological stop loss, and of course we all got taken out at the low at the end of the day, only to see it bounce the following morning. Thanks for pointing this out. Another addition to the armament we all eventually learn to strap on before playing.


Leisa said...

I note that Gary K does not use stop losses for the same reason. I try to keep my sanity in check by hearing others (who are smarter than I) in the market make the same observations.