HOW SUBSCRIBERS CAN BENEFIT FROM MY SWING TRADER NEWSLETTER
Several subscriber emails have convinced me that it would be profitable to occasionally discuss how readers can make best use of my weekly newsletter.
My first suggestion may surprise you. It is to critically evaluate all trades I suggest and make sure they make sense to you technically. While I have more than 30 years' experience in technical analysis, there are times I may miss something. I encourage you to mentally argue with my interpretations. Do you agree with my perception of the technical factors? Do the negatives of the chart outweigh the positives and make the trade too risky for your liking?
There are times in the market when it is easy to make money. Other times, such as the environment we're in now, trading is very tricky. I do not pretend to be perfect. Nor am I psychic.
If you do decide to enter a trade I recommend, be aware that you have made the final decision to trade a particular pick. My role is to alert you to the situation and provide you with detailed technical analysis. Ultimately, however, it is you who is accountable for the trade. Therefore, I'd urge you to follow each trade as if you had found it on your own. I think that this suggestion holds true anytime you receive a tip, whether it is from a friend, the newspaper, or CNBC.
If on Sunday evening you decide to take a particular trade, look carefully at the opening on Monday, if at all possible, before you enter the position. In a market driven by breaking war news, major changes can take place over the weekend. For instance, in our March 24th StreetAuthority Swing Trader issue I was writing from the perspective of a market that had just finished 20 S&P points higher and had had its best week (as measured by the Dow Jones Industrial Average) in more than 20 years.
Over the weekend, however, the U.S. suffered its first casualties and prisoners of war pictures were shown on television. Based on the S&P Futures, a sharply down opening was anticipated, and I sent out a News Flash suggesting that readers short AT&T and raise their buy on stop level for GE. In hindsight, both of these turned out to be effective moves.
Always see what the futures are saying about Monday's opening before you implement a trade. If you are at work when the market opens and cannot get to a computer screen, try to check the S&P futures before you leave home. You can do this for free by going to a site such as www.livecharts.com. At the flashing cursor, put in the proper symbol for the S&P futures. The symbols are SP03M (June), SP03U (September) and SP03Z (December). Note that the "0" is the number ZERO, not the letter of the alphabet.
If the S&P futures are sharply higher or lower than where the S&P 500 index itself closed (say six or more points), then the market will typically reflect that disparity in the opening. There are occasions where economic news can affect the futures, but most often the early futures trend is carried into the opening. Adjust your trading strategy accordingly!
Another suggestion is to treat my picks within the context of your own portfolio. As a swing trader I position my picks in the context of the immediate market trends -- what I believe the market will do over the next one to three weeks. If I suggest going long and you already have a large number of long trades on the go, then it may make sense for you to not take my picks for that week.
Be aware that my trading strategy is very much geared to this swing-trading time frame. When I see a strong technical picture as measured by trendlines, moving averages and indicators such as MACD, my stock picks will probably both be long. Meanwhile, I will go short on two stocks in a weak market.
In a choppy market that is sending mixed technical signals, or in a very volatile news-driven market such as the one we are in now, I will often "straddle", or hedge, by going short a stock that is weak and long a stock that is strong. There are times when we "dance between the raindrops" and both sides of the trade work out.
For example, the week of March 31st we were long Avon Products (AVP) and short AT&T (T). Both of these positions have been successful. In a choppy market, therefore, readers may wish to straddle by treating a long and short pick as a "unit." When I am recommending this hedging strategy, I will make that clear in the newsletter.
As announced in the week of March 24th, all subscribers will receive at least one intraweek market update (and occasionally more if conditions warrant). One of my key purposes in these News Flashes will be to update trailing stop loss levels if I sense that a particular stock or the overall market may reverse. I will also suggest new trades and new stocks to watch.
Before I close, I'll let you in on a secret. In a day-trading chat room I occasionally access, I picked the name "PAAFA." It stands for Prosperity and Abundance For All. As I see it, my duty as editor of this newsletter is to live up to that name as best as possible for my readers. I assure you I try my hardest to do just that.
