Momentum Trader Report: 01/03/10

03 Jan

Posted by Momentum-Trader as Momentum-Trader Report

The market sold off into the close Thursday, no doubt many traders taking profits as we head into a new year of trading. The selling put the S&P 500 at support, and the Dow underneath support.

I was hoping to put together a post that reviewed some trades from 2009, but there were just so many to review. It was a great year for momentum trading. We may not see this kind of year for a very long time. The year started off frustrating. I even closed the site down briefly as may picks weren’t following through. That turned out to be a contrarion indicator, because as soon as I shut down the site, the market bottomed, and stocks were off, and haven’t looked back.

Some Fast Movers in 2009

Some of the trades that come to mind for 2009 were the ones that made huge moves quickly. Some stocks offered +20% gains in the first day they triggered.

Others like MEG and IMMU made +40% and +60% gains respectively in a single day.

CHINA also comes to mind, which made a huge 3 day move after triggering.

Some Picks That Went on to be Huge Winners in 2009

I had many picks early that went on to be huge winners. Some of them include:

As you can see, I missed even more buying opportunities in these, especially with GOOG and CREE. This has lead me to make a few general rules and observations:

1. Don’t set the initial stops too tight. I was using very right stops at the first half of the year, missing out on some winners.
2. When taking profits on a stock that is moving very well, try to keep 1/4 or 1/3 of original position with a stop at break even.
3. Continue watching stocks that offered winning trades.they may offer more opportunities.
4. Generally speaking, the best trades are profitable right away.

I expect 2010 to be much more challenging. I won’t even bother trying to predict what directon the market will do, but I don’t see signs of a top yet, although a pullback certainly looks likely here. What I plan to do is simply follow the charts, and let them tell me what the market is doing. I hope to listen to less opinions, especially my own.

Trade Ideas for 01/04/10:

Although I had a lot of stocks on the Watchlist, I want to see the S&P 500 bounce from support before committing to new longs. I am still holding some stocks here, but stops have been tightened.