OK, first things first. If you email me this week, you will get no response. Zippo. None. Nothing. That's right, this week will be the first vacation Nancy and I have taken alone since 1998. We're on a "boat trip," as she calls it, somewhere in the Caribbean. (I believe the itinerary is to circle Puerto Rico either five times, or until the music stops. Also, I believe every passenger is required to eat eight times a day.)
In any event, I will not be returning emails. I will not even be checking emails. As far as I know, I will have no contact with civilization other than to visit local ports of call and purchase gifts that sell in the States for half the price that I'll be paying. But, it should be fun.
However, in order not to leave you high and dry, I've finally put together something many of you have requested: a daily log of some of my actual trades. Now, when you look at these trades and the trades in my Wednesday and Friday columns, keep a few things in mind.
- These are only a small subset of the trades I make each day. But, consider them a representative sample.
During the week I've highlighted, I tried to trade based totally on what the chart was telling me. Entries and exit were based not on any formal money-management rules, but strictly on how the chart looked. I don't recommend trading this way, but it probably matches how many of you trade. In addition, I wanted to emphasize chart-reading skills rather than trading skills. Keep in mind though, most of these trades could be either winners
or losers, depending on where your exits are.
Going one step further, I did not take into account risk or volatility on any of these trades. However, I did minimize my risk somewhat by trading fairly small lot sizes. Therefore, even if a trade totally wiped out, I wouldn't be hurt too badly. In addition, I know that if I make enough trades, the extraordinary losses coming from volatile issues will be more than offset by the extraordinary gains from similar volatile issues. Assuming, of course, that my chart-reading skills enable me to get more winners than losers!
I also tried to give you a description of exactly how I felt each day. As opposed to my normal rigid style of trading, I specifically wanted to give in to my emotions and see if that had a positive or negative impact on my trading. So, also consider these trades an open door to the "GBS workshop."
Along those lines, you'll also note some quasi-fundamental analysis sinking in. Is it helpful or harmful to my own trading? I certainly wanted to find out.
Today, Wednesday and Friday I'll have five charts that thoroughly discuss what I saw and why I went long or short. I will also note if I exited any positions I entered earlier that week. However, in order not to publish a column with 23 charts each day, I'll leave it to you to see what the chart looked like when I exited.
So, with those caveats in mind, away we go, starting with Monday, Feb.14. I remember clearly thinking that the selloff the previous Friday was a fakeout. There are times big down days are scary, and times when they feel like a good buying opportunity. Right after an index makes a new high, then pulls back, usually feels like the latter to me.
More importantly, as I scrolled through my long candidates, I saw a lot of great-looking charts. So many, that I was excited about being on the long side, even though I took a bit of hit the past Friday. In addition, I saw zero short opportunities. That's another good sign the recent action was a shakeout and nothing more.
With all this in mind, I entered aggressively on the long side. Here were five of my key trades:
Look for my next report Wednesday!
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take, Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at