Trading Diary, Wednesday, Feb.16:
If it's Wednesday, I'm at the pool watching my kids work out. It's funny, but even though getting up at 4:15 a.m. sounds like a chore, I kind of like getting an early start.
What I don't like, though, is what I'm seeing when I look through long and short candidates. I don't know if it's my foul stomach, the heavy chlorine or watching my daughter Katherine's hips sink too low on her butterfly, but something is bugging me about the market. As a result, the
bullishness from the last few days is gone. Instead, I'm now very bearish.
Given that, I cash
Morgan Stanley Dean Witter
at the open.
, I hold until about midday, and after that runs a bit, I cash it also. Net result from all this churning? About 7% to the upside. But I don't care if I left money on the table or not. When I'm worried, I want to get to flat as quickly as possible. Remember, even if you're only in the market when it feels right, that still leaves plenty of trading days throughout the year.
For someone bearish, though, my mix of selections is curious. I have some defense in there (not by design, but rather because the chart looked good), and a few highfliers. In addition, I have one tasty-looking short.
Epilogue: this is the last column of the series, and my last column until I return from vacation next week. Folks, I tried, but I'm just pooped from having to do so many columns before I left for the cruise!
In any event, I hope you found it helpful in learning what to look for when you look at a chart. Remember, though, chart-reading is one element, but a small element, in trading success. There are two other things to keep in mind when you trade -- concepts that have helped me immensely over the years.
First, always trade with a lot size small enough so that, even if disaster strikes your position, you can live again for another day. You almost want the feeling of "not caring" what any one position does on a given day.
Second, I always exit when the stock does what I wanted it to do. And, then I never look back with regret. If I was counting on a 10% gain, and I get it during the first day, I'm gone. And, if the stock continues to skyrocket, well, good. I have my profit, and there's plenty there for everyone.
Oh, one more thing. Keep in mind, I'm a singles hitter. I generally hit for high average, but with few extra bases. This may or may not be your style, so build on what you read in these columns, and adapt this stuff to your own way of trading. The best method isn't the
Epilogue II: My bearish feelings did turn out to be right, as the market cratered that Friday. By that time though, I had already cashed a lot of my longs for decent gains. Lucky? Who knows?
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