Home | About Us | Resources | Archive | Free Reports | Market Window |
How We'll Protect Our Big Gains So Far in 2012 (And Make Bigger Ones)By
Monday, February 27, 2012
Shares of Stillwater Mining are up 45% so far in 2012 – that's in less than two months!
And we're up 33% so far this year in the ProShares Ultra Technology Fund (ROM).
All you hear on the news about the stock market is that the Dow Jones Index hit 13,000 – but it's only up 6% this year. Meanwhile, many names on the recommended list of my True Wealth newsletter have soared much higher.
I hope you're in the same boat. Because now, it's time to protect those gains.
The market is now due for a correction. We need to take action to protect our downside risk.
On Friday, my friend Jason Goepfert wrote, "Risk is high for a looming correction... most likely 2-4 weeks and 3%-8% in duration."
Jason runs SentimenTrader. He tracks investor sentiment for a living. He's good at what he does. And right now, according to Jason, his indicators are flashing danger signs. After a great start for the year, investors have gotten too complacent.
Specifically, Jason wrote:
Our more speculative True Wealth recommendations have soared quickly. And it's time to make a few changes...
Looking back on 2011, one of my big mistakes in True Wealth was taking bigger losses than are acceptable a couple times, simply because we used a 50% trailing stop on some speculative positions. I don't want to let that happen again.
Now that so many of our positions have soared – including positions in technology stocks and homebuilders – I don't want to risk giving back all these gains. So I've tightened ALL of our 50% trailing stops to 33% trailing stops.
This does NOT mean it is time to sell.
I expect a minor correction – along the lines of what Jason expects.
A minor correction will burn off the excessive optimism we have right now... and set the stage for even bigger gains...
I am personally still bullish on stocks. I believe we'll eventually see much higher highs in the stock market this year – potentially much higher than anyone can imagine.
So I don't want to sell our positions just yet. I want to stay onboard as long as possible. It's simply too tricky to try to time when to get out and when to pile back in. So it's best just to ride it out, knowing we might give back a bit.
Yes, the market is due for a correction, but that's all it will be. Make sure you protect what you've made... tighten your trailing stops.
Don't sell unless a trailing stop is hit... I expect to see higher highs in many investments in 2012.
Good investing,
Steve
Further Reading:
"For seven straight months, investors ran from stocks," Larsen Kusick writes in Growth Stock Wire. "But right now, the tide is turning. And we should see many more months of gains..." Read more about what's in store for the stock market here: An Argument for Investors to Get Off the Sidelines.
Most investors would be thrilled with a 70% gain in three months. But not Matt Badiali's S&A Resource Report subscribers. By tightening their trailing stops, his readers booked 542% gains in 10 months. Read how here: How to Book a 542% Gain in 10 Months.
Market NotesNEW HIGHS OF NOTE LAST WEEK
Anheuser-Busch InBev (BUD)... Big Beer
Philip Morris International (PM)... Big Tobacco
Lockheed Martin (LMT)... Big Defense
Chipotle Mexican Grill (CMG)... Big Mexican
MasterCard (MA)... credit cards
eBay (EBAY)... online auctions
Motorola Mobility Holdings (MMI)... cell phones
Qualcomm (QCOM)... the stuff that goes in cell phones
Comcast (CMCSA)... cable company
Harley-Davidson (HOG)... motorcycles
Nordstrom (JWN)... clothing
TJX Companies (TJX)... clothing
Yamana Gold (AUY)... gold
Continental Resources (CLR)... oil and gas
Marathon Oil (MRO)... oil and gas
Kodiak Oil & Gas (KOG)... oil and gas
Core Laboratories (CLB)… oil and gas services (seismic) National Oilwell Varco (NOV)… oil and gas services (rigs) Hornbeck Offshore (HOS)… oil and gas services (offshore vessels) NEW LOWS OF NOTE LAST WEEK
Dynegy (DYN)... electric utilities
RadioShack (RSH)... electronics
|
In The Daily Crux
Recent Articles
|