With CIEN (Ciena) we have a one month base followed by a breakout in good volume.
Between August and November of last year the price and MACD (12,26,9) formed a positive divergence and between November and March the price formed higher lows. In the fundamental side the price/book equals 3.19, allowing some upside movement.
We only thing twice because the long term trend is not very favorable, but considering the very good short term pattern, we favour a long position placing a stop loss close to 27.8 at the end of the base.
2 comments:
LET THE PROFITS RUN AND STOP THE LOSSES.
Let profits run and stop losses are two basic rules in
investing and trading.
However there is some variants that I like to folow. One
that I classify as very good consist of close half
the position when a big gain is achieved and there is some
evidence for a reversal. I use as objective number for a big gain a return of more that 10%.
For JBLU, where we study a short position sugested with a price close to 11.5 usd,
we have since January in the week chart a strong down move without
any correction. For that reason the probability for a move agains us increase. Additionally,
we have almost 12% of return,
so, with this strategy we
close half the position.
Other example from our sugestions that favors the strategy presented here is YHOO. Since the price we study as a potencial good entry for a long position the return achieved almost 15%, but last days some strong move occurred
against us and at the moment I´m publishing my thought´s the bid price is at 28.18 usd corresponding to a loss less than 1%. if we had followed the strategy of closing half position with a big gain (more than 10%) and when we have evidence
of a reversal, we still have a good result with YHOO. In this case the sugestion
for a investor that remains with all the position is stop loss at a very
short negative return (less than -1%). We stop with a almost null loss because the reason
for the long position disappeared.
Dates of previous discussions in this blog:
JBLU 11.04.2007
YHOO 25.01.2007
Thank you for reading our thought´s and remember that they are only for
illustrative/educational purposes and although our historical results are very good
,no system or methodology has ever been developed that can guarantee freedom
from losses.
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