The Weekend Factor

I've only been (actively) trading at the start of 07. Recently, I've realized that on Fridays, there's either heavy profit taking or very minimal trading.

I attribute this to some of these factors:

1. People want to reposition their portfolios
2. They're happy with the gains they've made over the past 4 / 5 days.
3. The US factor. If you buy a stock on Friday, and then for some reason, the DOW corrected big time Friday night (our time), then you'd be hard-pressed to sell it come Monday.
4. Threat of coups, other circumstantial events that could suddenly spark a sell off
(FIRE SALE!)

OR...

People just want to spend their gains on the weekend.

During the great bull run of the first half, I was making money. But because I was making money, I didn't quite learn the fine art of doing cut loss. I made myself believe that hey, this is a bull market, it'll come right back up. 70-80% of the time, it was true. But after July, I've appreciated the importance of aggressively cutting my losses. BUT!, I only cut my losses for the following reasons:

1. If the stock I bought didn't go my direction, i.e. UP!
2. If my timing was wrong (my personal example is LND, I thought it was a breakout, but after revisiting the stock by viewing the RSI, it was at its resistance point! I immediately called my broker to sell it off at whatever price. Good thing I did that time. This happened late September).
3. RSI divergence (bearish). This third one has been a reliable friend of mine (except for SINO).

The question is, when do you say that you should be cutting losses already? It's a tricky question. Sometimes you see it on the chart, sometimes you don't. What I've learned so far, is that you somehow build instincts as you trade longer. You have to look at the buyers and sellers. Who is buying, and who is selling. Our market is such a small market, you know who's the players and who're the real "strong hands", in tradespeak.

For this long weekend, if you're a safe player, I suggest you just watch the Dow's performance over the next two days. If they make new all time highs, expect a spectacular run come next week (so hold on to your positions). If, not, the correction next week will be a good time for you to accumulate on good stocks. When I say good, it doesn't always mean blue chips. It could be basura stocks near their support lines and a good time to accumulate them at bargain prices.

I'll be busy in the next few days (as I've been these past few ones), so I won't be able to update this here blog of mine. I've no stock picks yet because recently I just rode the momentum of the buying and selling of stocks. Chart viewing was just to confirm if I should get in or out.

Good luck on this last quarter! This is the time to recover the losses (if any) we incurred last August.