Allow me to reiterate the value of the technical trading tools. As I posted in my last article this morning regarding Panera, the price dipped below the 10-day moving average, the MACD went negative and the slow stochastic (14/5) went negative, giving us a clear “get out now” signal. I still believe there was profit taking in the works, as I actually got out a couple days before in anticipation (using a slight faster and thus more conservative use of the tools). But, sensing a drop, I posted the article suggesting that you get out and wait. If it wasn’t profit taking, perhaps something else was in the works.
Then I began, as I always do when I have cash sitting in my account, looking at my watch list. Note: these are not to be construed as picks or suggestions, these are simply a small sample of the stocks I’m tracking and researching right now. Look what happened to the stocks on the list:
My first thought was, “yippee, maybe it’ll soon be time to get back into Guitar Center or MasterCard.” Then I started seeing a pattern emerge. As the day went on, all of my watch list stocks had dropped. A lot. Plummeted is a more accurate word.
It turned into a market-wide sell-off that has wiped out the gains of the entire year. But I’ve got no worries. Why? Because as the panicky investors move their money into the bond market, we’ll be given a feast of value opportunities in the coming month. And, oh yeah, the tools told me to get out and so I made a small profit instead of taking a beating today.