Newsletter 03-15-09

In the last newsletter, Newsletter-03-15-09. I showed you how I narrow the list of potential candidates down to just 10 stocks. If you missed that one you can find it on the www.tradingourway.com website. As I have said many times in my newsletters and seminars and repeated in step #12, "I prefer to enter at the closing price I will wait until 3:45 pm today, March 10, 2009. Then based on my prioritized list enter the top 3 if and only if they are still valid trades."

The Conscious Investor product which I used to find the potential candidates is usually intended for the purpose of finding long-term trades. As I stated in the last newsletter, I am using it to find quality stocks for short-term trading. You can do the same thing in Worden Brother's Telechart program by building an "Easyscan" based on growth. Needlesstosay, the resulting list will be different but nonetheless they will be quality companies.

As it turned out I entered 4 trades (ANF, ETN, GR, LECO) in the last 15 minutes of the market on March 10, 2009. You might very well have selected others from the list. The good news is all 10 in the list were profitable as of the close on Friday March13, 2009. But let's not get to excited about that. Now it is a good start but we should expect some pullback this coming week.

Top 10 growth performance for 3 days

If you enter any of these trades move your stops up to minimize your potential loss but not to the break even point just yet. We have to let the stock move a little. You place the stops where it fits your style of trading. Remember, we are all different and have different tolerances for loss. So our stops will not be exactly the same.

I show you my trades and new stops below in my "Active " position worksheet only as an example of tracking trades. If you don't track your trades and make comments as to why you are making decisions then how will you know if you are following your written Trading Plan?

Top 10 growth stocks open positions

As I stated above I expect some pullback this week. The 3 major indices had a very nice move up this week. In fact, it was the best week since the NOV08 low.The DOW increased 12% off the MAR09 low, the NASDAQ 13% and the SP-500 was 14%. But one week does not make it a verified rally. I do like the fact the DJ-30 closed above the 20 SMA the last 2 days.

In order to reverse the current downtrend, we have to take out the NOV08 low on the rally . That means we need another 200+ point move up from Friday's closing price of 7223. This is very doable.

Using our Price Projection Calculator and entering the previous pivot high (01/06/09 - 9088) and lows (11/2/08 - 7449 and 03/06/09 - 6469) we see a 38% retracement is 7469 and the popular 61.8 extension is 7481. That gives us a confluence of the 2 major retracement methods. To date our retracement has been 29%.

DOW Early March retracement

Not all all trades work this well in 3 days but when they do we are grateful. But at the same time cautious because we know strong moves like these are followed by a correction.

Before anyone trades remember my #1 and #2 rules:

1.No matter the source of the candidate, I and I alone am responsible for making the trade profitable. I get all of the blame, but only some of the credit.

2.Never trade without doing Due Diligence. Never trust anyone’s “hot” pick. Investigate it and then trade it only if it fits your style.