Cut your losses early and let your profits run

INVESTING SIGNALS

      Transaction entry

  • Monitored companies belong to the investment universe.
  • Stock price must have reached a recent 52-week high.
  • Stock price must be above its 20-day moving average.
  • 20-day moving average must be above the 20-week moving average.
  • 20-week moving average must have a positive slope.
  • Wait for a price pullback: a retest of the 20-day moving average.
  • Stock is bought above previous day's high, 1 to 3 days after that retest.
  • If dynamic is too weak to take previous day's high, stock is removed and replaced by another stock.

 

     Transaction exit

  • When price hits the 20-week moving average, a stop will be set a little under that week’s low.
  • Stop is removed when stock hits a new high.

Transaction is closed when stop is hit.

 

     Illustration

IPGP: sold 10 months after purchase when it moved under previous week's low after a retest of the 20-week moving average. Recorded gain: in excess of 60%. This shows how some stocks can become very directional in some period of time.

Ipgp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRADING SIGNALS - long trades only -

     Transaction entry

  • Monitored stocks belong to the investment universe.
  • A retest of the 20-day or the 20-week moving average usually leads to a great trading opportunity as a price reaction is likely to occur at these level.
  • An optimized oscillator must be oversold which increases the likelihood of a price bounce.
  • “The stock of the day” signal can occur for a stock that is already held in investing signals. It is usually a good re-entry point.
  • Stocks which report earnings in coming trading days are not considered as price can be hurt by an adverse news.
  • A target price is defined.
  • An initial stop-loss is usually set under the recent low-price pivot.

     

    Transaction exit:

Stop is adjusted under previous day's low when:

  • Oscillator makes a bearish reversal.
  • Oscillator makes a new bullish reversal.
  • Price hits the 20-day moving average.

Trade is closed when stop is hit.

     

Illustration

NANO: bought after a successful retest of its 20-day Moving average. Sold 7 days later with a gain of 4.2%, under previous day's low following a momentum decrease.

 

Nano