Wednesday, 8 August 2012

Genting SP - a little recipe for protecting profits after a breakout or dow surge

On Monday after the 200+ rally in the Dow last friday, Genting SP  surged to a day high of 1.34 .  I sold 2/3 of my Genting(  bought earlier at 1.29 -see last post ) soon after open at almost day high of 1.335 before it came crashing down. I'll explain my logic for my partial sale later, a risk management technique I used quite often in my trades.   

Yesterday  Genting continued its crash , it hit a strong support at 1.285 before bouncing to close at 1.305 but it  was still a weak close ... as a consequence , today it suffered another breakdown and came crashing down to 1.26 in yet another  big selldown 

It appears  Genting is quite susceptible to shakedowns, so  this stock may not be for the faint hearted.. 

Yesterday morning , a reader by name of Connie asked me in the comments section of the last post  about the status of the  Genting 'rally' as she was still holding on to her Genting shares , apparently disconcerted by the sell down as do, i believe,  some  other readers  as well  - still holding onto their genting shares .  

When I looked at the chart , the 'expected'  breakout did  occur on Monday morning but it closed badly which invalidated the breakout which then lead to a strong reaction south...

 But all the above is hindsight reasoning .. not of any use to a real trader seeking to protect his profits before & not after a reaction has occurred. 

   Question is how do we flexibly handle such situations  to ensure we keep most  of our profits & still retain some flexibility to ride further rallies , if any  ? .. 

  My replies  to Connie yesterday in  comments section of last post-(click here   or read below ) contains a little recipe,  not perfect but i find quite useful  in  my handling of such situations .. especially useful when coinciding with a short-term market  swing top  like Monday  .. hopefully you find it useful as well in future trades.  

for those who saw their paper profits turned to losses  after sticking faithfully to a fixed price  goal  without reacting to  dynamic market conditions , I can only offer my apologies for not advising earlier  & hope a precious lesson can be drawn from this experience. 

5 comments:( from last post ) 

Connie Kong said...
Hi Bill,
the price has retraced fr ytd high 1.34to 1.305 now, do you see further upside or it's time to book profit?

Bill E said...
I believe many STi blue chips topped out( at least in short term) today or yesterday,eg. dbs ( 14.99), capland ( 3.16) and sgx( 6.85) all hit my short-term toppish targets , so I will be cautious , anyway yesterday I took 2/3 of my of profits on genting sp at 1.335 where I saw a reaction level at 1.335-1.34 , leaving the rest for a ride to National day .. my apologies I forgot to draw that level on the chart..

Connie Kong said...
thanks for the reply, Bill. I didt manage to sell at that point, genting nt looking too good now>.<
Bill E said...
In general if you have a good dow nite ( say up 200-300 pts) and the stock had already run up somewhat the previous day in anticipation, it is good policy to take at least some partial profits the very next morning ( and totally disregard for that moment what long term price target people tells you - one bird in hand is definitely worth more than two in the bush ) .. can always buy back after the reaction runs out of steam at a good support level .. of course that might incur some extra brokerage commissions which though a pain in the ar.. should not be allowed to affect one's self conditioning/ discipline in reacting to the market flow.. if comm is an issue find a cheaper broker ..

Genting looks strong at 1.285( see orange line) for now.

Connie Kong said...
Thank you for your kind reply, I will bear this in mind:)

Happy & profitable trading Bill!

1 comment:

Anonymous said...

Thanks for sharing Bill. I really like your posting. I could feel the bad omen was about to come when I saw so many failed breakout on Monday (not only Genting). Yesterday market sells off was rather fierce.

Having said that, can you share your view on the bigger picture and the longer time frame? I feel US Dow is rather strong, while Shanghai Index is in the bottoming process. There is not many retail participation in the local market hence trading here is very lacklustre. All this leads me to believe we're in the early stage of another bull market. I really to hear what your view is.