Don’t be fooled, it’s not easy to do. I spotted the bottom on Etrade partly because of luck, but really I was counting on the volume to keep the stock on the uptick. Monday, Tuesday and Wednesday saw over 100-200 million shares trading but today that volume winded down to under 40 million. That signals much of the end of the run for me. The 10 day moving average for Etrade had been 20 million, so as we near that number again I decided to exit my position and book the small gain.
Most of my portfolio has been in the red over the past year, mainly because of a few bad picks but also because I held on too long to some positions that I felt should be doing much better. For those stocks, I actually bought more shares on the way down as a way of buying the weak stock of good companies. Ameritrade is one of those stocks. Two years later the stock is finally recovering. So be it.
With Etrade, I knew I was only going to be holding onto the stock for a couple days at best. Some analysts put the stock at 9-12 but I don’t care. Who knows what’s going on with the banking arm and until Q4 earnings come out, I am done with that trade. Momentum plays can pay off big when you spot them…that’s the tricky part.
I should also mention I booked gains on Netflix. I still believe in Netflix long term and I am looking to get back in at a lower cost. The PE is too high considering their earnings and I want to wait until Q4 earnings are stated before I take another solid position. If you must own it here, buy a quarter of your position and wait for it to come in.
What’s Next?
Right now is a great time to be looking at retail in both tech and apparel. Names like Gamestop (GME) and Best Buy (BBY) come to mind as does American Eagle Outfitters (AEO) which I wrote about in October.
I also still think Apple and Google are good buys because their growth and fundamentals haven’t changed. Apple is rumored to have a new notebook computer to unveil at MacWorld in January and sales of the iPod and iPhone should pan out nicely this holiday season.
Bottom line, if you are looking for quick profits on something like Etrade make sure you have an exit strategy in mind before you buy the stock and make sure the volume is there to support it otherwise you might be left “holding the bag”.
Of course, had you subscribed to my Newsletter, The Proficient Investor Alerts! you would have known these trades even before I made them and you would have made the same mad cash I have. Subscribe today and get the first month free.
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