8-14-14 comments

[Mike]

With the IBD follow-through yesterday I closed my short CTRX trade early this morning. This is one of my trading rules. I likely would have done it anyway as the Market School exposure model has moved up to a recommended 75% long portfolio.

In the past since 2000 IBD has usually wanted more than a 1% rise on a major index on volume higher than the day before to call a follow through day. Prior to this period however 1% was the threshold. The difference has to do with market volatility. Volatility is lower now than it was in 2002 for example when IBD was looking for a 1.7% threshold.

I entered RH this morning. Not on a volume trigger but because the 21-day, 50-day and 10-day moving averages have converged and RH has move up through the convergence. This is generally a safe entry as the three moving averages each contribute to support. High volume would have made it more obvious.

[Harry]

Mike,

I checked out the chart and the see the three MA convergence. The 10W SMA (practically same as 50D SMA) is also there for support.

For plays such as these, do you set you mental sell stop right below these three MA's?

Harry

[Mike]

Mike,

I checked out the chart and the see the three MA convergence. The 10W SMA (practically same as 50D SMA) is also there for support.

For plays such as these, do you set you mental sell stop right below these three MA's?

Harry

Harry,
I do set a mental stop below the three converging moving averages.