Failed Breakouts

Feb 19, 2022 06:28 AM 0 Answers
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Hi Marty,

It seems for the last few months and weeks that the strategy of buying breakouts doesn't work as the breakouts either fail or chop around, even in the energy sector. If a trader does want to be involved in this market, perhaps a strategy of taking smaller, quick profits (3%-5%) might be less frustrating?

Thanks for the service


That is exactly right! There are very few stocks that are running away, and creating FOMO (Fear Of Missing Out) right now.  There are some stocks (mostly energy, shipping, and leisure) that are gradually trending higher). But, the name of the game right now is to take quick profits (as you say 3%-5%) and get out.

A good example from our watch list last week is MAR. It traded 5% higher on Tuesday, and added another 1% on Wednesday. But, then gave back most of the gains on Thursday and Friday.

We cannot hold on to stocks thinking they are just going to continue to advance. This current market environment is vicious and we must take profits quickly. The profits will turn into a loss if we do not act fast.

I know it feels like the market is forcing us to be day traders. But, we must play the hand that we are dealt. The stock market in 2022 is favoring energy, and everything else is out of favor. There are few stocks breaking out and adding to gains like AMR. That is a rare stock in this market.

You are thinking correctly!



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