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All of a sudden my recent ideas have become very volatile. Volatile is stock market lingo for "going down". However, stocks go up and down, driven by a herd mentality these days, and it's pretty wild.
At times, we all need our proverbial diapers changed.
Recent ideas Regency Resources (RSRS), from yesterday morning, behaved rather nicely for the first day and a half, and is backing up rather abruptly today. Personal favorite Luxeyard (LUXR), which I was liquidating in part at the $1.20 level, it really taking it on the chin.
Let's start with RSRS. As I said in the initial presentation at $1.10, the company was a bit more speculative than my usually highly speculative ideas, so a tight stop should be used with discipline.
I suggest trading into the stock at $1.10 yesterday morning. Since then, it has made a high of $1.32 for a quick paper trading profit of 20% in a day. If you jumped in and took that profit, you get an "A" in trading class today.
I also suggested sticking to a tight stop loss of $.90 as there is little information about this company to hang one's hat on. The stock traded briefly below $.90, and bounced back to $1 today as there appears to be profit takers.
If it doesn't hold above $.90 and close more in the $1 range today, I would stay disciplined and take your small loss and move on. As more information unfolds about the company, we can always have another look.
Now- a little more detailed information on LUXR.....
In my view, LUXR is a different story because of all the company has achieved, so I'm more interested in trying to find the bottom then pouncing on the stock in this case. Today, LUXR announced it has eclipsed the 600,000 registered member mark- an amazing achievement when one considers the service just launched in January.
At this clip, LUXR will have 1 million registered members much faster than either Facebook or Twitter.
If you passed on LUXR at my $.80 entry level, you're getting a nice mulligan from short sighted traders. The herd has been stampeding out since yesterday.
Technically, here's what I look at to pick and entry level.
Whenever I like a stock that's in an uptrend, I look to sell when I have a profit and the stock is hot and in demand. When they're all panicking and selling, that's when I like to jump back in. But where do you go back in.
I like to use Fibonacci Retracements- and the 61.8% Fibonacci retracement is the most powerful entry level of all. Fibonacci was a 12th century mathematician who discovered certain ratios that constantly occur in nature, 61.8% being one of the strongest.
So, when a streaking stock gives back 51.8% of its recent gain, that's the level I'm willing to get back in.
In the case of LUXR, I measured from the time volume start to appear in this stock at $.50, and stretched it to the high of $1.245 yesterday.
The 61.8% Fibonacci retracement puts the stock at $.755- a level it reached today, then bounced. I suspect the short term damage is done, and this stock is ripe for a rebound.
If you missed it the first time around, here's your mulligan. $.80 appears to me to be a great entry level, and if you're brave enough to jump in, I'll bet you do really well between now and the end of next week.
Let's see what happens.
A reminder: Catch me live on TV every Monday from 12 to 2PM eastern.