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What A Mess |
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The world has become a giant mess.
Revolution in the Middle East. Skyrocketing oil prices that threaten to
slow down the domestic recovery which seemed to be moving forward smoothly.
Earthquakes and Tsunamis in Japan killing thousands of people and causing
nuclear power plants to shut down and have potential safety issues.
And- here's some really big news-
China- in the month of February, China had a $7.2 billion trade deficit-
China buying more than it sells? Are we in some sort of parallel universe
where everything is backwards?
The Global Mess certainly
roiled the markets last week, and all classes of assets got clobbered on
Thursday- stocks, bonds, commodities, currencies- all down on the same
day. It's the "cash at any cost" mentality- the flight to safety.
On the plus side, it's a good thing
to reset the bar from time to time. The markets have really extended out
this year, and a big sell off followed by some lower volume, sideways trading,
might be just what the doctor ordered to set the markets up for higher
levels.
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What A Micro Mess |
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What a mess the world is, and what
a mess trading small stocks has been of late. Let's face it- of late, the
small stocks have not been as good to us as they have in the past. I'm
keenly aware of it, and that problem will be corrected immediately.
Two editions ago I suggested taking
a position in Sauer Energy (OTC BB: SENY). The stock had been trading
monster volume, and looking like it was ready to surge. If you're trying
to scalp a nice trade, you have to focus on the volume- it's what moves
the stock higher. I was just as involved as anyone.
I told everyone I would be a buyer,
and would share the outcome. Here it is:
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On 2/22 I bought 10,000 shares at $1.23-
total investment was exactly $12,307.96
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On 2/23 I bought 5,000 more shares at
$1.17- total investment exactly $5857.95
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On 3/7, after watching the stock trade
massive volume for a number of days with no upside progress on the price,
I sold the stock.
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Net Outcome- I lost $1661.82 on this
trade.
This is a dollar amount I can afford
to lose, but I can't afford to lose in those amounts time after time. I
have to sprinkle some winning trades in with the losers. Any trader knows
taking a small loss and moving on is part of the game, but you have to
have some wins.
The last five or six trading ideas
have followed the same pattern- entry level, increasing volume, quick blip
up, then reverse course into the losing column before you can really act.
It's like a one way ticket on the Titanic if it goes on. You simply have
to win a few.
The market was our friend for a while,
but the market has suddenly turned really grumpy thanks mostly to Middle
East unrest, which makes for higher oil prices, higher prices at the pump,
and less consumer spending.
These big volume surges come from
a combination of expensive recognition campaigns and corporate achievement.
I have the ability to gauge how much energy is being put into an awareness
campaign, so I'm trying to pick the ones that look like they'll be effective.
In the case of SENY, I was right about the volume, but wrong about the
price appreciation. You have to get them both right.
It's time to get the OTC Journal
back on track and find some nice wins. Admittedly, the last 4 or 5 ideas
have not gone well, but the "Times They Are A Changing". I have
some really quality little names coming up, and I'm prepared to put my
own money on them as well.
I might have one idea I've been buying
for my own account on Monday. Tuesday will bring a fantastic AMEX idea
doing some real numbers and really cheap. After that- we'll see.
Home Page : www.otcjournal.com
Email Questions or Comments To:
editor@otcjournal.com
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