Yesterday, we sold AAOI at 19.32, ABTL at 17.48, and ACLS at 3.14. What appeared to be a bounce back attempt today, quickly faded away during the last hour of trading.
When the market makes a move similar to yesterday, it's necessary to tighten your stops. Every position which we owned, opened lower on the day, but was still trading near or slightly above their mid-level stop. Generally during traditional market corrections, it's practical to adhere to a more distant stop because your stronger stocks can generally make it through the correction without hitting your close out price. However, the market characteristics as of late lend itself to much tighter stops on any open positions. On Monday, we chose to let them trade out until the market began reversing back down. Once this started and the prices moved down, the positions were removed.
We are currently long only have three open positions, EFOI, LGIH, and CCS. EFOI's price action has been extremely constructive during the last three days which is a very positive sign that it can withstand a market drawdown. Below is the current chart with trailing stop.
There's very little to discuss in terms of actual names on the list. Currently there are only a handful of names remaining. What I would like to point out is how the list will ebb and flow based on market trend. When market's enter negative price trends such as the last few days, our list virtually vanishes. There are currently 65 names that meet the screen criteria. During healthy markets 300-550 would be more common. Another quick note is that the list tends to slowly deteriorate during market tops. This time was no different! As the market rounded out it's top over several months, our lists became smaller and smaller with each subsequent move back towards old highs. This is a tale tale sign of a market losing the foundation beneath it. When we focus on quality weekly chart breakouts, the guesswork is removed from the equation as to when to deploy our capital for profit potential trades. Stay focused and trust your process.