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Observation Update

Trade Summary

Today, a trade alert email was released stating that all open positions were being closed in the Trade Anatomy portfolio.  Over the last month or so, the portfolio has naturally been moving to a less invested position, either due to trailing stops being hit or price alerts being activated.  Our current positions were near various price points, some near highs, while others nearing their trailing stops.  Taking this into account along with the length of the run-up in the market, I decided it would be best to sit back and observe for a period of time.  

Stocks With Strong Trends

Three of the eight positions fit in this category - TSEM, AMAT, and UCTT.   UCTT and AMAT both produced the orange alerts in the last few days, which can be used to sell the positions outright or tighten the trailing stop.  As a reminder, this indicator is rarely used before 10 weeks have passed since taking the initial trade.  TSEM didn't produce an alert but is up nearly 50% since the addition to the portfolio in August.  If the market does consolidate in this area then it's likely all three of these stocks will form new bases. Below are the charts. 

Stocks Still Developing

Two stocks that are still developing are BABA and MTZ.  If the market only pauses briefly, both of these stocks can be added back to the portfolio if they move out of their pricing patterns because the price support will be near our entries.  MTZ can be added back near 41 and BABA can be added back as high as 109.  Below are the charts.

Stocks Near or Hitting Their Trailing Stops

SUM, OSB, and EMKR are the positions hitting or bouncing around their trailing stops. It's absolutely critical to remove these positions regardless of market condition because our first priority is always preservation of capital.  If the market does move lower, then these generally speed up to the downside during the first two to three weeks of a market move. Below are the charts. 

The price movement in the market today could be the start of something or nothing at all.  However, given that the portfolio had already moved to 50% cash and that our current holdings were displaying a variety of price trend points, I chose to move the remaining balance to the sideline.  Over the course of the next few weeks, stocks could setup and push higher, if that occurs then positions will be added back to the portfolio.  In the mean time, the screens and watchlist will be updated for all members.

Best of Luck,

Chris

 

 

 

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