It was to be expected, after the massive run-up, that any pullback on the indices would result in a plethora of dips to be bought. As the Power Dip portfolio can hold five stocks, their is only room for two more. The system is currently holding SLAB, SBUX, and SPIL. TNDM stopped out yesterday.
Below are the two power dips that will be bought on today’s open:
Tonight I will post the updated spreadsheet showing the current losses.
The difficult part about trading a dip-buying strategy is that when the conditions look the worst, the bounce will come…So the dips MUST continue to be bought.
Hi Wood,
Thanks for the post.
It’s obvious that for the stocks in question, this is just a pullback (at least the way the charts look right now) and they may even pull back a lot more on the daily without affecting the structure, but what makes you believe this is a good entry point?
Is this an RSI(2) type strategy?
Thanks,
Cristian
Christian, when buying dips, we must manage risk as we never know when a dip might become a freefall. Stops must be used, even when a dip falls farther than we expect without “affecting the structure.” Stops not only mitigate losses but they will also get you out of trades so that that cash can be deployed elsewhere, which mitigates opportunity cost.
Backtesting and real-time trading makes me believe that this is a good entry point.
The strategy is a dip-buying strategy. Believe me, I don’t want to be some sort of cryptic asshole, but I will not be discussing the specific components of the setup. I really am sorry about that, but I’ve got a lot of time invested in this system.
Fuck FAZ/FAS…nice post WS.love the trailer highrise..I’de move there if I could get top level resonably
Repeat from my blog:
ALERT: $HUI bounced right off it’s 200 day MA average this morning for the second time, and is proceeding to take off.
Mount your chargers, Jacksonians!
___________
Got it.
So what are the stop loss points?
Jaydog, I would use 8% minimum, 12% max.
Jesse Livermore recommended waiting for a new trend confirmation before buying. Most money to be made is made in the middle of a trend. Trying to catch the exact bottom or top results in the biggest loses.
His words, not mine.
^^^ Power Dip is not a trend-following system.
OK, since Bman started it… The most important Jesse Livermore quote ever, bar none:
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting.â€
Listen and learn kiddies.
Wood,
Thanks for the info. I do remember you talking about Big Bamboo system. So that’s what it is then….
Regards,
Cristian
>Bman Says:
>Jesse Livermore recommended waiting for a new trend >confirmation before buying.
I believe that the stocks in question are in a defined uptrend (i.e. ICON >11 by eyeballing it). Nothing has happened to invalidate the uptrend.
>Most money to be made is made in the middle of a trend. >Trying to catch the exact bottom or top results in the >biggest loses.
That is true — and I really believe that this is the biggest problem facing an amator trader. But then again, it does not apply to the stocks in question as Wood is not trying to short them while they are in a defined uptrend.
The reason I was asking is that it seems to me that this might look like distribution. And if that is the case, we know who distributes. But then again, distribution should be met with buying by the amators and these will probably return towards the high, but if it’s distribution they will probably not reach previous peak. We’ll see.
–cristian
This is not the Big Bamboo. I’m still tracking the bamboo, and it is still doing surprisingly well, I just don’t trust it.
I see Wood. Thanks. Sorry, I am new and I did not yet have a chance to go through a lot of your posts 🙂
–cristian
Cristian, no problem my friend. Don’t worry, I’m friendly, and rarely bite anyone’s head off. Feel free to ask questions and kick the tires.