Trade Review: (GU)

I'm afraid I haven't got much for my (GU) trade review. Sometimes a stock purchase doesn't work out, and I just can't see any good reason why not.

The only red flag that still jumps out at me when I review (GU)'s chart is the relative strength line lagging; I noted on the day I bought the stock this is always a concern for me.

I think I'm about 50% fundamentalist and 50% technician when I buy a stock, and about 90% technician once I own it. I believe the relative strength line is a great technical indicator, and like to see it 'leading,' or making a new high before the stock price. This information is a valuable indication of the support a stock is getting before the price might necessarily reflect it.

Taking this into consideration, perhaps (GU) is a laggard. After all, it was in the 2nd ranked industry group at the time but broke out late. Earnings and sales numbers had been poor up until the recent quarters announcement that caused the stock to breakout. I like buying on breakouts from good earnings news (see (SOHU)) but perhaps I washing pushing it on this one.

I think the best lesson I've learned is try to find the best stock in a strong industry group and stick with that stock - trying to find the next best stock in the group two has just cost me money recently.

-Geoff