Sell Stop:(MYGN)

Stopped out of (MYGN) today at $68.20 for about a 3% loss on my total position.

Not too much to say, this was a probe buy in case the rally took hold, I knew it was risky and kept a tight stop - which worked.  Probably should not have added to my position with a second buy in this climate, but I kept my risk of capital roughly the same so it didn't cost me much more.

I believe today's action effectively ends this rally, I'm back in cash and it seems the market has more work to do before we see a tradeable uptrend.

-Geoff

Add On Buy:(MYGN)

Today when (MYGN) dipped down to $68.50 again I put in a buy at the original $69.24 buy point which was executed.  My cost basis is now $70.20.  It's a risky business averaging down, but stocks often come back to the buy point I don't mind getting some shares closer to the true buy point as long as the stock is moving in the right direction at the time I buy it.  I also use a tight stop in that situation so I won't compound potential losses.

As a rule it's poor practice to ever make a second buy at a lower price than the first, and with the negative action of the market the past two days I may regret it.  I've moved my stop up though so my risk exposure has increased only slightly.

-Geoff

New BUY:(MYGN)

I made an initial buy today of the stock that I saw breakout yesterday - (MYGN). It was a small initial buy at $70.70 with a 5% stop loss. If I suffer that loss it will make up less than 2% of my total capital.

This stock made my screen yesterday as it staged a powerful breakout to a new high on earnings news (just the way I like it). The ideal buy point was $69.24, and it traded below that point for a time this morning. However, the market opened poorly, and I wanted to wait to see how the volume was tracking before making the purchase. I'm remaining cautious and would rather pay a couple percent more for a stock than buy it as the market is logging it's second distribution day in a week.

As it turned out, volume was running lower than yesterday so I went ahead with the purchase. This stock is in a strong group, is newly profitable, is in a 'recession proof' business (if there is such a thing and the chart looks strong. Growth forecasts are good as are the fundamentals.

Of course, none of this guarantees my a profit. However, I think it's a good candidate and my risk is managed as well as I know how so I feel comfortable with the buy. In the current climate I will continue to focus on risk management and capital preservation as my primary goals.

-Geoff

Signs of Opportunity

I found today's market action positive.  I viewed the distribution day immediately following last week's follow through day as an end to that rally attempt, as something like 90% of the time rallies fail if they suffer a distribution day one of the first three days after a follow through day.  I don't like those odds.

Therefore I started tracking the market anew last Thursday, when it began what I considered a new rally attempt.  Based on that view, today was a follow through day on all three major indices.

I think there are some compelling reasons to market can mount a successful, if short term, rally now.

First, the election is over.  For better or worse, the issue is decided and the market hates indecision.  Now that we will know who we have in Washington, the market can get on with pricing the new establishment in.

Second, volatility has been steadily declining from it's historic levels.  The market is calming down.

Third, the S&P 500 retook the 1,000 level - there could be psychological support here.

Finally, and probably most importantly, there are some quality stocks breaking out of decent bases this time.  Worth watching is that most are related to the medical field - typically defensive - but that doesn't mean some money can't be made from them.

I had a nice candidate come up on my screen tonight and I'll have a look at it tomorrow.  If it acts well and I can get in near the buy point (it would need to pull back some) I'll take a run at it.

-Geoff