Sell Stop:(TNDM), Addon Buy:(ARST)

Well, I said yesterday that the market was due for a pullback, and we certainly got that today. As ugly as it was, I'm not ready to say the sky is falling. The market's had an amazing run off an ugly bottom and really needed to correct. Of course I'd prefer a gentler correction on lower volume (the Nasdaq volume was considerably higher than Friday), but with violent up moves come violent down moves.

The combination of the overall market and a downgrade shook me out of my (TNDM) position for a 5% loss. This stock still could do very well, but I'm through second-guessing my sell stop orders, I put them in and leave them alone now. I'm not going to be right on every trade, though I have to admit I'm anxious to log a winning trade - it feels like a very, very long time since I've done so.

Whenever I stop out I try to reflect on the general market and my plan going forward. I gave it quite a bit of thought today. The market has behaved very well, but the ride could end any time if folks remember that the economy sucks (sorry to use such a technical term). I don't know what it will do in the future, so all I can go on is the current state, which is a confirmed rally with two distribution days. Nothing to panic over at this point.

Next I looked at the two stocks high on my wish list, (TNDM) and the other that I had a buy stop order in on. There would be nothing wrong with entering another buy stop order for (TNDM) if it crosses the pivot again - some winning stocks do stop out before going on to big gains. However, I've decided not to put another buy stop in on (TNDM), and to remove the other buy stop order I had open, for a couple of reasons.

For one thing, both stocks release earnings a week from Tuesday. Best practice is to avoid buying a stock within three weeks of an earnings announcement. The reason for this rule is to ensure that you have a suitable cushion in case the stock takes a dive on the earnings release. I was willing to give (TNDM) a shot one time this close to earnings, but I won't do it again.

Secondly, when I consider my early trading history, one of the biggest problems I had was over-trading. Instead of being content with a winner when I found one, I continuously looked to add more stocks to my portfolio. The profits I made were overwhelmed by the losses.

Since (ARST) held up well today, I decided to add on to that position, which was working, rather than open a new position with some unproven stock. I added to (ARST) at $14.30 and $14.64 for an average cost of $14.42. We'll see how this approach works, and what the market has to say tomorrow.