As an example of how I am going about this bubble, my main risk management tool is to make sure I am routinely taking profits in the ones that boom and replanting in the ones that are in setups. For instance, I highlighted Boston Scientific (BSX) for NFTRH+ due to its decline to a weekly moving average that had supported it for the last few years. Not long after I bought it I took the profit in its direct competitor, Medtronic (MDT).
Then I botched that BSX trade like an amateur because as noted in NFTRH I had questions about the device sector (since answered in a bullish way) and BSX’s daily chart (the market clowns us all at times). But then this was noted on Jan. 3rd in the NFTRH Trade Log… “Buy back BSX as possible pattern develops at originally noted weekly moving average support.”
The wording may sound like a recommendation but it certainly is not. The Trade Log especially is just a log of what I am doing in real time. I write informally and in short hand. Anyway…
Today? Boink, it’s exploding up from the ‘W’ pattern. Making sure not to fall in love with any given stock, I took the profit just a few minutes ago. But its former spot is newly manned (also per the Trade Log) with another Device company (yesterday) and a large BioPharma (today); each of which were in decent technical setups and one of which was not unlike BSX’s previous setup.
I am as afraid as the next guy about the irrational bubble making going on all around me and the only ways I know how to deal with it are 1) sit it out or 2) play it but reap profits routinely and be aware of (dividend paying) cash (equiv.) levels. I choose Thing 2. The market indexes and sector ETFs may be manic, but I have found that individual stocks have been routinely providing opportunities as long was we “keep dancing” (ref. Jeremy Grantham’s comment about playing a melt-up).
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