Trading Lessons: Know When to Sell-Minyanville

Trading Lessons: Know When to Sell

Smita Sadana Jun 24, 2009 4:00 pm


		How to reduce "unknown unknowns."

Since my time horizon is usually a few days, I try to minimize the impact of "unknown unknowns" -- and this happens to be one of them. I do remain a strong vocal advocate of adherence to rules that suit your time horizon and personal-risk profile.

The support levels on multiple indexes that I shared yesterday (NDX and Dow), offered some good (short-term) long set-ups. Many companies in the commodity space that had chipped away 20% or more in the past 7-10 trading names are bouncing the hardest today. The next 3 days typically would mark the last days for window-dressing.

And the names that could be the most affected are the ones that put in the best performance in the second quarter.

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As I opined yesterday, there's resistance ahead in many indexes and individual stocks. So, while I've used up my (self-permitted) long ammo, I'm also cognizant of that other reality.

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In addition, please keep in mind that we normally talk about support/resistance in absolute numbers as defined by some key moving average. But the market has been so volatile over the past few weeks that these levels have been changing -- almost on a daily basis. Because of this, it's better to rely on the concept of moving average (and switch the numbers accordingly).

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