The Novice Bear

With the market flailing, I thought it would be nice to review some of the trades that I made since the last IBD-style “follow through” day.  I’ll start with CHRW, which first flashed on my daily screens when it broke out on March 24th.  I was quite bullish at the time and was ready to pounce on stocks with good relative strength.  I didn’t chase CHRW, but waited for a pullback after the break.  While CHRW climbed, I noticed that it’s industry group was performing very well, which gave me more confidence with this trade.   

As the market continued to climb on lighter and lighter volume I began to worry that we might not be out of the woods yet.  I was becoming more cautious and decided to take profits after a 20% gain (a standard CANSLIM selling rule).  I then turned to TD Sequential for more insights into the support levels of CHRW. 

While I often like to short stocks that have broken below their TD Sequential buy stop-loss points, the same rules apply to the reverse situation.  When TD Sequential Sell stop-loss points are violated, it often means that the equity has more upside.  As with shorting, the best entry is usually when the stock has retested the stop-loss point.  Turning our attention back to CHRW, you can see that it closed above its sell stop-loss point, indicating a very strong chart.  My strategy is now to see how CHRW acts when, and if, it comes back down to the stop-loss point.  If it does so on light volume, it might be worth re-establishing a full long position around 58, using a close below 55.87 as a stop-loss.