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The market is acting in what is for me an unprecedented fashion.
How do you explain a stock market that drops another 444.99 points today to 7,552 on the Dow, or another 70.30 points on the Nasdaq to 1,316? I guess you don't.
Needless to say that "M" in CAN SLIM, as William O'Neil would say is determining the performance of all of my holdings. And I was disappointed today that I needed to sell my 47 shares of Esco (ESE) at $27.27. These shares were purchased literally just days ago at $32.73, so in this short period of time I incurred a loss of $(5.46) or (16.7)% since purchase.
Since this position is one of my final five positions, as I have pointed out elsewhere, I have tried to tolerate the greater volatility in the market with (16)% loss limits (instead of my usual 8% loss limit). Even so, within days this stock managed to dip that 16% and I sold my shares this morning. The market deteriorated into the final hour (as it has been tending to do on a regular basis), and ESE closed at $25.97, down $(2.18) or (7.74)% on the day.
This is in no way a reflection on the underlying fundamentals of this stock, as far as I can tell, but rather on the underlying fundamentals of the entire market. Esco had great quarterly results reported just days ago, and as I wrote in my earlier post, a very nice Morningstar.com '5-Yr Restated' financials page.
But the powerful downward plunge of this market is 'lowering all ships' and Esco (ESE) is no exception.
I sold my shares and paradoxically, since I was then down to 3 positions, this generated a buy signal giving me the opportunity to purchase two positions, albeit reduced in size, to bring me back to my minimum of 5.
With the market behaving relatively benignly earlier in the day with talk of a automotive manufacturer's bail-out discussed, I waded back into the water, purchasing two small positions: 104 shares of PetSmart (PETM) which announced good earnings, at $15.50/share, and thinking that the entire automotive industry might yet be 'saved', I thought it might be a good time to venture back into my 'old favorite' Johnson Controls (JCI) and purchased 95 shares at $14.75.
PETM gave up much of its earlier gain before the close, itself being caught in the downdraft, and closed at $14.84, up $1.52 or 11.41% on the day. JCI closed down a little less from my own purchase at $14.14, up only $.07/share on the day or 0.50%.
I am back to my minimum of 5 positions. But with each of these purchases, I continue to shrink the size of my holdings, and shift a little more each time over to cash.
Currently my 5 positions add up to about $11,000 in value, and my cash position in my ever-shrinking portfolio is at $22,000. And to think that just months ago I was listening to my son tell me I needed to get out of margin. My portfolio management strategy is working, albeit in fits and starts, to shift me into cash while allowing me to continue to have equity holdings to direct my own future sales and purchases!
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Yours in investing,