ANGO No-Short Rule Revisited
So I am beginning to wonder if I should explore my ANGO no-short rule a little further as it seems as though I am missing out on some opportunities to short. I can see 2 situations where the ANGO rule applies, but maybe only 1 deserves to have the rule applied to it. This brainwave comes about after Cramer's pick from last nigh (WCI) once again dropped into the red.
First is when a stock opens at its high for the day of lets say $20 and had a down day and closed at $18. Cramer then mentions the stock on his show and it goes up to $19.00, so we are well below the high of $20. BUT, that high was the first trade of the day so there was downward pressure all day.
The second scenario is where a stock opens at $20, goes up to $22 during the day but closes at $20.50. Then Cramer mentions it and it only goes up to $21.50, so still below the high. So in this situation, the stock had upward momentum during the day but cooled off (profit taking or a market downturn maybe). This situation I think leaves the door open to people jumping back into the stock and causing unpredictable highs and where the ANGO no-short rule is better suited.
Something I will certainly take a closer look at and mention the next time this scenario presents itself.
posted by CramerTracker @ 6/13/2006
2 comments
Comments on "ANGO No-Short Rule Revisited"
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Anonymous said ... (June 13, 2006 5:05 PM) :
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CramerTracker said ... (June 13, 2006 5:57 PM) :
post a comment"I am beginning to wonder if I should explore my ANGO no-short rule a little further as it seems as though I am missing out on some opportunities to short."
My friend, I will say this as loudly and clearly as I can. DO NOT MODIFY YOUR RULES JUST BECAUSE YOU THINK YOU MISSED AN OPPORTUNITY!!!
This is not a science, its more of an art. Sometimes a stock trades against our rules.
Today was a day in which everything was down. I count only 9 ETFs traded positively and 5 of them were based upon bonds and fixed income assets. You could have shorted just about any stock/ETF and made some cash.
Jim Cramer's number one rule is bulls make money, bears make money and pigs get slaughtered. Bulls and bears are those with a system and make money. Pigs are those that have no system and trade impulsively.
You have an excellent system in place. Your rules are meant to protect your assets. If you miss an opportunity and dont make money, then dotn sweat it.
My strong advice is to stick with your system. Do not modify it because you feel that you have missed an opportunity. If you deviate now, then you will deviate in the future and may lose BIG.
Now with WCI, if you had monitored it on the candle chart then you could see the straight up Cramer peak. This is because the lemmings are placing market orders. Either the lemmings or the pro/am investors using market orders because they believe its the Cramer spike.
STICK WITH THE SYSTEM!!!
Very sound advice and I thank you. There are obviously opportunities most days that Cramer makes picks so missing 1 opportunity is certainly no big deal. I do intend to still look at future picks that fit my ANGO rule and see what category they fall under (as I describe in my post) but that does not mean I will ever change my rule and short them, but I would be curious to see if maybe other factors effect the price action of the stock. There would have to be a 100% success rate over a long period for me to even think about changing my mind. Having said that I haven't even really even back tested this theory I have to see if it is even right so that could squash this idea quickly :)
Again..thanks for the post and great insight.