2 min read

Trading Updates

I think this is an opportune moment to get back into 2 stocks we exited last week for modest 9-10% profits (out of concern for a bigger market meltdown).

I think the meltdown/plunge scenario is becoming less and less likely, given the prior email I just sent about the potential of a Ukraine-Russia brokered peace deal, and the easing of prices for a range of commodities.

So let's add back in Meta Platforms (FB) and PayPal (PYPL).

Both are up 3% or so and could climb sharply higher in a strong rebound move of 40-50% in coming weeks. I think the setup I'm seeing here is what I call an "undercut low" - both stocks pushed briefly below their old lows, then ricocheted higher.

I'm also adding back in Clear Secure (YOU), which I think also has a good shot at having bottomed with a slightly "higher low" and will rise sharply if/when oil prices keep falling, and people generally feel better about traveling again.

See below for the trading strategy I typically use with this kind of setup...

Obviously, none of these stocks has actually started trending higher. Even the idea of a bottom, at this point, is just my hunch.

But the technique I use is to buy at the current price, with the idea of selling for a small 1% loss (to the total value of the portfolio) if it falls below the line in red.

For example, with Meta Platforms, I'd be entering the trade at $194 and change (the current price as I write this). The distance to making a new recent low, if I'm wrong, is roughly $12. So with a $10,000 goodBUYs portfolio, we're risking 1% ($100)...which means we can buy 10 shares.

I use this technique all the time with my own portfolios. I love it because it allows me to take chances on different kinds of stocks - if I'm wrong, the loss is usually small. If I'm right, I have a chance to log some nice gains in coming weeks and months.