
The stock market was down big Wednesday and again today. That is usually were the panic sets in with investors and more so with traders. The 'Working Mans Portfolio' is operated somewhere in between.
Two thirds of the Working Mans Portfolio is an investment portfolio and the other third is a traders portfolio. But that is just how we feel
every one's portfolio should be. Keeps you involved so you know where your money is going.
When you are investing or trading in the stock market the two worst things you can do is to panic or get too greedy. This is how and when we make bad
decisions with our money.
When there are days like yesterday sometimes the best thing to do is walk away for the day. Do not get wrapped up in the market or it will consume you on those days. When the S & P dropped below 1136 we did stop and look at some
intra-day charts to get a feel for what was going on then walked away.
The Market Magic Report simply decided it was not the start of a bear market but the bear claws are coming out soon. We still believe the S & P needs to kiss 1180 or 1200 before a bear market starts.
If you are following the Working Mans Portfolio and are concerned about the call options we have on the board. Stand fast and be patient and above all do not panic. However, we are really close right now to a support level and if it is broken we need to go ahead and sell our call options.
This
support level is 1114 to be exact. If the market closes below this level you need to sell the call options. Even if you sold them today at closing prices you would make a profit of around five or six hundred so be patient, we still have the ability to make a nice profit.
However, we still believe the S & P needs to reach 1180 and when this happens keep a close eye on the market. I am looking for a day that sees the market sore upwards then comes way back down off of the highs. The S & P will probably be around 1170 - 1180 at the start of the day and will get up over 1200 then finish the day at 1188 or something. Sell all call options at this time.
The Market Magic Report has been asked recently about putting on stop losses on there trades. Stop losses are never a bad thing and in the Working Mans Portfolio's case we would let you know if we thought it was necessary to put a stop loss in on a trade.
When trading large
quantities of stock, stop losses are strongly recommended. When we bought the penny stock
OPMG we probably should of put a stop loss on that trade and if we had held it for any longer we may of just done that. But as you know we sold that bad trade off rather quickly.
It is always important to set levels when trading stock or options in the market. For instance, on the
Weatherford International (
WFT) Call option we are looking for 22 to 23 on the stock price to take profits and have a bottom sell point of 17.50.
On the other hand Arch Coal (
ACI) Call option has past our profit taking point but has come back to it the last two days. You have not
received a sell trade on this yet due to the fact that we feel it has more room to run and set a new profit taking level of 29 to 30. However, if this goes much below 24.75 think about taking your profits on this one, but again be patient I think it sees at least 29 first.
Just remember that
panicking and getting too greedy are two very bad emotions to have when trading in the market. So are we getting greedy with Arch Coal? Possibly, but we are confident holding this a little longer will be profitable. However we will watch it closely with the sector down grade today.
Patience is a virtue... so they say, let's give it a try!