RSI & buying decision in "bull market".....

RSI is a good tool to base your buying decision.Like any other tool you need to understand it well based on market/individual stock movement.We all have discovered that what looks good today MAY turn UGLY with market forces.

It is extremely important to know the fundamentals of each company you are trying to start a position.

Based on "bull market" TAPE, it MAY be a very good strategy to buy "strong stocks" when they are around 50......as strong stocks have a tendency to go to 70+++ but do come back to 50+ area for a rest.....

I have learned with great discomfort that "bargain stocks/sectors" have NOT done well @ all & have caused losses to many.

Those who have stayed in "bargain sectors" have seen full year @ a loss,when market is UP substantially.

We all have a tendency to call turn in stocks,but we have failed miserably in that call as "strong stocks get stronger" while "so called bargain" either languishes or keeps going down.

This year has been "tough" for me as some of my bets were "poor choice" like APWR,PALM,CREE,VMW....

Some other bets were timed poorly like AGU,AKAM,EBIX,JKS.....

It is "critical" to realize bad trading strategies, then only one can learn & reposition.Focus on losers much more than winners.Losers will erode your capital much faster & will drag down your entire portfolio/returns for the year.IF i look too hasty in my sell orders ,it is because of getting rid of something that is not working or @ best MAY barely break-even.

It takes tremendous amount of effort/luck to "recover from poor selection/bad trades"

For 2011, i have placed my bets on stronger stocks like AAPL,AMZN,FFIV,PCLN,RVBD,AUY & turnaround story of BAC.......

Also , i am planning to trade less,unless market becomes volatile AGAIN....

The moral of my trading story for 2010 is ,do not buy "speculative stocks" & stay with winners plus think long term in this bull market......

Hopefully, you have taken few pointers from my bad & good trades.Yes there were many good trades like FFIV,AAPL,LVS,AMZN,NFLX,CRUS to name a few.

Here is RSI numbers for the listed stocks as of last close :

BIDU 39.15
CMG 45.36
DRI 46.75
FSLR 47.44
LVS 47.57
ISRG 49.12
CRM 49.76
SLW 51.33
NFLX 51.72
COH 51.94
FFIV 55.78
RVBD 56.65
GS 56.67
PCLN 56.75
AUY 58.75
POT 58.89
C 60.18
GOOG 60.36
AAPL 61.00
CREE 61.59
BAC 62.03
AMZN 63.62
TCK 66.57
MGM 67.31
CNQ 70.46
LULU 75.70

Good luck with your OWN homework for 2011.

Next post by noon Sunday.

BLOG does NOT give buy or sell.

Saleem