The Transparent RRSP: More Thoughts on the Market

I posted on Monday that I had bought another 16 shares of LFE.TO at $6.12. This cost me $97.92 + 0.16 of commission. I now have $60.90 of cash remaining in my account. This was at the same price I got the previous 24 shares of LFE.TO at, giving me 40 shares of this stock.

Currently, I’m not crazy about entering any new positions given the market. I would prefer it to have a more substantial correction before it resumes going up. My preference would be for the market to just slightly sell off below February’s lows. The market could just move sideways for the rest of March, which I’ll be satisfied with. If the market isn’t going to have a correction, then it at least needs to take a break from going straight up.

When the market is operating near a peak like this, I tend to find that stocks with great setups are merely shortlived opportunities in that they might only be in the profit zone for a few days – then people get scared at the slightest hint of a reversal and sell their positions to take their profits.

Another thing I find when the market is iffy: investors tend to gravitate towards stocks doing their own thing regardless of what the market is doing. That is the only reason why I bought more shares of LFE. I said earlier this month that I didn’t want to take any new positions for the RRSP until the market had a decent correction. This stock was resilient during some market weakness and looked like it was taking off.

When I am doing something that goes against my intentions, I have to ask myself, “If this stock takes off without me, will I be upset?” Some setups are dodgy enough that I wouldn’t have regret even if it works because I’ve learned that if I took such setups every time, I’d have consistently worse returns. The setup LFE was demonstrating is the kind you just can’t ignore.

Below is a comparison of the daily and weekly charts of LFE to one of my favourite market index ETFs to watch, the XIC. I also watch the actual TSX Composite Index, however, I prefer looking at the XIC because I get a better view of the trading volume in the market.

lfe

I haven’t lost sight of the increased amount of risk when taking trades in a market like this. I feel that LFE will trade on its own page for a while. Eventually, it’ll likely be more affected by the market. Hopefully, that happens when it’s at a much higher price!

 

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