Short Selling

There are so many different ways to make money in the stock market. The most basic way with stock shares is to buy them low enough and then sell them at a higher price later.

Did you know that it’s possible to make money in the reverse? You can sell shares in the market at a higher price first and then buy them back at a lower price later. This is called short selling.

The concept of short selling had me confused at first. I’d only heard that it was something a lot of traders did when they anticipated a drop in stock prices. None of it made sense until I executed my first short sale.


My First Short 

Many years ago, a certain company messed up royally and was getting a lot of bad press. Shareholders were selling in a panic and the share price was dropping in high volumes. I saw that the price was at around $76 and I believed it would go down more. I lined up my order to sell 600 shares at the current market price and I hit, “Short.”

After that, the price fell considerably. In the order box I clicked on, “Cover,” and I bought back 600 shares at the new market price of $74.75. That is a share price difference of $1.25. With 600 shares, I made $750, excluding commissions.

Broken down, it looks like this:

  • I short sell 600 shares for $76 per share (600 x $76 = $45,600). By doing that, I’m borrowing the shares from my brokerage to sell in the market for that price;
  • The share price falls;
  • Then I buy back (or cover) 600 shares at the current price of $74.75 (600 x 74.75 = $44,850)
  • At the end of my trade, those borrowed shares are returned to my broker. I get to keep the difference in the short sale for a profit of $750;
  • $45,600 – $44,850 = $750.

Despite the order at which the transactions occurred, the concept of buying low (at $74.75) and selling higher (at $76) is still preserved.


The Downside of Short Selling

As great as it sounds to make money when share prices are heading down, short selling is a riskier practice. Here are some reasons to consider:

1.Many investors don’t short sell or even know what that is. This means you don’t always have the majority of the market on your side.

2. Shorting is made possible when your brokerage firm has the shares to loan you from its own inventory of stocks. These stocks are either from the firm’s own positions or from the positions of the firm’s clients. If your broker doesn’t have the shares to loan you, you cannot short sell the stock. You end up missing out.

3. The market is generally optimistic. This means the fear and panic don’t always last as long as you might hope to support your short sell. Price reversals can happen fast. You generally need to have a shorter time horizon for shorts and you need to be watching your positions more closely.

4. When you buy a stock in the standard fashion, the worst thing that can happen is that your share price drops to zero before you’re able to sell it. In this scenario, the most you can lose is the entire amount of your investment. When you short a stock, the share price can go up indefinitely — this means you can lose more than the entire amount of your original position. Potential unlimited losses is what makes shorting considered a high-risk practice.

5. Profits from short selling are normally taxed as income rather than as capital gains. This is not favourable taxation.

6. If the company that you’re short selling is paying out a dividend, you have to pay the dividends owing to your firm or to the client those shares are being borrowed from.


Why I Don’t Short Sell

The reasons above are enough to discourage me from shorting, though there are many more that I haven’t mentioned. Short selling is a more advanced way to make money in the stock market and is best left to the pros. I don’t short stocks anymore because I prefer to own them.

I normally don’t discuss short selling because it’s not for most people, not to mention it’s really confusing. I only feel like it’s relevant to discuss shorting in a market like the current one so that new investors can understand the additional reasons why the prices of their stocks might be going down so much. It’s not just from investors collecting profits or abandoning their stocks out of fear of losing more — it’s also from short sellers trying to profit.

After the short sellers have had their fun and after all the panic selling and pessimism have subsided, it usually takes a while for a stock to recover before going up again with more investor confidence. I’ve got my wish list of stocks to consider buying when all the selling is over, so I’m just waiting for good setups and a better market.


Alternatives to Short Selling

Even when the whole market is negative, I don’t always want to sell my stocks, nor do I short any stocks, as you already know. Sometimes to combat the downward funk, I will buy shares of inverse ETFs to make money in the interim.

Inverse ETFs are exchange-traded funds made up of more complex financial instruments that generate money when the market is moving down. Like a regular ETF, its movements mimic the market index ETF it is modelled after, however, it’s designed to go in the opposite direction. Basically, when the market index goes down, the inverse ETF goes up. 

Index ETFs are often created in a way to move up to 3 times more than the index performance or up to 3 times less. These differences in performance can either enhance your trade or really hurt it when you’re wrong.  You have to be careful and consider this when selecting ETFs.

I still regard buying an inverse ETF a very risky strategy as it’s still in theory ‘shorting’ the market. Also, inverse ETFs tend to have higher management fees because they consist of higher maintenance assets than most regular ETFs. Higher fees and MERs in funds diminish their value and overall returns. For this reason, I usually only buy and sell them for shorter-term swing trades.


Before investing in an inverse ETF or deciding to short sell anything, please consider the risks. At this point in time (it’s December 2018), I think the market will go up a bit more before it goes down again early in the new year. We’re so close to the year’s lowest trading levels of the US markets. I don’t think things will really start moving up again until we at least break below those 2018 levels first.

I know a lot of investors who have been feeling beat up and want to do something to save their portfolios. If you’ve been feeling this way for the last few months, the best thing to do at this point is to think of your future strategies for your portfolio and be ready for them once the market is more positive.

Remember that downswings and bear markets are a normal part of the cycle for stocks – nothing goes only in one direction forever. Going short now after the market has gone down so much is not only is riskier, the returns won’t be as great had you gone short in early fall.

Market View from Costa Rica

20180909_1246071210966888-e1540933721266.jpg

Jaco Beach, Costa Rica

It seems like a lifetime ago since I last posted a blog in February. I’d made a lot of life-changing decisions since the start of the year. I left my amazing job; I travelled to many places; I finished the courses I needed to become a certified equities trader; I moved to Costa Rica where I now live with my spouse; and when I’m not working on my rusty Spanish or chilling on the beach, I’m trading for myself.

My life may seem as volatile as the market these last few months. I don’t view volatility as a bad thing, though. I feel that drastic changes force us to adapt and stay sharp. We should be in a better place by the time we make it to the other side.

I’ve been hearing from friends who are concerned about the market. It’s understandable. The bear market I’d been anticipating came hard and fast. As of yesterday, the Canadian market’s gains of 2018 and 2017 have been wiped out. My answer to my friends has been consistent: You can either get out now or you can hold on — either way, be ready for when the time comes to get back in.

I’m not new to market drops. I started to learn about stock trading in 2008. It was a good time to learn because I saw how bad things can get before they get better again. Each time fear and pessimism took over (in 2011 and 2015/2016), after the market freak-out, I eventually found bargains of some very solid stocks. And I learned from these times which stocks I really wanted to own in my portfolio for the long term. Should there be another 2009, I want to be ready to buy when there’s a recovery. My stock wish list is comparable to my Christmas wish lists as a kid: unrealistic but crazy optimistic that one day, it’ll all be mine!

My current outlook is a lot more short-term and I’m taking less risk by using fewer shares and making fewer trades. Some of my stocks I thought I would own for a long time, but I had to let go and bank on the gains while they were still there for me to take. I find myself sitting out more often on what normally would be great opportunities. Am I always right? Of course not. It’s just not the right market to jump on most opportunities. I feel that my best play is to think defensively and to be more hands-on by watching the prices of my stocks more closely than usual.

The US market is still above its lows from this year. If it takes that out and then eventually 2017’s lows, the move will cause more downward pressure on the Canadian market. To what extent, I’m not sure. I’ll be paying attention to the support levels of previous years.


My Stock Wish List

My wish list consists of mostly American stocks, some Canadian, and some ETFs. It’s likely to change and that’s fine, I have plenty of time to decide. I already own a few of these stocks, but I keep them on my wish list because I want to remember to buy more of their shares later on.

  • ADBE
  • AMZN
  • ADT.A.TO
  • AXP
  • BABA
  • COST
  • DIA
  • DIS
  • DOL.TO
  • FB
  • FDX
  • GOOGL
  • HD
  • JNJ
  • LULU
  • MA
  • MSFT
  • NFLX
  • NKE
  • QQQ
  • SBH
  • SBUX
  • SPY
  • TSLA
  • ULTA
  • V
  • WEED.TO
  • WTW
  • XIC.TO
  • XIU.TO

 

 

The Market Dumps

 

Dailies

The SPY, QQQ, DIA, and XIC ETFs on freestockcharts.com

While some investors have been freaking out, I’ve been casually checking the market and my portfolios. Is this the correction I’d been impatiently waiting for?

Looking at the daily charts of the SPY, the Qs, the Diamonds, and the XIC, you can see a few major things happening here. A big precipitous move often creates another one. Look at the XIC on Monday, Jan 29. It gapped down and just kept going. Something similar happened to the Dow on Tuesday. While there was some defending going on, it still broke its trend on Friday. The SPY and Qs had a huge down day like the others on Friday; however, their uptrends are still intact. It will be interesting to see if there’s a bit of a bounce before these go down even more and break their shorter-term trends.

 

Weeklies

When we pan out and inspect the weekly charts, it’s hard not to notice the glaring red candle on the XIC. Whoa, Canada! In one week, it wiped out all the gains made since mid-October. The other charts only came down past the gains from the last week or two. If this is the start of the move down for the US market, it might be wise to take some profits off your US stocks before they correct even further.

Monthlies

As for me, I’m just hanging onto everything and waiting for my next buying opportunity. In fact, I transferred more cash into my registered accounts so that I’ll be ready when I see a good trade is on.

I’m noticing some beautiful monthly corrections on the weed stocks. You can bet that I will be scaling into these before their next big move. If you have difficulty selecting which weed stocks to buy, then just buy the ETF, HMMJ. You can visit this link to get more information on the fund and its stock holdings. I created a watchlist on freestockcharts.com with all the stocks that are in the HMMJ ETF. I like to cruise through the charts and check out which ones are helping the portfolio or weighing it down.

Stock Picks

selloffs

Market ETFs: SPY, QQQ, DIA, and XIC on freestockcharts.com

The US market is making me nervous as the charts get higher with bigger candles. At some point, it’s gotta sell off, right? I notated on the charts the last months where the most selling happened.

Market cycles can either be four months for the shorter term, or eight to ten months. The SPY and DIA show their last major sell-offs were in March of last year. The Canadian market, on the other hand, looks like it could be halfway through its current move up. It could pause for a bit at the current highs before continuing its move. If the US market pulls back, it’ll be interesting to see how the Canadian market will react.

It’s been a hectic week for me and I’m gearing to go back to work tomorrow. I managed to do a quick search and I found some decent charts to check out:

  • BB.TO
  • PD.TO
  • ACBN.TO (watch for a consolidation setup on the daily chart)
  • ENB.TO

Be sure to check the sector and do your necessary research and take the right amount of risk so that you can feel confident in your trades/investments.


Oh, and happy new year!

 

Stock Markets and Stock Picks

Marks

Monthly charts of market ETFs: XIU, DIA, SPY, QQQ on freestockcharts.com

The Markets

I typically like to analyze the XIC ETF as it consists of more TSX stocks. The XIC is very much like the SPY ETF for the S&P 500 index. When I want to know how the tech-focussed stocks are doing, I check out the QQQ.

I admit, I rarely look at the XIU (the TSX’s top 60 large cap stocks) or the DIA (the U.S. ETF for the Dow Jones Industrial Average). It’s an old habit of mine as my trading background was more focussed on shorter timeframes and bigger price action. There is less price action in these indexes that cover the large-cap, blue chippy stocks. Molasses moves faster than some of these stocks’ prices — this is because there are so many more shares to go through at each price level before the price moves up or down. Less price action, though, doesn’t mean less money. It’s just more stable. I really should watch these ETFs more because this is where big money, like funds, tends to go. With investing, it’s often good to follow the big money.

I drew horizontal lines on the charts for the XIU, DIA, and QQQ to show where those stocks had reset. The XIU has been “resetting” for a long while now, pretty much since February. The DIA (often called “the Diamonds”) had a reset in April and the Qs had one in July. Look at the SPY’s trendline that goes straight up. When is the SPY going to take a breather? If we’re going by season, then perhaps in the fall?

Observing the timing of these corrections demonstrates well the cyclical nature of markets. To get a better idea of what drives these differences means to take a closer look at the sectors and specific stocks that dominate their respective markets.

I worry that if the SPY makes a correction, it will affect the Canadian market. If I didn’t concern myself with the U.S. market at all, I have to say that I like what the charts tell me for the Canadian market. It’s been rationally pulling back for over half a year now and moving sideways for three months. It could be gearing up for another bullish move up. Let’s hope that if and when the SPY comes down, investors move into the Canadian stocks and start a new investment cycle.


Stocks to Check Out

Here are some stocks with nice-looking monthly charts:

  • TCW.TO
  • CVE.TO
  • SJR.B.TO
  • HSE.TO
  • IPL.TO
  • POU.TO
  • MG.TO
  • THCX.V (I own shares of this one already.)

Now, keep in mind, most of these are oil stocks. If you’re considering trading any of these, keep a close eye on the sector. And as I always advise, do your own necessary research on the company, the sector, and the markets. Consider how your choices fit into your grand plan and decide on the appropriate time horizons and how much you can safely risk for your portfolio.

Some Predictions: The Markets and the Big Fight

The Markets 

Up and down charts

Price charts for ETFs: SPY, QQQ, XIC, and GDX on freestockcharts.com

The US markets have only started their decline since the last month. The Canadian market has been going down since late February. That is no surprise since it had gone up for an entire year since February 2016. The gold sector has been starting to trend up since mid-July. Whether gold breaks out or just jogs sideways is hard to tell at this point.

The trade volume in the US markets has been very high this summer. A lot of selling happening, particularly in the tech sector. Tech had been going up since last summer, so like the Canadian market, after a year of bullish trading, it was bound to sell off.

I think the US markets are going to continue trending downward until the end of September, maybe even going into October. If the selling is heavy enough, it could trigger a longer bear market until the new year. If this happens, it’ll be tough on the Canadian market as it will only get weaker.

For the time being, I’m going to be really reserved about buying anything. I would like to see a substantial correction in the US markets before feeling confident in the next uptrend.


Mayweather vs. McGregor

Any predictions? No doubt, there is a lot of betting on this fight! I don’t believe in betting on sports. Instead, I just argue over who I think will win. My brothers and I got into a fun debate over Mayweather and McGregor. Two out the three of us siblings think that Mayweather will win, though we’re all kind of rooting for McGregor. It’s just really weird that one is a pure boxer and the other is an MMA fighter. McGregor really is the wild card.

I grew up watching a lot of boxing and wrestling. Eventually, I started watching UFC, Pride, and K1 fighting. One time, ages ago, I had a short stint working with a K1 promoter in Japan. I was in my element talking to all the fighters and getting an inside look into that world. I hung out with them all for a few days, some of whom I’d recognized from TV: Mike Bernardo, Jan the Giant, Alexey Ignashov, and Canada’s own Mike McDonald and Gary Goodridge. Some of these guys started out boxing and eventually got into other forms of fighting, especially since there was money to be made.

The day of the tournament, things got intense. At ringside, I could hear every punch land and every kick connect. These fighters, my new buddies, were really hurting each other. Whether they won or lost, everyone got hurt. After that, I couldn’t watch fights with the same enthusiasm.

Well, JP twisted my arm and got us tickets to watch tonight’s fight at our local Cineplex’s VIP theatre. I do think that Mayweather has a better shot at winning unless McGregor can get a few really hard punches in early enough. If he can’t, I think Mayweather will tire him out until he goes in for the kill. It’ll be bad if McGregor accidentally resorts to MMA and disqualifies the fight. We’ll soon find out!

The Transparent RRSP: Share Prices & Flash Crashes

Action taken the week of June 5
  • Bought 20 shares of TransAlta (TA.TO) for 7.74. This cost me $154.80 + 0.20 cents of commission. I now have 45 shares of TA. There is $16.90 in cash left in the RRSP account.

If you buy a stock at different times and at different prices, then it makes sense to figure out the average cost of the shares. The previous 25 shares of TA were purchased at $7.63 per share. I’ve worked it out below:

  • 25 shares * $7.63 = $190.75 + $0.25 commission = $191
  • 20 shares * $7.74 = $154.80 + $0.20 commission = $155
  • $191 + $155 = $346
  • $346 / 45 total shares = $7.69

This is also known as the adjusted cost base, or ACB. I use the share price of $7.69 to determine how much I make in profits (or losses) when I sell the shares at a different price later on.

If I want to determine just the average price of the shares, I can do the same thing, only I leave out the commission fees. It works out to be $7.68. It doesn’t seem like much of a difference, but that’s only because my commissions are extremely low.


Flash Crashes

Yesterday the Canadian market closed positive. We traded sideways all week. Not much action, which I prefer. The US market, mainly the NASDAQ, however, experienced a flash crash. I saw the charts and so I had to see what the news had to say about it. They explained that the mega-cap tech stocks (Facebook, Apple, Amazon, Netflix, Google – aka FAANG) were starting to sell off. They weren’t the only ones selling off hard before the crash. The semiconductor stocks (SMH is a semi-conductor ETF in case you’re interested in viewing its chart) were selling off heavily after noon. It had been a long while since the tech sector had shown any major weakness.

After hitting new highs this week, investors were starting to collect profits and play defence by unloading some shares to be less exposed to a sell-off. Well, if enough investors with large holdings (particularly institutional investors) get the same idea, this triggers a mass sell-off. These sales which began around noon triggered the automated trading programs to sell later on in the day, which led to an overall big sell-off in the market. This domino effect happens when giant stocks fall; sometimes even one giant stock can affect the general market. The NASDAQ market lost its last three weeks of gains in minutes. It recovered partially at the end.

I have shares in a few of these tech stocks and I was thinking this week, “Wow, I can’t believe it just keeps going up! When will it come to an end?” I had sold some shares to collect profits a few weeks ago; I was left with the disappointing feeling that I had acted a little too soon. However, I did so because I was anticipating this. (If you’ve been reading my blogs, then you know this isn’t hindsight commentary.) I’ve lived through enough flash crashes to know that I’d rather make my decisions away from such events, not in reaction to them. I still have some shares left in these stocks, but I’ll see how they do over the next couple of weeks.

The Canadian market came down a bit in reaction, but it came back and closed positively. These flashes tend to be more pronounced in the US markets. Because the US market is so big, a crash can affect the global markets if sustained recovery doesn’t follow.

It’s events like this that could deter people from wanting to ever invest in the market in the first place. These things can happen in any market, though, because people are prone to panic. Rather than cave into your feelings and react out of fear of the worst to come, it’s best to try to be objective: Observe the sentiment of other investors and see how your holdings are doing on the bigger time frames like the monthly charts. There is a good chance that your charts are still looking healthy. A correction here and there is to be expected as nothing ever goes straight up. All I can say to all that is to keep calm and let your stock carry on!

39

 

The Transparent RRSP: Month-end Market Read

Action for the week of April 24
  • I transferred another $150.00 to the RRSP account’s current cash of $29.90, which will give me $179.90 for the month of May.

I also didn’t do anything for the RRSP last week (the week of April 17). I mainly sold more shares of other stocks in my TFSA. I was feeling exposed having so many stocks at a time that I feel the market is going to have a correction. The fact that I still have 28 stocks in this account is still a head-scratcher. I managed to make a decent profit on some of these, so I’m sitting on more cash than I have in a long while.


Marks

The XIC and SPY ETFs on freestockcharts.com

The Canadian Market

You can see on the XIC that the Canadian market has just been trading sideways. At the time of writing this, there still remains one more trading day this month. There is usually a lot of selling at around month-end mainly because funds are re-balancing their portfolios for cash to pay investors. So, it remains to be seen how we’ll close, but I don’t think it will be too far off from where we closed last month.

The Canadian market has been lagging the US market this year so far. It’s not a surprise. Check out the two bottom charts where I drew the circles. Upon quick visual inspection, you can see we covered way more distance in 2016 than the US market. We (our economy and our loonie) got beat up so badly from the underperformance of oil/energy in 2015, that we had so much room to climb up and recover. And that we did. Our sectors in energy, mining, and finance gave great performances.

Every good run needs a break to slow down and catch its breath. If I want to find out what is making the market do what it’s doing, or where the market could be heading, I will look at the major players. I’ll either check out the sector ETFs, or the biggest companies in the influencing sectors.

For this scenario, I’m keeping an eye on the banks, all of which are in the process of a correction. It could be just a bit of a selloff, or it could be a substantial selloff that will keep going until mid-late summer or fall. Now, don’t go on selling your dividend-paying bank stocks – I’m just saying keep an eye on them if you want to have a better gauge as to where the market is going.

I will suggest that if you’re interested in accumulating more shares in bank stocks, you might want to wait a while for the prices to come down more and have settled down for a bit before going up again. I am a huge fan of waiting for new buying opportunities and I will wait months, even years, to get into good stocks.

The US Market

I can’t invest or trade or think anything stock-related without looking at “the SPY,” the most popular American S&P 500 Index ETF. It’s more out of habit having used it so much for day trading than it is out of necessity. I look at it to get the feel for the market, its momentum, and its sentiment. It often is quite off from the actual S&P 500 Index, but it’s where the action is at. This is where I discovered the importance of monitoring trade volume.

I never look at the SPY without looking at the QQQ, the NASDAQ Index ETF. Plus, I never look at “the Qs” without looking at some of its big players/action stars: Apple, Microsoft, Facebook, Google, etc. I attribute the US market’s most recent run, not as much to its new president (but I’m sure he’ll take full credit for it, very true), but to the technology sector. I’m sure this would stir a lot of debate, but I’m speaking from an on-the-ground perspective because I own a few tech stocks.

The tech sector has been the leading sector over the last year, so it’s important to keep an eye on it along with its biggest stocks. You can watch the Qs and the tech ETF, XLK and the semiconductor ETF, SMH. When observing the big players in tech, look out for shifts in volume and ask is the buying volume is lessening? is the selling volume increasing? or whenever the prices drop, is there a lot of buying or just a little?

I would also be watching the US financial sector’s ETF, XLF. Like Canada’s, the US financial sector has been pulling back the last couple of months. If tech starts to come down along with the financials, then I’d expect a more prominent correction in the US market before more new buying opportunities start presenting themselves again.


This is my process and how I see the market. I’m always trying to find clues that indicate optimism (buying), euphoria (heavy buying with big price moves), panic (heavy selling with quick and large drops in price), pessimism (selling), or neutrality (lower volume, sideways trading).

I still hear over and over that timing the market is useless. I don’t look at it as ‘timing’ because it’s not a science, nor is it something you can accurately measure. It’s more about reading the market. Investors’ feelings and sentiment move the markets, not numbers. I hope that one day, more people will see it this way and learn how to invest with the flow.

 

 

 

 

The Transparent RRSP: Market Timing

Action Taken for the Week of February 28th
  • Deposited $150.00, giving me $150.48 of available cash in the RRSP.

At the time of writing, the net equity in my account is $1771.02. I’ve contributed $1750.00 in total to the RRSP. I’m up $21.01 so far. $2.10 of that is from a ZPR dividend payment received in early February.


The Canadian market has gone up six months straight. The U.S. market has gone up four months straight. On top of that, the trading volume has declined – a sign of the market running out of the steam needed to keep going straight up. There is nothing I would love more than for the market to have a little correction – that is, a little selloff – before going up again for another leg. I would feel more confident in making a new trade if this happened.

 

tsx

The S&P TSX Capped Composite Index Fund ETF chart on freestockcharts.com

 

 

spy

The S&P 500 ETF Trust chart on freestockcharts.com

 

Market timing means timing your trade entries and exits with the stock market moves. It’s more of a shorter-term strategy. When the market is on its way up, you buy. When it begins its move down, you sell.

A lot of people rag on market timing and its futility. I don’t blame them. It’s not easy to estimate and it’s impossible to be right and exact all the time. On CNBC, the analysts and traders always goad each other into making short and long-term predictions and when one is right over the other, they really rub it in! It’s pretty entertaining. It doesn’t really matter because, in the long run (we’re talking years), the stock market generally goes up as it has historically for decades upon decades. Why is this so?

Investors, by nature, are optimistic. You invest because you believe there’s a decent chance you’re going to make money. When optimism shifts to pessimism (due to recessions, world events, interest rate hikes, etc.), investors sell to take their profits or reduce their exposure during a downturn, or as in my case, hold off on making new investments.

So what happens if your market timing is off? Well, if you bought at the height of action before a turnaround, you’ll just have to wait until you’re back in the positive. No matter what, don’t panic. These downturns are more temporary in nature.

There are ways to be impacted less by market timing. The general goal is that over the course of your life as an investor, you’re accumulating assets and creating a diverse portfolio. If your portfolio is diverse enough, a part of it should be performing better than the other part of it during a market dip. When the market is strong again, most of your assets should be doing well. Then, you’ll eventually get rid of the ones that don’t meet your minimum expectations regardless the market and sector. After years go by, you’ll be beyond caring about market timing as most sound securities pass the test of time and should increase in value.

Why do I care about market timing? I simply prefer to take positions at the start of the uptrend. I learned to look for signs that a trend might be tiring out and if I do enter a trade, it’s with fewer shares and moderate expectations. I watch the market enough that I’m able to pay attention to where I’m positioning myself within the trend (at the beginning, mid-trend, near a top).

Before taking another position for the RRSP, I’m going to hold off until later in the month to see if there will be a correction, or if the market will take a bit of a breather that will be more apparent on the shorter time frame of the weekly chart. The only way I’d break this commitment is if I saw a perfect setup (to-die-for charts on all time frames, volume action, sector making a new move, and the market had sold off, yet the stock wasn’t affected).

This is actually a good time to look for stocks in the middle of setting up. That way, I’ll be ready with options when the timing is better.