Trading this Market

On Monday, JP went through all the Canadian stocks and gave me a list to check out. I went through it and thought the following were great charts:

  • RME.TO
  • FRU.TO (A royalty company.)
  • LCS.TO (A fund)

The next day, he asked me which one(s) I was going to buy. I told him none of them. He couldn’t believe I was just going to sit on a bunch of cash without investing it. Of course, I had some explaining to do. It was very simple: I didn’t like the market. I figured the market was going to offer hokey bullishness all week which it did, ending with a big hoorah day on Friday.

 

Market Monthlies

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

Here are the monthly charts for the Canadian XIU ETF, and the U.S. ETFs: the SPY (S&P 500), the QQQ (the NASDAQ), and the DIA (Dow Jones Industrial Average). There are seven trading days left in this month. If we close at new highs with lower volume, then I will happily wait for a correction next month.

I noted on the charts the months when we last saw a correction or a reset. On the DIA chart, I put a star over March 2017. Even though there wasn’t a proper sell-off/ correction, it consolidated and traded sideways for the following three months, which is often a good setup for another run.

Out of all of them, Canada’s XIU looks the best. If the U.S. markets undergo a correction, then trading Canadian stocks could be the next best play. I’d keep a close eye on the Canadian financial stocks, though, to see whether they reset or have a substantial sell-off that could weigh down the Canadian market.

For the rest of the week, JP kept asking me for my contribution of picks in return. I flat out declared I’d rather sit on cash than to buy anything right now. (Honestly, I was too lazy to look, but we both knew that.) He agreed that although the market looks overbought, sector rotation could keep it churning and that unless something fundamental changes in world economics (like a big war), we’re going to keep going.

I found some charts worth watching over the next week or two:

  • CCO.TO (Needs better setups on daily, weekly, and monthly timeframes.)
  • MX.TO (Could tighten up on the monthly, but decent daily and weekly charts.)
  • ALA.TO (Nice monthly, but it went up a lot already on the daily and weekly.)
  • ATZ.TO (I own this already. This must set up on all timeframes.)
  • H.TO (I own this already. The monthly chart is meh.)
  • DRT.TO (I own this already. The weekly isn’t that clean.)

JP’s picks definitely look better than mine. However, I feel these are worth watching as they had more recent corrections on the monthly timeframe. None of these have great patterns on all their daily, weekly, and monthly timeframes. I find that often when the pickings are slim, we’re due for a correction. By the time the correction or reset comes around, these picks could be even tighter. That’s the benefit of having cash ready and waiting in your account: you’ll be ready to go once the best opportunities are there. You can always afford to be patient.

 

 

 

 

 

The Transparent RRSP: Thanksliving Day Weekend

The week of October 2
  • On Oct 2, I bought 10 shares of ZPR.TO at $11.61. This cost me $116.10.
  • To my horror, I realized later on that I meant to buy 15 shares of ZPR, not just 10. So I ended up buying another 5 shares the next day at $11.67 a share (6 cents more!). This cost me $58.35. Aw phooey!
  • I would have bought more ZPR on Wednesday when I finally had more funds in the account, but the price was up higher by that point. Instead, I bought 15 shares of GRL.TO at $7.96 per share. This cost $119.55.

I have $37.92 in cash left in my RRSP.

GRL and ZPR

Price charts for GRL and ZPR on freestockcharts.com

I bought both of these stocks earlier this year. In early January, I got 50 shares of ZPR for $10.86 and 50 shares of GRL for $7.74 in mid-February. When you work out the average price, it looks like this:

ZPR

  • 50 shares @ $10.86 + $0.50 in commission* = $543.50
  • 10 shares @ $11.61 = $116.10
  • 5 shares @ $11.67 = $58.35
  • This totals to $717.95
  • Take the total cost of $717.95 and divide it by 65 shares. You get $11.05 a share for ZPR.

* I forgot to buy this under the “Free ETF Investment” commission structure with Virtual Brokers. I did remember to choose the correct commission structure this time around. At least I got one important thing right.

GRL

  • 50 shares @ $7.74 + $0.50 in commission = $387.50
  • 15 shares @ $7.96 + $0.15 in commission = $119.55
  • This totals to $507.05.
  • Divide $507.05 by 65 shares = $7.80 a share

Oh, what fun math can be! 

I really need to work this out for all the stocks I’ve averaged or scaled into. I scaled into a few of my other stocks last week — as I’ve been doing throughout the summer. I wish I could be a little more type A when it comes to tracking.

My new year’s resolution was to get more organized with tracking my trades. I still use post-it reminders occasionally. I now have two bulletin boards and a whiteboard to post better visual reminders for my trade ideas, upcoming strategies, and items that need attention. While I’ve made improvements in keeping up with things, I’m still floundering in the tracking department.


Thanksgiving Day 

Tomorrow my in-laws are coming to stay with us for a few days. They know it’s going to be a vegetarian ‘Thanksliving’ (the term courtesy of Jesse Eisenberg), so I’m sure they’re getting their turkey fill tonight with the other half of the family in Calgary before they fly in tomorrow.

I’ve got yummy Tofurky on the menu (don’t knock it until you try it) along with savoury kale chips, grilled veggies, dessert cookies, and other things that go well with good wine and craft beer. This may seem unappetizing to many, but we’re decent cooks for a couple of veg-heads and have yet to disappoint our guests. Cholesterol levels will not be spiking tomorrow!

I’ve got some cleaning and prep to do tonight so that tomorrow, I can trade in the morning for my US margin account as the US markets are open. Once I’m done trading, Thanksgiving cooking – and drinking – begin in the early afternoon.

Happy Thanksgiving to all!

 

 

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: Relative Strength

The Week of August 14
  • On Wednesday, August 16th, I bought 100 shares of Bombardier (BBD.B.TO) at $2.65 per share.
  • With $1 in commissions, the whole purchase was $266.00. I now have $18.47 in cash in the RRSP account.

I actually meant to buy the shares on Tuesday, but I totally forgot to put in an order! So, on Tuesday night, I put in a limit order to buy 100 shares at $2.68, a couple of cents above the current bid/ask price. I was peeved by my sloppiness, but I’d been stalking this stock all month, watching it against the market. I wanted it that badly that I was willing to pay more than I knew I should have.

Thankfully, on Wednesday, my order was filled at the lower price of $2.65! This happens sometimes; other times it can go the other way and your order will be filled at a much higher price. It’s called slippage when you get filled at a higher price than what you have on order. Slippage tends to happen more when stocks are lightly traded. Bombardier is a heavily traded stock, so slippage is less likely to happen.


Let’s do some chart analysis!

 

BBD analysis

Price charts for BBD.B and XIC on freestockcharts.com

On Chart #1, the pink arrow shows the day I bought BBD.B. No special day and it closed negative. On Chart #2, the pink arrow for the XIC market ETF shows the market on the day I bought BBD.B.

The blue arrows on both charts #1 and #2 show how they closed for the week. BBD.B closed more positive than the market did, showing relative strength. There’s been uncertainty in the overall markets in general with the possibility of war — and then you add violent protests and terrorist attacks to the mix and you get even more negativity. I hope this little stock, along with the rest of the RRSP portfolio (come on, LIQ!), will show resilience in the face of all this.

Chart #3 is the weekly chart for BBD.B. It’s a healthy looking chart with a very bullish setup. (If you’re not familiar with the market lingo, bullish means optimistic and positive because apparently, bulls look up when they’re in attack mode; bearish means negative and pessimistic because bears look down when they’re about to pummel you. There could be more to the meaning of these terms, but all that matters is that you get the picture.)

Chart #4 shows a lot of potential for BBD.B to move up if and when it gets past the previous price resistance points as seen on that pink dotted line.

Of course, all of this can go potty — regardless the relative strength and bullish setups — if the overall markets get really negative and there are more sellers than buyers. No matter what, just try to stay positive and strong!

 

The Transparent RRSP: Market Fears

The Week of August 8
  • I left the RRSP account alone. I wanted to buy shares of Bombardier (BBD.B.TO), but I couldn’t find an entry. There might be an entry on Monday or Tuesday.

 

BBD vs XIC

Price charts: BBD.B vs. XIC on freestockcharts.com

As you can see in the top two charts, BBD.B has been more positive than the market (the two lower charts of XIC). If the market continues to head lower, I’ll either abandon the plan to buy shares of BBD.B or just wait until the market settles down.


Last Thursday, the markets collectively demonstrated anxiety over North Korea. There was a big market sell-off and most gold stocks went up. It’s hard to say at this point if this is a reaction temporary in nature, or if it will signify the beginning of more and more selling due to fear. I’m going to make it a point to pay closer attention to the news and to how the market trades over the next couple of weeks.

Last week, I put together a big watch list of stocks that had promising charts. After last Thursday, only a few of them still look okay:

  • L.TO (Wait another few weeks to a month for this to properly set up)
  • H.TO (I own shares of this stock already.)
  • EXE.TO (I own shares of this stock already.)
  • TCW.TO
  • D.UN.TO (This is a REIT.)
  • CNE.TO (Needs a better setup unless you’re into aggressive, riskier entries.)
  • LIF.TO

Until you know what’s going on with the market, I don’t recommend buying anything. These stocks would be worth looking at while also observing the market. Watch how these perform against the market or their sector. If resilient stocks start to show weakness, then it’s usually a good sign that a weaker market will become even weaker.

There are different ways to play defensive during uncertain times. You can buy gold or shares of gold stocks. You can also buy consumer staples stocks. You can buy nothing or you can sell all your stocks. Whatever you do, don’t lose sight of what you want for your portfolio long term and think strategically.

Since the late spring, I’ve been unloading shares of stock. I’m either selling portions of my positions or all of them to either collect profits or reduce my exposure to the market. I have still been buying shares here and there, but not as actively as I used to. This has nothing to do with North Korea. Rather, it’s more about the market, which has been pulling back since the end of April. Maybe eventually, it will have everything to do with a conflict with North Korea. Regardless of what happens, I’ll let the charts guide me, not my fear.

 

 

 

 

 

The Transparent RRSP: Summer Reading

The Week of July 17
  • I took no action for the RRSP.

Instead, all week I’ve been stewing and brewing over something I wrote two weeks ago:

This week, I was actually considering buying shares of APH.TO for the RRSP, but it’s not quite ready yet. I know this one is capable of developing really good patterns. Once I see the trading range tighten, the selling volume lessen, and a pattern improvement on the daily and weekly charts, then I’ll pick the price I’d like to enter at and I’ll put in an order. I’ll give it another couple of weeks. If it ends up going up while I’m waiting for these things to align, I won’t be too concerned if I miss the run. It will either set up again later or I’ll find something else.

So, APH had a major breakout three trading days after that post. The setup I was identifying actually happened – just a lot sooner. I took my eye off the ball. So, I went with my next play. Last week, I bought ECN at $4.03 with a strong feeling that it was going to take out a previous low of $3.87, which it did only three trading days after I put in my limit order.

 

APH ECN

Price charts for APH.TO and ECN.TO on freestockcharts.com

 

I was right both times. The problem is, I’m left frustrated, mainly because I missed the stock that had the bigger move. You know what’s worse than losing money for most traders?

  • Exiting a stock too soon and leaving money on the table;
  • Missing out on something you knew was going to happen;
  • Overcompensating for either of the above two reasons.

I actually shouldn’t be frustrated. Let’s say I never noticed APH at all. I would take that ECN trade any day and I’d be okay with it.

Trading Psychology

Trading psychology is actually a ‘thing.’ I once had a trading coach – an infinitely kind, generous, patient, uber positive day trader based out of Colorado. He was really into trading psychology and he consistently banged the drum on the importance of visualization, meditation, and forming a strong belief system supported by mindful practice. He got me reading Psycho Cybernetics and books by Tony Robbins, among many other things. This reading took me down a path of self-exploration deeper than any other self-improving attempt I’d made in the past. This was when trading had changed me.

I learned that most of what drives our decisions is conscious, but so much of what drives our actual actions is subconscious. A common action for traders is to right a wrong. When we lose, we become prone to overtrading or overcompensating for something we should’ve done instead. We try to make back what we lost or make what we should’ve made on something we ‘knew’ would work. The reality is, there is no certainty in markets and everybody knows this. Nor is there total certainty about anything in life.

I finished reading Market Wizards, a great book featuring interviews with top traders in the U.S. These traders all had their own unique strategies, their special recipes for success. What they had in common, however, led to their success: tested strategies, experience, persistence, the need to manage their losses, and learning to deal with the uncertainties of the market.

In this book was also an interview with Dr. Van K.Tharp, a psychologist who focuses on the psychology of trading. It was so fascinating to read about how this psychologist understands the thought process behind trading and has dedicated his work to helping traders get past mental and emotional road blocks in order to achieve their goals for success. Of course, I ordered one of his books from Amazon. I’ll be reading Super Trader – Make Consistent Profits in Good and Bad Markets over the next few weeks as I also read Edwin Lefevre’s Reminiscences of a Stock Operator.

Am I upset about missing the move on APH?  150% yes. Have I missed other amazing opportunities in the past? Yes, hundreds of times. Has that ever stopped me from making other decisions with good payoff? No. Will I miss other great opportunities in the future? Of course. Will I take other great opportunities in the future? You betcha.

The market will always be there. Opportunities will always present themselves. I will try to be ready for them, but I can’t catch them all. Learning and growing from these experiences is part of the fun and adventure of trading. I know I’ll get over this missed trade with APH. I hope that things work out with ECN and that I’ll have another few opportunities to buy more shares of it. One day, APH will present yet another opportunity and I will do my best to be ready.

 

The Transparent RRSP: My Own Stocks and Father’s Day

No actions taken the week of June 12

It’s been a very busy week for me, but it’s a good time to be busy as the markets are still looking like they’re headed lower. I don’t feel the need to take action quite yet. The US markets need to go down through May’s lows – at the very least – before going up again. This could affect the Canadian market; we have already been weakening the last couple of months and going through our own correction. If the US market goes down more and we don’t, then that’s a good sign for us that our correction could be over.

markets.jpg

Price charts of QQQ, AAPL, XIC, and SPY on freestockcharts.com

Apple (AAPL) is a big part of the NASDAQ (ETF: QQQ) and it’s been weakest of the big tech stocks (Facebook, Amazon, Netflix, and Google). Until it stops going down and levels out, it will continue to lead the NASDAQ down.

It’ll be interesting to see if the rest of the US market follows suit. I’ll keep my eye on the S&P 500 (the SPY ETF). Its financial sector (XLF) has been quite strong, but this sector is due for a correction. A slower summer market could cause it to stall and look less inspiring to investors. A correction in the financial sector could take the SPY down. There was a lot of selling last week in some of the big US banks (BAC, JPM and WFC) as well as Visa (V). Other big financial stocks (C, MA, and AXP) were trading strong. A divergence between a sector’s biggest stocks creates uncertainty.

Summer Trading Means Fewer Selections

Often, when the leading market heads lower, other markets eventually do the same. However, it can be different in the summer because of less trading volume. Performance is more stock and sector specific and less market dominant.

Investors and traders pile onto the fewer, more promising opportunities that stand out. Sectors kind of do their own thing and are less prone to overall market moves because there’s less of a dominant trend. It becomes more obvious which sectors are stronger and which ones are weaker. It’s actually a very good time to look for sectors and stocks that are about to embark on a new move or trend before it gets busier again in the fall.

For me, the summer is usually the time when I focus on the quiet under-performing sectors and I try to see if there will be a new longer-term opportunity in it. I’m going to watch the Canadian financial sector as it’s been weak since late February. I feel that it should correct just a titch more, and if it does, I will watch very closely for when it sets up again. If this happens, Canadian banks, here I come!

I didn’t have time to do a stock search this week – I only had time to look at my own portfolio. Here are a few of my stocks that I’m considering buying more shares of:

  • Aphria Inc. | APH.TO
  • Aritzia | ATZ
  • Bombardier | BBD.B
  • BMO SP TSX Laddered Index ETF | ZPR
  • ECN Capital Corp. | ECN
  • Extendicare REIT | EXE

I’ve been complaining a lot about having too many stocks. It’s better for me to focus on what I have and get more shares of the ones that I like. I just have to wait for a new entry point.


Thanks Dad!

My dad passed away in 2009. He was 59 and battling a long-term ailment. At least I can say that shortly before his death, he was living life to the fullest. What happened to me after his passing was something worth thinking about. Without his guidance, his half-believable stories, and hilarious anecdotes, I had to use whatever resources he’d passed onto me to keep going. I’m sure this recognition was all subconscious, but I finally had the courage to see things for what they were and let them go in order to do the things I most wanted to do. I took a promotion at my job, saw my career trajectory and said, “On second thought, I’m going to learn how to trade stocks. However that turns out.” The rest is my history.

I’m halfway through reading Jack D. Schwager’s, Market Wizards: Interviews with Top Traders. It’s been an incredible read so far. I’ve heard of some of these guys before. It’s so cool to hear about how they all had to overcome so many barriers to get to where they were. One thing none of them had to overcome was their gender. I can honestly say that neither have I, even though I am a woman.

Since I was young, my dad convinced me that being a girl was an advantage. His dad, my grandfather, was in the US Army, and he was away a lot. He served in WW2 and in Korea. So my grandmother ran the show when my grandpa was away. My dad was the youngest of seven siblings, four of whom were older, amazing sisters. My dad ended up being a very macho guy – who saw women as being greater than anything macho.

Because of my dad, I never felt disadvantaged for being a woman. I actually thought that I could do whatever I wanted to because I was female – he’d long convinced me it gave me an edge. Maybe it is true – our society has yet to accept this concept. Or maybe he just told me a tall tale knowing what I’d be up against. As I got older, I became more painfully aware of the disadvantages women frequently encounter. I love trading because the market doesn’t care about your personal details. You’re either in at the right time and right price, or you’re not. It doesn’t get more gender neutral than that.

As I’m reading Market Wizards, I feel that I can relate to these traders on so many levels, but it feels a bit too much like a boys club. I know there are a lot of extremely successful female traders out there. We’ll just have to cover our own stories. Whether or not I become a market wizard worth writing about one day, I’m sure my dad would be proud of me.

Happy Father’s Day, Dad!

 

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!

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