Applying the 2008 strategy
Oops!
18-Aug-08. With a brand-spanking new strategy in hand, I decided to look at my current and recent holdings. It wasn't pretty!
CYCL
I still have this lot of CYCL in my portfolio. The timing of the buy was, in fact, just right in terms of the new strategy. The PPO line had crossed over the signal line and was obviously diverging. The only problem is, I bought when I should have sold short!
Since then, there has been another cross-over. If I had sold-short and then covered just before the second cross-over when the PPO line abruptly changed direction, I would have made about $1.50 per share profit.
Currently the PPO line is very close to the signal line but has not crossed. Since I am long, the sensible thing to do is hold a few days until the PPO line either begins to parallel the signal line up or cross below it. In other words, watch carefully and be ready to bail!
ELP
I bought about three weeks after the latest cross-over. Had I been following my strategy I would have sold short, not gone long. The divergence of the PPO line from the signal line is increasing, which indicates that the sensible thing to do is eat the loss and get over it.
HPQ
I've had these shares of HPQ since Eve was a rib. Since they are worth much, much more than I paid for them, I consider them almost a foundation; their value cushions the value of the portfolio from rapid changes.
Given the new strategy, it makes sense to continue to hold since the PPO line is rising faster than the signal line (bullish).
Note that at the same time the PPO was showing increasing divergence (bullish), the ADX was showing a weakening trend.
DYN
In retrospect and considering the new strategy, buying DYN was a colossal mistake. I bought just as the PPO line was coverging from above the signal line, and within days it had crossed and was diverging below it. I could have saved myself a big loss if I had bailed.
On the other hand, the PPO line has just crossed above the signal line. If divergence materializes, this might be a good time to buy! It could be a bottom.
HGSI
I bought HGSI just as the PPO line was converging on the signal line. Luck was with me, however, because after a brief flirtation, it began to diverge again. Selling at a profit was a good thing, but it was premature. The line has diverged again and HGSI closed Friday just below $8.