Painful Trading Week

I didn’t have a good week trading and finished down for the week. In my last post, I lamented about not swing trading this market, and the opportunities I have missed. Well, I decided to make a couple of swing trades this week; the results weren’t good.

The first swing trade was RSH, which I bought on a breakout on Monday. I have been watching this one for awhile. I was up at the close on Monday, but I could see it selling off after hours. They sold off due to a disappointing report by Best Buy. I cut it loose on Tuesday for a painful loss.

I also tried a swing trade in CROX, a Zanger pick. I entered a swing trade on Wednesday morning at $46.23, using a loose volatility stop. It moved up over $1, and I considered taking profits, but didn’t. The stock then sold off with the rest of the market on Thursday, and I capitulated, selling near the low of the day. You can guess what the stock did on Friday. Yep, it rallied.

I was also stopped out of QQQQ after I moved my stop up to secure $1 gain, but it didnt cover my losses.

In hindsight, I chose to swing trade at a bad time. The market was a little overbought going into the week, and volatility has been increasing. I did learn something else, and that is that I don't have the stomach for losses. I like to take a quick profit and end the day in cash. This is not how millions are made, but it does suit me best.

By the way, here are some interesting statistics regarding the markets performance in pre-election years, which I read at the free weekend newsletter over at Amateur-Investor.net:

For those that have been long time readers of this newsletter you know that since 1943 the Dow has always had a positive return the year prior to a Presidential Election Year….For those years prior to a Presidential Election Year the 1st and 2nd Quarters have typically performed the best on average while the 3rd and 4th Quarters haven't performed nearly as well. If this trend continues in 2007 then the Dow's performance in the 3rd and 4th Quarters may not be as good as what we have seen in the 2nd Quarter which is currently up 8%.