Friday was somewhat of a busy day for me as those of you who follow me on Covestor are aware. I told you that I was concerned with the recent rapid price increase in IEF (iShares Lehman 7 – 10 Year Treasury Bond) and had set a tight stop. Earlier I had set a $97.00 stop but I decided late last week to tighten that after I calculated the Chandelier Stop to be $98.09. With the decline in IEF’s price on Friday, all my IEF shares were sold as the stop was hit and I decided to buy more QLD (Proshares Ultra QQQ) and sell April $33 calls on same.
On the Canadian side, I sold some of my XSB (iShares Canadian Short Bond Index) and bought HXU (Horizons Beta Pro Bull). I also sold some of the stocks that I still owned from my former life as a small cap stock investor.
Neither of my timers has generated a long signal but they are close. If the Canadian market continues moving upward over the next several days, I will sell more of my XSB and use the proceeds to buy HXU.
I noted above that I used a Chandelier Exit to set the stop price for my IEF holdings. The Chandelier Exit was developed by Chuck LeBeau and is one of the best ways to set a stop. Mr. LeBeau has a web site at System Traders Club and was gracious enough to allow me to make one of his presentations on stops available to my subscribers and blog readers. Click here to open a pdf file which is Mr. LeBeau’s presentation titled “Exit Strategies for Stocks and Futures”.
If you want to employ stops that are adaptive to the market, I suggest you consider SmartStops for which Chuck LeBeau directs the financial analytics team. Essentially, SmartStops calculates stop prices based on its own analytics for most of the active US stocks and ETF’s each evening and sends a report to its subscribers. If you become a subscriber, when a stop is hit for one of the stocks in your SmartStops portfolio, an e-mail is sent to you. I signed up for a free, 3-stock portfolio last week and I did receive an e-mail Friday afternoon after IEF had reached the SmartStop. As for some of the people behind SmartStops, I can tell you that both Chuck LeBeau and Shelly Gould were very prompt in their responses to questions I had.
In the interest of not letting this post get too long, I won’t go into the importance of setting stops but I will state that I think all great investors who recognize the wrong-headedness of the buy-and-hold mentality also recognize that knowing when to sell is absolutely critical to investing success.
FJP
