On February 4, 2010, after hours, I blogged about a method to use Stockfetcher to identify stocks in solid uptrends, that had temporarily sold off for several days straight, like 4-5. The plan would be to buy the selected targets of the scan on February 5, holding for a swing play that would be exited using RSI 2 or above 5 SMA on the close cues. These are intended to be multi day holds, to ride out rough spots and profit enough to make such boring "buy the dips and sell the rallies" routes worth the tying up of capital.
Read the post here: http://traderbigt.blogspot.com/2010/02/alternative-trading-methods-using-real.html
How did we do? The stocks were: UBSI CHSI SLXP.
UBSI did quite well, and I would consider selling now, as upward momentum is fading.
CHSI also did ok, but without a reasonably wide stop, you might have exited before banking coin.
SLXP did the least well, but even it is above the open of February 5, as are the other two.
The conclusion is that in similiar market conditions, with a tolerant stop to ride out short term volatility, trading strong stocks temporarily pulling back 4-5 days which are above their daily chart 50 and 200 SMAs, the strategy is feasible. It also shows that sitting, and sitting tight, as Jesse Livermore has quipped, is a virtue!
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