Tuesday, June 28, 2005

NSI revisited (NTRI)


I'm trying to be more aggressive about selling rallies so that I can buy bullish dips. Jarod reminds me "its better to sell when you can than when you have to." I think a trader from the Market Wizards book series said that. Maybe not, maybe it was just Jarod. He's right though.

I posted on this blog here on April 7'th that I was making my first long buy of the year, NSI. Since then it has moved from the amex to the nasdaq market and renamed to NTRI. I've done a little bit of trading in it during that time, but I carried my original one-lot position this whole time, letting it ride the trend. This position was my best one so far this year, more than doubling. But I sold it today because it looked dicey. Better to let the window dressers carry the risk while the market is vulnerable. Although it made a new high today, the volume was not impressive at all. But just because I closed out the position doesn't mean I'm done with it though. If NTRI sets up another low risk buying opportunity, I'll take it. I'm still bullish on the stock, but right now it looks pretty ripe.

Every now and then I bump into ex-traders from the dot-com days. When I explain to them how I trade, I often get asked how I can take so many losses. Well, NTRI is a perfect example of why cutting losses and letting the winners ride is a really good idea. You can pay for a lot of small 2-5% losses with a win like this.

I put the NTRI chart up here with the 20-day and 50-day simple moving averages for a reason. Notice that NTRI ran up for months, almost 100% advance before even moving below its 20-day moving average? It still hasn't even closed under it! If I had a larger position I would still be carrying half of it, with a stop a little under the 20-day SMA. If it closes below that line though, it may make a good short-term short play. Whether I short it or not depends on the market at the time.

In closing, I don't know if I made the right decision to sell NTRI or not. The best part is that I get to find out without losing any of my new capital =)

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