Jun
04
2009

  USO Is A Nailbiter

Whew, good thing I checked the market when I did. USO is potentially in day 13 of the TD Sell Countdown. If the price closes today above $37.79, then my strategy is to sell at the closing price. Since it's close to the end of the day, I put in an automatic order to close out my position if I can move it at $37.80. It's been hovering around $37.67 since about 3pm. It got as high as $38.10 earlier in the day, so it's not inconceivable that the price could move and I'll get my order filled in the last minutes here.

The temptation to just sell at the current market price rather than waiting for the TD trigger is strong. I wouldn't be giving up all that much profit if I sold at $37.67 instead of $37.80. But I would forfeit my trading discipline, and that's a bad habit to get into. If my strategy is to sell at the close of day 13 of the countdown, that doesn't mean to sell it a few cents shy of the price making the countdown.

It's a tiny little bit easier to wait because the pattern is close to recycling. We've already had a second sell setup finish during the current countdown, but the true range is still less than the previous range, so it hasn't "recycled." If it does, then I'll be glad to have waited, since another spike up would be predicted.

Thank goodness for automated trading. If I were on the floor of the exchange, I'm certain I would have jumped the gun by now and sold my shares at market price, with a potentially high opportunity cost of missed profits if the pattern does, in fact, recycle.

It feels good to place an order again, even if the chances of it getting filled are low. My DXD has been down so much during this rally, I could use some profit-taking to boost my job satisfaction. If my order is not filled today, I might put a trailing stop order on it. That means I'll hold USO as long as its price is going up, but when it drops a certain amount (I'll have to do some chart math to determine if I should use a percentage drop or fixed dollar amount) then a sell order will be triggered to lock in profits.

Now I'm going to check GLD. It's a long-term holding for us, but I'm not above taking profits on a big portion of it, and buying more on the dips. It's been trading up in the $90s again. I should probably put in a standing order to sell at $100 since that's been a pretty long-standing price ceiling. Or at least set a trailing stop order on it to be triggered once the price hits $100.