I shorted ACL yesterday at about R81 as I believe it is over valued (bad management, strikes, uncertainty etc.) and thought it was a good trade. However, price bounced about 5% from low of R78 yesterday and has been going up and up in a down market. Even in Europe, Arcelor is worst performer on AEX for past 3 days. Am I missing something?
I respectfully disagree. Don't really believe in technicals. I have had a good success rate in 2010 so far (touch wood!). Need to base my decision to go long or short on something other than gut feel . . . PS: My short term trades are usually from 1 day to 1 month.
Use fundamentals to determine long term trend.....if you do not use technicals to determine your entry point into the long term trend you better have deep pockets to see you through short term technical moves that will bankrupt you and then move in the direction of the larger trend. I have never seen a long term trend without pullbacks along the way - this is where technicals will protect you. Fundamentals are great but as you are discovering today, trading short when an extreme oversold position calls for a 10% retrace will hurt you.....ignore technicals at your peril.
I aim for a 10% profit. I concentrate on a few shares I researched. If the trade goes in opposite direction, I revisit fundamentals after about a week. If it hasn't changed, I hold on until loss turns to profit. i.e. If I don't get closed out by OST if there is a sudden surge! If loss and fundamentals changed, then take loss! Not for the faint-hearted though! PS: Just did a 20 minute in and out trade of AMS. Took my 15% profit and ran . . . Still in my ACL's though.
Wish I stayed longer in my short! Tried using a bit of technicals and gut feel. And I must admit that you can get quite an adrenalin rush . . . and good profits in a short time. Couple more transactions like this and I will be converted from being a fundamentalist!