Monday, June 1, 2009

Lesson on Not Buying at the Right Time: GOOG

I sold Google (GOOG) $37 ago and I feel stung. So I decided to learn my lesson here in the hope of not repeating it. Well, it looks like my same old pattern, lesson unlearned. (Darn!)

Here's GOOG's 3-year weekly chart to get a better perspective.

My mistake was easy to spot. NOT BUYING AT THE RIGHT TIME. Now I see on the chart that the first (less risky) buying point was when the stock broke above the downward trend line from December 07 (yes, 07). That would have been $345 during the last week of March. The second buying opportunity was mid April, when the stock broke $381. You could call it a tiny cup break or breakout from irregular double-bottom.

Instead, I bought at middle-of-nowhere price of $360, and sold it at $389, right after the breakout from $381. Duh.

This seems to be my repeated pattern. Now more than ever I'm determined to correct it (if my ADD allows me to).

By the way, note the textbook climax top in October-November 07. Huge run-up every week on increasing volume, then the highest price on a very low volume. Sure enough, the next week saw a huge decline on a massive volume. That was a Nasdaq top. I didn't know then what I know now, so I remember those days as frightening, not sure what was happening.

So why am I not in the Nasdaq beta stocks like GOOG and AAPL? Why did I sell GOOG? It's VOLUME. It's not there AT ALL for either stock. No one (figuratively) is buying the breakouts. That's a precarious situation to go long.

No comments:

Post a Comment