We Got a Bottom, Now What?
My method of profit taking and buying dips had me selling shares early in the year to lock in profits that I am now using to buy back shares. One of my top stocks corrected 50% from its peak before it bottomed at the same time the XLK line bottomed. I managed to buy shares back a mere 25 cents from its March 2004 low and have a 30% gain already from that buy! Even with that gain, the stock remains over 30% below its peak so it has plenty of room to continue higher. Another stock I bought back shares in last week has a PEG of less than 0.5! For a growth stock, this is a tremendous discount!
Technology stocks had huge gains since the low in October, 2002, so they gave back the most during the recent correction. A correction to the 200 DMA line is a very solid correction. We got that! As the chart of XLK above shows, the technology stocks are now once again above their 50 DMA line, which has been a good support level for most of the bull run since the bottom. The ONLY other time XLK was below the 50 DMA was early last year, when then market had a similar consolidation phase after some very fast and large gains from the 2002 bottom.
Warning! Don't Gamble on the Market!
You should only invest money on "hunches" like mine above with money you can afford to lose. I ONLY use money in the "explore" part of my portfolio to invest in these "hunches," so if I am wrong, it won't upset my long term investment plans. If you start to string several good moves together, they add up and can be significant, which explains why so many of us try to beat the markets.
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Meaning of "Core and Explore"
I advise a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE portfolio of well diversified, buy-and-hold, no load mutual funds and or blue chip stocks, then Explore with the remainder as you learn.
"Diversified" means you should have bonds as well as
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