The chart below shows the 80 stocks that made an all-time high in the week of Dec 18, 2009, and how they have performed over the following 2.5 months. There are more gainers than losers and the average stock underperformed all three stock indices. Five of the top gainers were up more than 20% (
SLXP up 29.5%; followed by
NRGP up 25%;
VNR,
STRI, and
NETL). The worst loser was
MDVN (Medivation Inc) which was actually performing well until yesterday when it released some bad news and got destroyed (gapping way down; See chart below). Special Circumstances:
STAR (Starent Networks) was
acquired by CISCO (CSCO) for $35 per share (slightly higher than its closing price on Dec 18th).
BWL.A (Bowl America) is also listed below as a zero because of difficulty obtaining data from Yahoo Finance, however, from Finviz I see it is currently about 3% higher than Dec 18th. Here is the chart of stock performances, followed by a chart of the biggest winner and loser.
What's hot:
SLXP (Salix Pharmaceuticals Ltd) is not the greatest chart out there, and a lot of folks might have been shaken out during the drop below the 50 day moving average. However, it's moving higher and it's a good example of where a relaxed trailing stop would keep you in a trade that's working while the market corrects.
What's not:
MDVN (Medivation Inc) This is why owning individual stocks carries more risk than owning an index. Just yesterday MDVN made a new all-time high and appeared to be breaking out. It closed over $40. Today, less than 24 hours later trades around $13. That's a loss of almost 70% in one night! Unless you trade after hours there was no way you could get out of this one. I show this to emphasize why position sizing is so crucial:
Individual trades will go wrong. Plan accordingly.
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