Former Long Position - BKE
Step numbers referenced below are referring to
Tutorial Steps.
If you need help with terminology refer back to that Step of the Tutorial or the
FAQs associated with that Step.
Yes, you have seen this one in our portfolio before -- but as a Short (see
Closed Positions). Why would we turn right around and Buy it? Because we
received a Buy Configuration Signal, the chart looks good, moderate risk
corridor, and upside potential to this stock's previous record high ($38.56 in
June '98) is over 100%. Here's the play by play:
Action 1) - 6/15/03:
Step #1 - NYSE registered a Stage 3 - Bull Market.
 Step #3 - BKE flashed a Buy Configuration Signal
(click on Configuration
Chart, to the right). We executed the Buy. Initial Sell-Stop is established off the
valley-bottom resistance points which are below the 30wk moving average. Risk
Corridor is very close to the ideal range at 21.1% (see Action History Chart, below).
Observation 8/24/03:
Step #4 - A hilltop at 7/11/03 is confirmed as the third subsequent
decrease in price occurs as of market close on 8/22/03. No Sell-Stop
adjustment action required until confirmation of next valley-bottom (see
Action History Chart, below).
Action 2) - 9/14/03:
Step #4 - A valley-bottom at 8/22/03 is confirmed as the third
subsequent increase in price occurs as of market close on 9/12/03. Since
the 8/22 valley-bottom is above the 30wk moving average, we adjust
the Sell-Stop to the 30wk level at $18. From this point forward, Sell-Stops
are adjusted upward in $1 increments in tandem with the 30wk (see Action
History Chart, below).
Actions 3) through 10):
Step #4 - Sell-Stop adjustments in tandem with the 30wk moving
average (see Action History Chart, below):
3) 10/5/03: 30wk = $19.02 rounded down to $19
4) 11/30/03: 30wk = $20.04 rounded down to $20
5) 2/1/04: 30wk = $21.19 rounded down to $21
6) 3/7/04: 30wk = $22.21 rounded down to $22
7) 4/4/04: 30wk = $23.29 rounded down to $23
8) 5/2/04: 30wk = $24.42 rounded down to $24 (this action could have
been taken on April 25th)
9) 5/30/04: 30wk = $25.11 rounded down to $25
10) 7/4/04: 30wk = $26.18 rounded down to $26
Action 11) - 8/8/04:
Step #1 - NYSE registers a Stage 5 - Bear Market
 Step
#2 - BKE flashes a Sell Configuration Signal indicating it is too risky
to continue to hold (click on Configuration
Chart, to the right). We execute a Sell on our entire position. The
transaction provides for a 39.6% gain which is equivalent to a 34.4% Annualized
Rate of Return.
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