Former Long Position -
HON
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
Positions Closed in 2003). 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 ($67.69 in
July '99) is over 145%.
Action 1) - 6/8/03:
Step #1 - NYSE registered a Stage 3 - Bull Market.
 Step #3 - HON 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 a tad above the ideal range but within tolerance at 23.7% (see Action History Chart, below).
Observation 9/28/03:
Step #4 - A hilltop at 9/4/03 is confirmed as the third subsequent
decrease in price occurs as of market close on 9/26/03. No Sell-Stop
adjustment action required until confirmation of next valley-bottom (see
Action History Chart, below).
Action 2) - 10/19/03:
Step #4 - A valley-bottom at 9/26/03 is confirmed as the third
subsequent increase in price which occurs as of market close on 10/17/03. Since
the 9/26 valley-bottom is above the 30wk moving average, we adjust
the Sell-Stop to the 30wk level at $26. 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 11):
Step #4 - Sell-Stop adjustments in tandem with the 30wk moving
average (see Action History Chart, below):
3) 11/9/03: 30wk = $27.29 rounded down to $27
4) 12/7/03: 30wk = $28.11 rounded down to $28
5) 1/11/04: 30wk = $29.22 rounded down to $29
6) 2/1/04: 30wk = $30.11 rounded down to $30
7) 2/29/04: 30wk = $31.14 rounded down to $31
8) 4/11/04: 30wk = $32.15 rounded down to $32
9) 5/9/04: 30wk = $33.14 rounded down to $33
10) 6/20/04: 30wk = $34.10 rounded down to $34
11) 8/1/04: 30wk = $35.11 rounded down to $35
Action 12) - 8/8/04:
Step #2 - HON closed at $34.58 on Friday, August 6. Since this is
below our Sell-stop level of $35 this represents a Sell-stop violation. As
this is our first Sell-stop violation with HON, we
Sell one-half of our position. This transaction results in a gain/positive ROI of
25.6%, locking-in an annualized rate of return of 21.9% on this portion of the
position (see Action
History Chart, below). Half of our original position is still alive.
Action 13) - 8/15/04:
Step #2 - HON closed at $34.80 on Friday, August 13. Since this is
below our Sell-stop level of $35 this represents a Sell-stop violation. As
this is our second Sell-stop violation with HON, we
Sell one-half of our existing position. This transaction results in a gain/positive ROI of
26.4%, bringing our cumulative gain on the closed portions of HON to 25.8% (see Action
History Chart, below). One-fourth of our original position is still alive.
Action 14) - 9/5/04:
Step #1 - NYSE registers a Stage 5 - Bear Market
 Step
#2 - HON flashes a Sell Configuration Signal as the 5wk moving average
passes downward through the 15wk, indicating it is too risky to continue to
hold (click on Configuration Chart, to the right). We execute a Sell on the
remaining portion of our position. The transaction provides for a 32.1% gain
bringing the cumulative gain on this former holding to 27.4% which is
equivalent to a 22.9% Annualized Rate of Return.
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