Former Long Position - IBM
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Tutorial Steps.
If you need help with terminology refer back to that Step of the Tutorial or the
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We added IBM to the portfolio because we like the looks of both
the Configuration and Action History charts. The Risk Corridor is very
comfortable and the upside to the historic high ($132+ in
August, 2000) is about 38%. In addition, they offer a solid product.
Action 1) - 11/14/04:
Step #1 - NYSE registers a Stage 3 - Bull Market.
 Step #3 -
IBM flashes a Buy Configuration Signal
(click on Configuration
Chart, to the right). We execute the Buy. Initial Sell-Stop is established off the
valley-bottom resistance points which are below the 30wk moving average. Risk
Corridor is a comfy 14.8% (see Action History Chart, below).
Action 2) - 4/17/05:
Step #2 - IBM closed at $76.70 on Friday, April 15. Since this is
below our Sell-stop level of $83 this represents a Sell-stop violation. As
this is our first Sell-stop violation with IBM (i.e., Strike One), we
Sell half of our position. This transaction results in a loss/negative ROI of
19.5%. Half of our original position is still alive (see Action
History Chart, below).
Action 3) - 4/24/05:
Step #2 - IBM closed at $74.21 on Friday, April 22. Since this is
below our Sell-stop level of $83 this represents a Sell-stop violation. As
this is our second Sell-stop violation with IBM (i.e., Strike Two), we
Sell half of our remaining position. This transaction results in a loss/negative ROI of
22.1%, bringing the cumulative loss on the closed portion of the position to
20.4%. One-quarter of our original position is still alive (see Action
History Chart, below).
Action 4) - 5/1/05:
Step #2 - IBM closed at $76.38 on Friday, April 29. Since this is
below our Sell-stop level of $83 this represents a Sell-stop violation. As
this is our third Sell-stop violation with IBM (i.e., Strike Three), we
Sell the entire balance of our remaining position. This transaction results in a loss/negative ROI of
19.9%, bringing the cumulative loss on this former holding to overall (see Action
History Chart, below).
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