There are a handful of stocks I've been looking to potentially add, and
Axsys Technologies (AXYS) has been one due to its exposure to government (a very "safe" customer) - but it's beaten hard and heavy and the chart has gotten very ugly. Yesterday it fell from the low $50s to low $40s on no news... I went back and pulled up a 1 year chart - in late April and early October it fell to about $45 on high volume selloffs so that was a "double bottom" in my eyes - I did not want to see the stock fall below that. A close below $45 and the stock could fall with no support for quite a while (to me, it looked like $34 or so). I don't have (it's ridiculous) stop losses in Marketocracy.com (which is where I track my "fund" portfolio) so I didn't even bother with a trade once it broke to $44. For disclosure purposes - I did try to trade this in my personal account: I put in an order at just over $45 with a stop loss in lower $44s. I was stopped out of my position within 30 minutes.
But, technical analysis is an art not science and you cannot predict the future - the stock was saved by
an upgrade today and is up 12% to the $48s. The chart is still in horrific shape but it has now "held" $45 so one could make a case for it again to some degree, based on chart. The larger point is, find something that works for you, and stick with your system - and control risk. Nothing works all the time, in fact if you find something that works 55% of the time you can be a large winner in the long run in the stock market. You just have to limit your losses on the 45% you lose and have some nice sized winners on the 55% you win. My discipline was once that long term support at $45 was broken to exit stage right... I gave the stock almost a dollar of "wiggle room". Again, nothing works all the time and if there had not been an analyst upgrade this morning I'd of been very curious to see how the stock acted today. In this day and age stock movement can be attributed to many things - namely a hedge fund blowing up and taking out positions at any cost. This might of been what happenes to Axsys the past two weeks, we will never really know.
Technically, upside is limited to mid $50s until proven otherwise as it has now broken all its major support areas. Since we missed it at $45, I'd rather be a buyer in the mid $50s than upper $40s - which sounds counter intuitive for those who do not use technical analysts. Once it regains its key moving averages I'll feel more secure the people who really move stocks are supporting the stock. For the nimble a trade between "here" and $54 might also be an option.
