How do you catch the Dips

[modhatter]

Just wondering how you more seasoned people go about trying to 'catch" the dips of any stocks or funds you would like to buy. I use Ameritrade and just started to set up a "watch list". That means of course going in every day and checking each and every stock. This however, won't catch every stock that takes a dive unless I call it ahead of time and post it one the watch list.

Seems with todays technology there should be an easier way to be notified when an opportunity presents itself. As you know timing is everything. There are many stocks I would like to buy if the price comes down. But can I monitor all of them.....

I have often looked at the charts, to see a significant dip five months ago, and said to myself, I wish I knew about that when it happened.

Any ideas how to better monitor these dips accross a larger scale.

 

[samclem]

Yep, just look for the folks who do "technical analysis" of stocks and you've found the dips.

 

[modlair]

The key reality of this sort of thing is to understand that when you see a market decline . . . it is closer to the bottom than it was when it started.

 

[mickeyd]

how you more seasoned people go about trying to 'catch" the dips of any stocks or funds you would like to buy.

I have no idea. I am not that smart. I own the entire market and I suppose that I get the ups and well as the downs (dips) every day. I never worry about what the market does throughout the day, week, month etc. I figure that if I worried about it, I would not be sleeping as well as I am each and every night.

 

[LOL!]

I look at that stock market indices about 15 minutes before the market closes on days where the market has been down big. If the market (SPY, DIA, IWM) is down 1.5% or more, I consider making a large purchase. There have only been a few days like that this year, so I have only bought chunks of stuff a couple of times.

Outside of the daily dip watching, I also invest some money every month. Each month, according to my rules, the money must be invested. So I pick the asset class that has suffered the most that month. This past summer, I purchased MDY, DODFX and PID on the dips just because of my monthly rule. I could have purchased just about anything at the time and it would have a gain now.

Another method is propsed by James Stewart over at www.smartmoney.com/commonsense

Another timing method is proposed by Paul Merriman over at www.fundadvice.com

 

[Merlin]

Rebalancing your portfolio on an annual or other basis kind of forces you to buy asset classes that have underperformed. Hopefully they go back up.

 

[jazz4cash]

Most of the online trading platforms have many ways to monitor individual stocks. I think if you spend enough time exploring thier website you will find some features to automatically execute trades at preset prices like a stop loss or limt order. Those can be really tricky in a fast moving market, so what may be more practical is the feature usually called stock alerts.......it will flag the stocks on your list when they hit a trigger level....sometimes they send you an email.

 

[CCdaCE]

I was interested in finding out, on paper, whether I'd make money or not. So, I set up a portfolio at cbsmarketwatch.com, so every time you go to that website (if you don't delete cookies) a popup ... pops up. And every stock in your portfolio has its price listed.

I agree with jazz4cash. You then have to set up some sort of an alert. My personal experience was that the daily price fluctuations didn't really get my attention, otherwise. Suddenly, one day I'd notice that a particular stock or fund was way up. Then, I'd go to the 1 month chart or 3 month chart or whatever and notice it'd climbed 30% or something in one month. Ooop. Too late to buy now. This was all on paper, for entertainment, but it wouldn't have been very effective.

For instance, if you track 3M or Merck or whatever. You put it in the "tracker", and today's price shows up, but in a month, the price may or may not seem alarming even when it should be, if you don't have an alert set up for another price, above or below todays.

Obviously this only works if you are considering buying a particular stock/fund at a particular price. That seems like a lot of work, to me, to monitor it. Or, check your email for alerts all the time, etc. But that's just me. The other hard thing to take, to me, is when a stock drops it's usually for a reason. "Say! Merck is down XX %", but it's because Wonderdrug got YANKED. So, now that you and everyone else knows this "bad news", do you still want to buy? Especially with all the "earnings announcements" every quarter.

As of yesterday (10/23), I'd be up 48%, according to the tracker, if I'd have bought different stocks since 2002-ish, when I started playin' around. So, am I good or just lucky?

I think it's mostly luck.


-CC

 

[Spanky]

As other posters have said, you can always set up an alert to inform that a certain stock price dips below a certain level. Some brokerage houses may offer this kind of service. I beleive there are software you can purchase that can do the same. Good luck since there are many, many stock traders who monitor price movement all day and many of whom may have access to information not readily avaialable to the public.

 

[LOL!]

As of yesterday (10/23), I'd be up 48%, according to the tracker, if I'd have bought different stocks since 2002-ish, when I started playin' around. So, am I good or just lucky?

You are neither good, nor lucky. You are unlucky.
Since Oct 2002, VTSMX (Vanguard Total Stock Market Index fund) is up 70%.
Since Oct 2002, VTRIX (Vanguard International Value fund) is up 135%.

 

[Mr._johngalt]

Drinking from a dirty beer glass?

JG

 

[brewer12345]

I sit at a Bloomberg terminal every day, so its easy. The harder part is having sufficient conviction in your analysis to actually buy when things drop.

The way I do it is when I find something that looks attractive, I typically analyze it to death to get comfy with it. If it passes, I buy a chunk that is less than a full allocation. I then watch and wait. If things go well for the business, but the price stays flat or dips, I buy some more. If the price really crashes, I double check my analysis. But if the drop doesn't change the cash that the business generates, I will belly up to the bar for more. In some cases, this has left me "Hunt brothers long", but most of the time it has worked out. Spectacularly so, in some cases.

When the whole market was crapping out in 2002 and 2003, I just trusted to history. Rarely to bear markets last more than 3 years, so I just closed my eyes and bought. But I think you only get a few chances in a lifetimewhere the entore market is on sale at low-low prices like that. If I get another chance like that, I will be buying LEAPs on small cap indexes.

 

[CCdaCE]

You are neither good, nor lucky. You are unlucky.
Since Oct 2002, VTSMX (Vanguard Total Stock Market Index fund) is up 70%.
Since Oct 2002, VTRIX (Vanguard International Value fund) is up 135%.

Fortunately, I've stuck all of my Roth IRA contributions into VTSMX since 'Dec 03.

Unfortunately, I haven't stuck any into international.

-CC

 

[renegade]

I think most studies show that most "market timers" (those that work hard at "catching dips" and selling peaks), lag the overall market badly over any long term.

indexing and diversification are much more sane and stable growth strategies.

 

[dmpi]

I'm mostly a buy & hold investor. I've been (painfully) thru the 1987 crash and the 2000 dot com crash. I'm starting to think there are enough warning signs to call a peak. Even if your wrong, what's the risk? You might miss out on a couple more years of the bull market, but you'll still be getting 5% on your CD. The real trick is to figure out when and how to get back in. You can always just wait 2 years (for your CD to mature) and then just dive back in.

 

[free4now]

Limit orders

Well it's pretty simple for me... if there is a stock I want to buy, I simply place a limit buy order a bit lower than the current price. I generally use 5-10% below the current price, depending on how quickly I need to acquire the stock. Most of the time I'm in no hurry so it's more like 10%.

Since I'm a long term investor and want to have a certain percentage of my money in cash anyway, there's usually no big rush to get the buy happening right away... taking advantage of the volatility is the way to go.

But I generally don't stretch it out more than a month or two because then you start losing opportunity cost from not having that money in the market. If a month or two goes past and I still haven't bought, then I will raise the limit price until it strikes.

 

[semtex]

free4now, I use similar method, except I set 20% lower than current price. Greedy, isnot it? I play penny stock, so 20% dip is common.