August 15, 2013:
Today saw a sharp selloff in the stock market, on worries that interest rates are rising.
I sold my Mondelez (MDLZ) stock at 31.15, a small loss from my purchase price of 32.00. Please review the Mondelez stock buy order setup post from August 8th. Today’s selloff in Mondelez was on higher than average volume (over 11 million shares), not a good sign.
The stock struggled to stay above the 32.00 buy point. This is always a warning sign that the trade will likely fail. Since this was the 2nd time the stock fell below its purchase price, it was time to sell. The odds were not in my favor now for a profitable trade.
Mondelez was not helped by the fact that late yesterday it was reported that Warren Buffett’s Berkshire Hathaway sold most of its stake it in the period ending June 30, according to documents fined with the SEC. Buffett is considered a guru of investing, and if he is not bullish on Mondelez then many other funds take this as a sign to sell. That would account for today’s lower price in higher than average volume, as well as a general selloff in stocks today.
I will stand back to see how Mondelez’s stock fares after the stock market correction is done.
Stock market trading is always risky, so the key is to reduce your risk as much as possible by choosing established chart patterns and setups that increase your odds of success. That said, there are always things out of your control (such as market corrections, negative news, etc.) that can and will affect your investments negatively despite your best efforts. We must not let small losses upset us, or derail us from our investment plans and overall investment goals. You make sure your losses are small, and learn what you can from the experience.
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