SCALING IN WHEN SPECULATING (weeks to months)

Rising tides lift ships and falling tides lower ships.  When uncertain with the Market direction over the course of a few months, scale in when speculating (weeks to months) on a stock.  For example, a full position should not exceed 20% of your capital/portfolio as discussed in “Risk Management” October 19.

I wanted to speculate in my IRA with Apple September before it broke above $700 with new all-time highs but I was uncertain with the Market Trend into the end of the year.  I opened half (10%) position at $694.  The Market appeared heavy the end of September so I trimmed the position back to 5% taking a 3% loss with plans to add back on the dip. Early October it dipped to the 100 Day Moving Average (DMA) at $630 and I doubled back up to 10%.  The day October earnings reported I scaled back in another 5% on the dip at $602.  I now have a 15% position in Apple at an average $643.  I am prepared to complete my scaling in of 5% around $500 in the event it dips that low; otherwise, I am content with the 15% position with a target around $800 (25% gain) over the course of a few months.

January 27, 2013 Update:
Added final scale-in January 15th at $489 for a $585 average full position and held into earnings.  Apple dipped on the best quarterly earnings in its history and is teasing with the $425 gap.  Not exactly what I planned, but will hold into September or $730 for a 25% gain.

May 26, 2013 Update:
Quite a wild ride down to the April 2013 low at $385.10 before reversing and currently trading above the 50 DMA at $445 and a 10 P/E.  I continue to hold a full position at $585 into September or $730.