Sunday, December 20, 2009

Beauty Is In The Eye Of The Holder

The Chinese told us many years ago that a picture is worth a thousand words. Today, I'm telling you that a picture can be worth much more than words. In fact, the right pictures can be worth riches. Take this picture, or shall I say chart, of PSEC. The beauty of its recent rally is undeniable. Note how the double bottom, the most powerful bottoming pattern in existence, solidly put in a base from which PSEC could explode. The smooth rising 8 and 20 period moving averages are things of pure beauty and the volume that the stock experienced on Friday is very telling.

What's Next?
Don't be surprised to see PSEC pull back some, as it has certainly gotten somewhat ahead of itself. The most recent jump has caused the shares to separate and move well above their 8ma. As a result, this could bring in some normal profit taking. But hold on tight. This is a wealth play, my friends, not a small insignificant day trading play. PSEC will be a friend for many years to come. So sit back, relax and let the stock work for you.

My Current Strategy
My hard stop is now at $9.50, just under the double bottom formation. I have no real upside target, but hope to earn the steady dividend quarter in and quarter out for years. Normal dips will be used to pick up more of these high-yielding shares. The only two things that would make me itchy to sell are 1) a cut in the dividend which I feel is unlikely and 2) a rally so fast and furious, you just have to take profits. Otherwise, PSEC will be a multi-year keeper.


Blogger Oliver L. Velez said...

I love it. so cleam.

December 20, 2009 3:35 PM  

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