Sunday, April 20, 2014

Aden Sisters Weekly Update

by Roger on May 31, 2013

Are We Buying High And Selling Low?

aep-price-chart-aden-sisters

AEP Stock Price Chart (from Yahoo! Finance)

In last nights Aden Sister’s weekly one page update they informed subscribers that American Electric Power (NYSE:AEP) has turned bearish and is therefore time to SELL.

This is one reason we advocate PAID investment newsletters instead of relying on free information that can often be worth exactly what you pay for it. With free investment advice you often get a buy recommendation (with or without conflict of interest, you don’t always know) but seldom any FOLLOW UP to know when to sell.

So I commend the Aden Sisters on that.

Was The Sell Recommendation A Little Late?

Time will tell how this sell recommendation works out but I bet anyone selling this morning at the open (what else do you do when they just tell you “time to sell”) wishes that the Aden Sisters would have recommended selling last week 5% higher.

Then, as I write this at about 11:30 ET, see the stock UP over 60 cents from where they sold in just a couple of hours.

NO ONE can get you in at the bottom and out at the top. And yes, AEP just reported earnings, though TheStreet.com is keeping it at a “buy”. But paying for advice we hope not to sell right after a good 10% drop that maybe could have been partially avoided with a FLASH alert that some newsletters offer instead of waiting for a scheduled release date.

What Does The Chart Say?

Richard Russell says “learn charting”.

And while we don’t pretend to be very good at technical analysis, a brief glance at the chart above, courtesy of Yahoo! Finance, almost looks like the same kind of temporary pullback AEP went through 6 months ago right before powering ahead another 20%!

Will that pattern repeat?

Hard to say, especially with Summer upon us. But AEP was purchased for the dividend, with some growth potential, so one should really only be selling if you expect the price to drop pretty significantly. After all, income and retirement portfolios really shouldn’t try to be market timers.

And definitely not with a paid newsletter service that updates no more often than once per week. A lot can happen in a week!

What Should You Do With AEP?

As usual, it’s your money, so take control!

We are holding our AEP for right now, it really rubs us the wrong way to sell when the market is going down and buy when it’s going up (unless in the context of a trend). In general, we want to buy when everyone else is selling and vice versa.

Not that the Aden Sisters can move the market on a stock like AEP, but the tone of the market was RED on the open – when we pretty much hate to trade anyway – and we didn’t expect that tone to hold (so far it’s reversed).

So we are going to see how this market goes; we kind of suspect the Fed was just floating a trial balloon and will try to start back-pedaling on the Fed-Speak. You don’t think what happened in Japan might have spooked a Central Banker or two in addition to the market?

In general, as smart as we know the Aden Sisters must be, it’s just difficult for us to REALLY recommend their investment newsletter. They have a tendency to tell that a stock (or commodity, whatever) will be strong IF or weak IF but by the time the IF has come to pass or not, the trade opportunity is GONE!

Such as: Stocks will be strong IF the S&P can stay above ????. Then when it falls below ????, well then it’s weak. No kidding? I think most investors would rather know the likelihood it’s going up and be able to make a PROFIT. And that’s hard (just ask a Dennis Gartman subscriber) when you buy what is “strong” and sell what is “weak” only to find out you’re in a trading range and you just bought at the top or sold at the bottom of that range.

Yes, many of the Aden Sisters stocks are at a profit, but the currencies (Aussie $ in particular) turned in some nasty (5% or more) losses. They told us to exit before that 5% loss became an 8% loss, yes, but taking a 5% loss on a currency where making back that 5% is not so easy makes one wonder why they took the trade initially.

And those who held NZ dollars like they said DID end up with that additional loss as that trade was exited AFTER the additional loss, since they “thought” NZ would hold up (stay strong above ???? – but when it doesn’t…)

This is one reason I am liking Scott Pluschau’s trading service more every day.

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