This morning I sold about 2/3 of my RCDO position (held via Spreadbets only) and this is a very quick summary of why I made this decision last night after the markets had closed. I think RCDO is a World-Class business and of the utmost quality - however, it has just run up quite a bit and I am nervous on the Markets in general and happy to bank some profits and reduce Risk. As I only hold this as a Leveraged Position, I am running a Higher Risk on it than if I had normal Shares.
Please note all the screenshots are taken from the Closing Position last night (Monday 11th May 2015) when I made my Decision to Topchop. Sorry to repeat myself, but I always like to make Decisions outside of Market Hours when I am Calm, Rational and Objective. I have not rushed into this Decision and have been thinking of TopChopping it for a few weeks.
In the Bottom Window, you should see the RSI (Relative Strength Index). The General Rule here is that you buy a Stock when the RSI is down around 30 and you sell when it is up around 70 - as you can probably gather, it is a Short Term Timing Indicator but it works very well. In this case, where I have marked it with a Red Arrow, the RSI is dropping down from 70 - this suggests that the Price will fall further in the Short Term.
The Blue Arrow in the Bottom Window points to where the MACD (Moving Average Convergence Divergence) Continuous Blue Line has sort of ‘bounced off’ the Dotted Blue Line - this is interesting because the usual rule here is that the Price is likely to go higher - so this is contrary to my Sell Decision. As with all things in Technical Analysis, it is imperfect and you have to make decisions based on several Indicators and you have to decide which to overlook. However, by only Topslicing and keeping some Exposure, I am still in the game if it does go higher.
Right, that’s enough.