I have been patiently awaiting the trade out of one of our Technology holdings into another one on my watchlist, and I believe that the opportunity is here. It's always a challenge deciding a trade in advance of the market opening, but it looks like the stock we are selling will likely be unchanged or perhaps higher while the buy will decline moderately.
The new name offers about 50% to my one-year target. It's a big company but much less mature than the one we are selling, which offers less than 30%. We are also adding to two laggards and trimming several names that have popped of late.
A sharp and surprising plunge in natural gas prices has pushed one of our stocks into extreme oversold territory, and, while I may need to refine my target, I believe that the stock's value is more than 2X the current price. The other laggard to which we are adding offers over 75% to my target.
On the sales, we are trimming a Large-Cap Tech company which is running into technical resistance and is somewhat overbought. My target is about 40% above the current price, so the position is still attractive. The other two are also a bit overbought, offering significantly less than the new name or the two adds.
Over time, we have been successful with this type of tactical trading. I have several other names I am considering adding, including a value name as well as a growth name. Earnings season is likely to give us some volatility among our holdings, and I will continue to optimize the portfolio.
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