About 10 years ago, I bought a book written by Jeff Cooper called "Hit and Run Trading: The Short-Term Trader's Bible." I found the book to be informative, easy to understand and well worth the $125.00 I paid for it.

It taught me some things I still use today and it was the inspiration for a great VectorVest strategy called, "Explosive Break-Out Formations." The most important thing I may have learned from Jeff's book, however, came from its title. That was to take the money and run. This is exactly what we did in our Model Portfolio this week.

Jumping in and making a quick killing like we did was similar in principle to what Mr. Cooper described in his book, but the setup, as he calls it, was quite different. First of all, we had to sense that an explosive breakout was near. This, of course, was fully described by our work on Timing-the-Market. Next, we had to pick the right strategies to use. This was easy to do since we know that stocks with the lowest RT values fly the highest on a rebound. Thirdly, we had to know when to take the money and run.

Again, this was very simple. We used a 5% Stop Price to exit positions as we have done in the past and we did not replace any stocks with new positions. A Stop was raised when a stock's price went above its purchase price, and we did not lower any Stops from their high points. Yes, a 5% Stop is awfully tight, and we have left a lot of money on the table from time to time. But it worked very well with the "Odd Fellows" portfolio.

By nature, I like to hold a stock as long as I can, but "Riding the Wave" is a trading strategy and it has to be managed as such. On the other hand, the "Stalwarts" portfolio is almost a "buy and hold" strategy which sells on the second weekly 'S' rating. It's getting hurt right now, but I'm betting it will improve as a new group of leaders emerge from the rotation currently taking place. You can see this happening right now as a new group of names are appearing at the top of Stock Viewer. You can use the "High-VST Newcomers" search to see who these guys are.

You may have noticed last Wednesday that we said we would begin to replace open positions in the Model Portfolio with stocks found by the High-VST Newcomers search. The reason for this decision was that we know that "short covering" had a lot to do with the explosive nature of last week's rally. Therefore, the price increases we enjoyed were unsustainable. So we wanted to switch to a search which would find stocks with sustainable price increases.

The High-VST Newcomers search finds stocks which promise long-term gains.
The searches we suggested using last Wednesday, July 16th, are designed to be used at market bottoms for Making a Quick Killing.

P.S. We have received several reports from subscribers who made phenomenal profits with the Pirates Long search.