Well it definitely has been an interesting few weeks since the previous edition of the Sterling Weekly. Since then we have seen a major issue develop with the NASDAQ halting trading in Corinthian Colleges 'COCO' because a single trader entered a erroneous number of shares to sell and sent the market sharply lower. The problem is that the NASDAQ was unable to halt trading on other ECNs and the shares of 'COCO' continued to trade. When the trading resumed the shares moved back higher. Then after trading resumed the NASDAQ cancelled many of the trades that executed during the trading halt. This left many traders who had purchased shares of 'COCO' during the trading halt and then sold after trading resumed for a quick and sizable profit, or at least who thought they had, actually short the shares of 'COCO'. I believe their attempt at dealing with the problem of the number of shares to sell created many more problems than it actually solved. Trading in the shares of 'COCO' should not have been halted unless all the other ECNs and exchanges agreed to halt trading at the same time. A cynical person could say that the NASDAQ moved to protect one of its members and the expense of the trading community. We will probably see new regulations dealing with the halting of trading in issues that trade on many different platforms, if not a multitude of lawsuits from traders who suffered losses.

The 7th Rule of Trading is "Cut Your Losers, Keep Your Winners!" This is a very basic concept and one that you would think would naturally be followed, but it's not. Adjusting your portfolio could be thought of as managing the personnel of a professional sports team. No one in their right mind would trade all their star players for a bunch of bench warmers, because then all you would have is a team of mediocre, or worse, players. Yet investors do the same thing all the time. I saw this many times when I was a stockbroker; an investor who needs money for something calls up and needs to sell an investment to raise the cash, more times than I can count the first thought was to avoid selling something that was not profitable so they would want to sell their biggest winners. Other times it is an investor who is looking to avoid short term capital gains taxes, so they will want to sell shares in a company that is a better performing investment and they have held for a long period of time to simply avoid the higher short term taxes. The bottom line is that an investor should keep their best investments and seek to constantly weed the poorer performers from the portfolio. This will result in a team of superstars that produces championship results.

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NEW FEATURE: In the late 90's and into early 2000 I published the Professional Trader's Newsletter, which featured four (4) trading recommendations daily, as well as my nightly review of all the various sector indices. It was from these four (4) recommendations I selected the one I liked the best, as the expanded recommendation for the Prime Stock Newsletter. I have decided to combine the two newsletter formats and add three additional trading recommendations to the Prime Stock Newsletter. The new Prime Stock Newsletter will continue to have a primary recommendation with expanded information and analysis, three additional trading recommendations (the new feature), and my list of stocks with patterns indicating they are moving either higher or lower.