2. Buy High and Sell Higher: "The one thing you learn in this business is things go higher than we ever anticipate and things fall lower than we ever anticipate," Gartman said, adding that Apple continues to establish new highs — highs much greater than anyone thought possible just a short time ago.
3. Never Add to a Losing Trade: This is the most important rule of all, Gartman said.
"What ever you do, never average down into a long position and never, ever, ever, ever average up into a short position," he said. "Averaging down is the suicide move in the business of trading and investing."
Gartman is a "Fast Money" contributor and publisher of the widely read "The Gartman Letter."
TRADING A SLUGGISH HOUSING SECTOR
As the housing sector continues to struggle and sales remain sluggish, Bank of America downgraded Hovnanian to 'underperform' from 'buy' on Thursday.
Hovnanian recently reported worse-than-expected quarterly earnings, CNBC's Melissa Lee reports. Its backlog was 30 percent lower than it was a year ago. Net contracts were down 13 percent. It spent a lot of cash buying land, which resulted in a negative cash flow.
This stock has been very hard to trade, said Guy Adami, managing partner of Drakon Capital. It's tough to both short and long. He'd rather go with Home Depot instead. Shares of the No. 1 U.S. home improvement retailer have continued to climb and could go higher, given he thinks its the best name in the housing space.
Veracruz founder Steve Cortes is watching PulteGroup, which he considers to be the "weakest" home builder. The stock has rallied 25 percent in the last month, but is still down 25 percent for the year. He may short this name.
TOP RETAIL TRADES FOR 2011