Well, I didn’t play any of my watches which I listed yesterday.
Instead, I shorted KEY. During the morning drop, I shorted 200 shares it at 2.45 only to see it go back to 2.75. As it was moving back and forth between 2.75 and 2.50, I shorted another 200 shares at 2.75 to bring average price to 2.60. Closed my position for a tiny 24$ profit after commissions. KEY has moved from around 5$ to 8.7$ in a week and I thought about holding it overnight for a fade. But at this point, financials are simply too risky. On any kind of bailout news, there could be huge gap up (gap down) wiping your equity.
Also, I would like to mention my watches from yesterday. MTG not only crossed 2.5$ mark, it it closed at 3.32, 50% up for the day. Why didn’t I play it then? For one, MTG gap opened at 2.54 (12% up from yesterday’s close) and then I decided to wait for 15 minutes before taking a position. MTG moved even further up and I couldn’t go LONG. I thought that MTG will run out of steam. Well, I was wrong and I lost a great opportunity. I think I need to keep my mind open and simply play the chart. As Morpheus tells Neo, ‘Free Your Mind’.
Just like MTG, ARTC was a great short right at the open. But I decided to wait a little bit and well, couldn’t enter into the trade afterwards. I am wondering if I should really follow JV’s suggestion that one should wait after OPEN. So many times, opportunity has already passed by the time I decide to wait and make a trade (especially incase of pre-hits). They say that most of the money is made and lost in first 30 minutes, I think I am going to try to trade those first 30 minutes and be on the money making side.Wish me luck. [Or if you think this is a stupid idea, let me know.]
Trade well,
RJ
Status as of end of Jan 28th:
Positions closed for Gain: KEY (24$)
Positions closed for Loss: None
Open Positions: None
1 response so far ↓
1 Charlie G. // Jan 29, 2009 at 11:38 am
Hey RJ, glad to see you posting again, and I’m appreciating the watchlists.
I’m always hesitant too to jump into plays after they already have made a big move, especially in the opening half hour.
One thing I have observed, and if I understand some comments made by Muddy in one of the seminars, is you have been watching a stock during pre-market and it has pulled back, it will at least usually reach it’s pre market peak. I don’t think this may as applicable on the days when everything is gapping up but mostly with individuals stocks getting ready to run.
For example, lets say a stock in PM peaks to like $2.35 after closing at $1.80 the day before, but pulls back to like $1.99 at open. Then it makes a jump early on to $2.15. There is a good chance that it will at least test $2.35 and maybe more before stalling. So it usually is worth the risk to try to get in like by $2.20 if you didn’t pull the trigger early on. And I think you would want confirmation with something like it being a former runner, or there being a spike in volume or some news to fuel the jump.
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