VRX - I saw the news that Ackman had reduced his stake and since he was a major driver of the stock, I thought any pops would be a good short candidate. I had the thought of it fading off right from the open and from then any lower highs could be shortable. However, it decided to ramp towards r/g first before washing out most of the day. The thing to note here is that I just finished reviewing some trades from Nate's free blog and I noticed the theme on most gap downs is to let the shorts gets exhausted first and then you short that first push. That is probably what happened here as shorts came into the stock on the news and they got ramped on and then the real short opportunity presented itself when it failed r/g. The good thing is now that idea is in my head. While there were no real lower highs, once it had that red candle at the r/g fail you could short there and ideally add to the winner.
SUNE: My plan going into today was to short any failed follow through for the $5 break. However, the gap down and the overall market negated that plan. I was looking for a push to the $5 area to get short and when it got there it did flush but then came right back and then I was thinking about shorting but decided it overall wasn't worth it and the whole thing wasn't going as my original plan, which was good of course since it grinded up the rest of the day. One thing to note is that Nate said that he looks for these types of stocks that don't move with the market usually but gap down when the SPY gaps down. He looks to go long and SUNE was one of the stocks he went long on.
LEI: I was looking for a weak open r/g for some sort of move upward. My thought was that it still retained most of the move from Thursday and with it being such a low float I figured any dips/higher lows would be a good candidate for a long. It ended up washing out a little and the ramping right up. It didn't leave much room for an entry unless you took that washout. It did come back down towards the $6.50s which was an opportunity but I didn't realize that at the time. I had actually thought about shorting it since it came under the $6.70 support from the prior day after shooting right through it. I should have thought about the overall bigger picture of shorts still being trapped especially from the bear trap this morning when it looked like it was going to wash out. I need to have a better idea of not just trading the pure price action like I have previously said but also think about what is overall happening with the stock and all the current participants. On the flip side though, had I had that in mind I would not have known that it would be a good short. I thought about shorting it when it went red which told me that the move was possibly over but it was a dollar from the highs so I wasn't sure if it was a good r/r scenario. When it consolidated toward r/g on volume and stuffed I should have shorted there. That was a better r/r. I saw the SSR was on though so I didn't want to bother with it especially since it had low volume.
CMRX: I was looking for a short on this since it looked overextended due its bounce from the lows. The gap down changed things a bit but in premarket it came back to the major resistance point so I thought any shorts near that area would be ok. However, going off of what Nate said the washout turned out to be a good long since it ripped through $9 pretty quickly. I was looking to short after it had gone red and below the $8.9 level. However, I saw on the bids that $8.66 kept refreshing and soaking so I stayed away from shorting it which was good. However, when it looked to be weak again I guess I was doing other things because the same setup occurred but this better looking and it faded nicely into the close.
VXX: In the morning the market was looking weak but the VXX and UVXY weren't heading higher so I thought that the market would head back up so I thought about shorting the VXX. It would have been a decent scalp but it came back and made new highs. I thought that the market was overreaccting so any pops would have been shortable on the VXX. Later in the day I saw the market was still weak so I changed bias and looked for dips on the VXX to buy but didn't want to chase, so I left it alone. The market then proceeded to do what I thought it would do in the morning and rip up.
Things to work on:
1. Always have an idea of what is happening with the stock and not just the price action you see.
2. Stop thinking you are always chasing something when most of the time you are not. Ex.: LEI short when it went red
3. When the market gaps down like this, look for stocks that don't usually trade with the SPY for gap downs and an opportunity to go long.
No comments:
Post a Comment