Eric had titled his post A GM Post-Mortem, but I sure hope the stock is not yet dead as I am holding it - Alex Elder
To tell you the honest truth I have been waiting for this trade opportunity to set up for several weeks. When it finally gapped down after I posted about the set up…I was shaking with a combination of excitement and fear! Sort of like dating the hottest girl in school with your inner insecurities kicking in that gives you the feeling she is out of your league. You finally go out on that date and you stumble and bumble and maybe make a move too early before she is ready. Well I jumped in on the gap down day…normally I tell myself to sit on my hands…a man who falls off a cliff is not going to bounce and start running the same day- in most cases! Unless he is some kind of Navy Seal.
I had written out a sort of “target” or “plan” at or near $1…I took (in 20/20 hindsight) a not great entry @ $1.11. I had my mental stop in place! Trust me! Like I have said before: “I am not a very good trader” and I need your help and feedback to try to improve. That is why I am posting up these trades to try to stimulate discussion which acts as “therapy” for a trader and helps put in place better habits and reactions. Anyway the area I need to most improvement is selling! Selling is the hardest decision for me for some reason. I got some therapy today because I sold! I don’t know why but the entry although mostly always fuzzy is more clear than the exit- maybe because of fear, greed, regret…I really need to stomp out those worthless emotions.
Today I hit the sell button at $1.61. Booking a 45% gain and $5000 profit. My target was profit driven along with some function of chart technical’s. I always think it can go a little higher and most likely it will…but it is hitting a potential resistance zone at the edge of the gap. If it pulls back it could set up another classical bullish pattern and offer a reentry point. And then there is the feedback- Thank you all to those that provided comments on the set up idea. I hope we can share more dialog and ideas in the future together. I am more of a technical trader than a fundamentalist. I like to be on the contrarian side most of the time, but not all of the time. Who knows about this one? I just thought it looked very attractive technically! Sort of like the hot Thai Girl looking like she has all the right features, except you never know if you will get a “surprise” when the action starts.
As I look down at my level 1 GM is ticking higher now 1.74…but I am happy. A target was reached and a profit was booked! Now let’s go find another good trade!
Good Trading,Eric F
Hi Alex I am glad to hear someone joined along on this trade with me.
ReplyDeleteLooks like today it is turning out to be that Thai "Girl" I talked about. For those of you who have never been to Thailand I recommend going to the island of Phuket- it will be an intersting experience you must see the Simon Cabaret:
http://www.phuket-simoncabaret.com/
I will be interested to find out how the Thai "Girl" treated you...Maybe I have been drinking to much this morning...but I think in a few days she may become more attractive again....
Good Trading,
Eric F
Hi Eric:
ReplyDeleteI share you feelings with being a good trader or not. I have been profitable in most of my trades but I certainly do not enter or exit well.
Most of my trades have been hitting my stops and I miss out on the real big move. I've been trading Morgan Stanly and have done well but an errant jammed stop the other day cost me $3500 on the next move.
Finding trades is going ok, entering trades is not bad but defining where to have that stop and when to let it run is nailing me but I guess that's the learning process.
Thanks for Sharing as I look and see GM closing at 1.43 today. It may be a buy next Tuesday and I never took it because of the bankruptcy issue.
Gordy
Dear Eric:
ReplyDeleteCongratulations! Thank you for sharing your GM trading idea on May 12 and the following-up on this sucessful trade.
I observed GM's daily development, but was shy to trade it. Somehow I had in the back of my mind that technical signals may look attractive, but if the channel width is in similar magnitude as the stock price, then look for a different stock.
I would be happy to read more discussions about this topic. Congratulation and thank you again for sharing this trade.
Regards,
Andreas R.
Hi Eric,
ReplyDeleteI didn't see your GM trade last Sunday - wish I had - but was following GM independently this week.
First: How can you possibly criticize yourself for an entry at 1.11 and 45% profit? Too sweet. This week offered a chance to repeat that, with similar entry or at 1.20 to 1.50 Tues-Thurs, and out at 1.90 Thurs. for 26 to 58% profit. "He who hesitates is lost", and I let my intuition to buy at 1.20 be over-ridden by seeking out more news and opinion about possible effect of bankruptcy on the stock.
Why didn't I buy at 1.20 with a reasonable stop and ask questions later? I don't know. Almost everyday, due to a type of brain damage, I sleep thru the good stuff in the morning, and try to assess the situation and the opportunities from 12- 1pm to around midnight. In the case of GM, I was still able to buy Thurs at the exorbitant price of 1.90, having missed a recommended entry at 1.41, and sell it 90 minutes later in the aftermarket for 2.22, a 16.8% profit. A very brief momentum trade that should, by rights, have turned around and bit me. After exit in post-market at 2.22, anticipating pull-back next day, I entered staggered orders at 1.66, 1.46, and 1.26, in a tiered trade size structure so that the mean price if they all filled would be 1.38. I do odd things like this to compensate for sleeping thru the morning session. It often works out pretty well, since I pitch low. Sometimes no fill, but if they fill they are often near the day lows, and well below the close. The 1.26 never filled Fri, which is OK because it meant the other orders were still close to value for the depreciated shares coming down from above $2 levels. This is one stock where News Matters, if you can figure out what it means. That run up was too much too fast on speculation, and bound to fall pending any real facts. Conflicting stories overnight created fear and confusion, and it fell. I ended up lighter in the stock than I intended to be over the weekend, but that could be Ok as we may know more by Monday night. Still don't know what bankruptcy will mean for shareholders. If it isn't devastating, then this stock is a hold perhaps to $4, based on one scenario I read.
I can't speak to interpretation of force index, but note from RSI panel in your illustration that major price increase occurred (Mar 12-27) where RSI was above what the arrow points to as sell territory. Entering sell territory, but what to do if price action still has upside potential?
It is hard to follow all the Spiker's picks, but your GM trade is one I wished I had seen earlier!! A riveting phenomenon - what is going on with GM.
Oh -- about Thai girls: please be careful what you say. The Ministry of Tourism is trying to discourage that sort of thing. Thailand is my second country.
Did you visit James Bond Island?
Eric,
ReplyDeleteNice going, sweet trade!
Grant
Hi Kim et al,
ReplyDeleteKim- thanks for the link. I have not been reading the 'news' or opinions about GM fundamentals...but rather have been following the charts...All I can say is WOW- you taking profit off the top of that momentum is one gutsy trade! Good job!
I would not be in a hurry to jump back in...just me...it looks like major dark cloud cover...My initial psychological historical low target of $1 is likely to get shattered...Someone once told me to buy new historical lows... :)
I still feel like this is speculation. At the highest order! What I want to see is another "set up"...either a squeeze play down to 1.25 or breaking the $1 barrier and plunging to new, new historical lows setting up a MACD histogram bullish divergence of major proportion!
I am happy to watch this one from the sidelines until we see something coming together.
Hi Andreas- not sure about the channel width? I don't use channels. I like the BB's instead. I really love a good MACD bullish divergence coupled with a historical low- which is what I was looking at that got me shaking with excitement and fear!
Thanks for the kind words! Let's go find another good opportunity!.
Good Trading,
Eric F