Earlier in the week I mentioned two short trades. So far, neither of them are working but neither have caused damage.
I mentioned BLK as a short term scalp. The trade was to work by shorting the stock at $225 at its all time high. The company reports earnings next Tuesday. My thought was that the stock would not have enough juice to take out its all time high until after earnings. Therefore, the stock would have a top until earnings and if the market had a down day (like today) there would be a chance to cover and grab a few points.
Well, this stock just won’t crack. Even with the sell off in BAC, C and GS the best we could do today is $222. I was at least hoping it would get pinned down at OPEX at $220. I’m still short BLK and I’ll likely hold it over the weekend and dump it Monday before earnings (whether it is a profit or a loss).
But, I would definitely watch this one after earnings. If there is a breakout over the all time high, this one could be a great long.
I wanted to write a post about BLK because it is a perfect example of how a [potentially] busted trade can be a great opportunity. I shorted BLK at $225 because it is at the all time high and a low risk entry. So $225 is a battle ground between the longs and shorts. Now it only makes sense that if the shorts lose the battle that it could be a good long opportunity with a nice entry point.
So for those that get a little frustrated with a loser trade, the silver lining is that sometimes it can turn into a nice opportunity in the other direction. Let’s see how BLK plays out.
Another short I mentioned this week was DEER. This is a mechanical RSI 93 trade. This stock is quite overheated and due for a fall. I have an entry at $12.40 and the stock is currently at $12.80 down only 1.77% today. This is basically the worst scenario for an RSI 93 trade. If it was up today, momentum would have become even further extended making the probability of a big fall even more likely. But with the stock only down 1.77%, it chops the RSI from 93 all the way down to 88. So that little drop causes momentum burn meaning that the chances are increased that the stock could have another big up day before it moves lower.
I mentioned DEER because almost all of my other RSI 93 trades in the past few months have been majorly successful trades. DEER could still be successful but I’m caught in a tough spot today. I’ll likely hold and let my stop do its work Monday if it bursts higher although I think closing it out this afternoon is not a bad move either.
Going into the close, I’m up barely up today. My long positions have done pretty well but my shorts are concentrated in BLK and DEER and those stocks are not offering any help.
My only trade was I added a little to my GLD position this morning. I put bids in for WATG (initial entry) and LCRD (adding to existing position) but neither were hit.