You Don’t Need To Be A Hero When Trading

Nov 5th, 2010 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Technical Plays
Share on StockTwits

This AM I tweeted that I thought LVS was getting a bit overdone.  These words of caution were intended to put those still trading it on the long side on alert for a possible blowoff top and reversal.  LVS at its peak today had moved up 40% from its pre-earnings closing price.  Too much too fast.  Those who bought on the break above 45 last week and were tweeting like drunken sailors today how it would trade up to 70 were definitely being setup for a vicious down move.

But the fact that LVS was becoming extremely overbought in the short term is not a sufficient condition to get short.  I was just relayed a story that a big time trader was shorting LVS all the way up today and was marked down 100K.  After LVS reversed and sold off three points they were up 100K.  Nice comeback but was it necessary for them to have taken so much pain on the way up.

One of the most popular expressions on SMB’s desk right now is that when a stock changes “character” it means it is time to take notice.  When LVS had a hard down move below 54.25 the momentum had clearly changed for the day and it made sense to short it with a downside target to yesterday’s close of 52.

Great job for those who were able to catch the reversal.  But if you were also getting killed on the way up you should ask yourself if think there are easier ways to make money trading.

  • Henry Wittman IV

    Nice post. Still feel like this is a bear trap for any people who hold this stock overnight.

  • Jason

    nice post, i was one of the people who is just grateful to be out alive after doing exactly as the person described!

smb newsletter
Options Risk Disclaimer    Forex Risk Disclaimer

1. SMB TRAINING is NOT a Broker Dealer. SMB Training engages in trader education and training. SMB TRAINING offers a number of products and services, both electronical (over the internet through and in person. SMB TRAINING also offers web-based, interactive training courses on demand.

2. The seminars given by SMB TRAINING are for educational purposes only. This information neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decision you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.

3. This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by SMB TRAINING or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.

4. SMB Training and SMB Capital Management, LLC are separate but affiliated companies.

5. No relevant positions

6. Please note: Hypothetical computer simulated performance results are believed to be accurately presented. However, they are not guaranteed as to accuracy or completeness and are subject to change without any notice. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since, also, the trades have not actually been executed; the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commissions. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any portfolio will, or is likely to achieve profits or losses similar to those shown. All investments and trades carry risks.

Log in | 80 queries. 1.698 seconds.