You Don’t Need To Be A Hero When Trading

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

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  • http://twitter.com/Hankw24h 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!