Everyone wants to get big. Great goal. To trade big responsibly you must have ways to lighten up. Today was one just way in QCOM.
So Solo J was in QCOM and looking to get bigger. QCOM was nicely above the longer term resistance at 53. QCOM was also cleanly above a slight intraday level of 53.50. A solid opening drive was followed by some consolidation with volume. Bullish Flag Pattern?
Solo J got bigger around 53.80ish and we were expecting an explosive move above 54. QCOM could not hold above 53.90, with 53.95 the intraday high. We were accumulating below these levels expecting a spike through the whole number. Our stops were 53.69, a price never touched in the consolidation.
QCOM finally held above 53.90 and pressed above 53.95. QCOM found 54 and 54.01 and 54.03 and 54.05 with more selling than I expected. 54.10 became the new previous 53.90 of intraday resistance.
Well this is not what we were expecting. I did not like all that selling above these resistance levels. It was still so early with increased danger of a reversal. So I recommended lighting up. This was just not the move I had expected. When QCOM held below 53.90 I recommended lighting up some more as this should have presented support.
I love the aggressiveness to get very big into the consolidation. But to be big you must also be able to lighten up in a way that makes sense to you. And a new high, with too much selling above the high, and an unimpressive drive higher can be a reason to lighten up and reevaluate.
Mike Bellafiore
Author, One Good Trade
7 Comments on “A Reason to Lighten Up”
…also $QCOM has a beta close to 1.00 and its a 90 billion dollar company….so for it to be up 4% with no specific news is probably up in th 99th percentile in the size of move scale.
Bella, I was involved in this trade this morning as well: long from the .80s looking for a move above 54.
I did not lighten up above 54 despite the moderate selling because I was trying to be patient and let it do its thing. I ended up getting stopped out of my position.
Where is the line between “being patient” and “having a reason2sell” for this specific example?
It was too early in the AM for me to hold the position. I do not trust the trend in the first 30 minutes of a trading day. It has to get later. And if a stock breaks a level and you see significant volume this can be a reversal pattern. Why not lighten up and reevaluate in this case? The line in these cases can be thin. So you should work this out for yourself when you will hold and when you will lighten up.
I too got long around 53.80. When it hit 54 I expected it to breakthrough. I was duped. Got out before I took a loss but that was not what I was expecting.
It was up on ‘news’….It was upgraded from Neutral to Buy…Albeit not too impactful but still, there was some news behind it.
hi I was looking at similar plays and many tend to have a gap at the point selling was encountered
looks very similar to lbr pinball play just some thoughts
great article