Truth be told I am somewhat amused each morning when our intern AGray pops by my station seeking our “Best AM Idea” for the Open. I am a trader and not a predictor. As a trader part of your job is to identify the MOST important prices in a stock and if a stock touches one such price you are obliged to figure out what trade to make, if any.
This morning before the Open my mentee asked me about getting short EL below 55. I said to him that seemed like a reasonable idea. As Bella would say that was an incomplete answer. What I should have said to him was that shorting a weak stock below support is a good trade BUT what happens if the support level drops and there are a ton of people prepared to buy right below the level? What happens if EL quickly takes out the pre-market resistance level and finds higher ground? I probably also should have asked him if EL had a history of bouncing after showing significant weakness. By asking such questions I would be in effect prompting him to open his mind to a bunch of different trading possibilities.
It is great to come in with a bias and a plan before the market opens. But please allow your mind to remain open to other possibilities. If not, you will severely under perform as a trader.