The wrong stop (IBM)

IBM drove on the open after gapping up.  At 52 week highs if you did not pay right on the open you were left to watch a 2 point upmove.  I am sure many passed on the first ticks opening drive play.  Flagging at 180.50 offered our easiest trade which I am sure many did not miss.  At 52 week highs, strongest stock on the open, and forming a bullish flag pattern.  We all can make that trade.

IBM got a bit trickier as it slowed near 182.  The market made new highs but IBM did not make an impressive new high above 181.80 and the market was near R for SPY at 132.  It was hard not to play defense here.  I readjusted my stop from 181.49 to 181.64.  Arrgggghhh!  That was a mistake.

I set the stop at 181.64 because this was just below the low of a pullback before the move to 182.  I tightened up my stop because of the R on SPY and the lack of impressive new highs as the market was ripping.  The real stop was below 50c.

Expensive stock need more room.  You give your best plays a little more room.  Stocks do pullback even when strong and need some room for stops.  IBM deserved a stop of holding below 181.50.

Earlier I placed an intraday reversal trade in WBMD at 35.49 as it showed some weakness around this level.  I set a stop for 76c.  I got stopped out at 77c, the high was 80c, and then it fell 1.5 points.  Arrgggghh!  I thought that was the right stop.  I just caught a bad bounce as they say in the market.   The IBM stop however was no good.

15 Comments on “The wrong stop (IBM)”

  1. Were you able to get back in the IBM trade 3 bars later, or was the pullback to shallow?

  2. I am sure many passed on the first ticks opening drive play.  Flagging
    at 180.50 offered our easiest trade which I am sure many did not miss. 

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