{"id":24149,"date":"2013-02-13T20:23:24","date_gmt":"2013-02-14T01:23:24","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=24149"},"modified":"2023-04-25T17:52:31","modified_gmt":"2023-04-25T21:52:31","slug":"learn-to-take-a-loss","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/learn-to-take-a-loss","title":{"rendered":"Learn To Take A Loss"},"content":{"rendered":"<p>I was trading GMCR this morning. I consider it to be a Top 8 &#8220;momo&#8221; stock. It would probably be #2 behind NFLX if it hadn&#8217;t done a dopey 3\/1 stock split a couple of years ago. &#8220;Momo&#8221; stocks are stocks that &#8220;fast money&#8221; hedge funds are constantly pushing around.<\/p>\n<p>GMCR gapped lower on earnings last week and had a pretty solid Day 1 bounce. It then sold off for two days before bottoming on Day 3 which was yesterday. The thing I like most about momo stocks is they just set up over and over again. The hedge fund players have not altered their playbook one bit in the 17 years I have been trading. It is really quite astonishing. \u00a0So the setup that started forming yesterday was a multi-point reversal.<\/p>\n<p>Look at the chart below. After making a new low on the Open of February 12th GMCR quickly bounced over a point. On its next pullback it held the bid just above the prior day&#8217;s low. This is the first evidence of a possible reversal and not an area I would be interested in putting on a trade. I needed to see more evidence that momo buyers were stepping back in to accumulate the stock for a multi-day move. That is what occurred on the two higher consolidations later in the day.<\/p>\n<p>In a market with a strong bid like we are currently in you will see traders getting in early on this type of trade as it will work more often, but I prefer to see accumulation at several higher levels before committing to the reversal trade. I am not concerned about being late because I know a momo stock will move farther than most stocks and the move should last several days.<\/p>\n<p>Before the market opened I visualized what price action I wanted to see to get long. If it drove up strongly above the prior day&#8217;s high I would look to accumulate into the first pullback. And if it ever consolidated above the opening high I could build a larger position. My out was below the prior day&#8217;s afternoon high. I judged the risk\/reward on the trade at 1\/6 at a minimum.<\/p>\n<p>My trade management was good as I was able to bring my average price to within 25 cents of my stop. I also took off 25% of the position when it was sold when it made a new high reducing my risk a bit if I were to be stopped out. If it had held above the opening high I would have built a larger position.<\/p>\n<p>I was stopped out of the remaining 75% when it traded below the prior afternoon high taking a loss. If on the desk I would have given it one more try as it was clearly being bought again during the next 30 minutes at this key level. It eventually moved higher closing a few cents below the HOD. Tomorrow I will be back in if it holds above this level.<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2013\/02\/gmcr-5-minute-feb-13th.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-24153\" title=\"gmcr 5 minute feb 13th\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2013\/02\/gmcr-5-minute-feb-13th.png\" alt=\"\" width=\"600\" height=\"420\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2013\/02\/gmcr-5-minute-feb-13th.png 1000w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2013\/02\/gmcr-5-minute-feb-13th-300x210.png 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2013\/02\/gmcr-5-minute-feb-13th-250x175.png 250w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/a><\/p>\n<h4>For more details on my entries, exits and stops take a look at <a href=\"http:\/\/www.smbtraining.com\/overview\/stock-play\">SMB Real Time<\/a>.<\/h4>\n<p><a href=\"http:\/\/twitter.com\/sspencer_smb\"><img decoding=\"async\" src=\"http:\/\/twitter-badges.s3.amazonaws.com\/follow_me-c.png\" alt=\"\" \/><\/a><\/p>\n<p>Steven Spencer is the co-founder of SMB Capital and SMB University and has traded professionally for 16 years. His email is sspencer@smbcap.com.<\/p>\n<p>No relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I was trading GMCR this morning. I consider it to be a Top 8 &#8220;momo&#8221; stock. It would probably be #2 behind NFLX if it hadn&#8217;t done a dopey 3\/1 stock split a couple of years ago. &#8220;Momo&#8221; stocks are stocks that &#8220;fast money&#8221; hedge funds are constantly pushing around. GMCR gapped lower on earnings last week and had a &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/learn-to-take-a-loss\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":143,"featured_media":24154,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,3],"tags":[],"class_list":["post-24149","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-steven_spencer_steves_blogs","category-technical_plays"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Learn To Take A Loss | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/learn-to-take-a-loss\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Learn To Take A Loss | SMB Training\" \/>\n<meta property=\"og:description\" content=\"I was trading GMCR this morning. I consider it to be a Top 8 &#8220;momo&#8221; stock. It would probably be #2 behind NFLX if it hadn&#8217;t done a dopey 3\/1 stock split a couple of years ago. &#8220;Momo&#8221; stocks are stocks that &#8220;fast money&#8221; hedge funds are constantly pushing around. GMCR gapped lower on earnings last week and had a ... 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