Well, the day had to come when the chop shop market we’ve been having would come to an end. Finally. For a day at least. Today Mr Mike (That’s Me), was hit by the psychological demon known as pulling the trigger too soon on a sell. Let’s learn from my mistake.
Homebuilders were acting weak today. My last trade in the sector came after I analyzed a bullish setup a week ago. My how it’s changed. Today, the stocks said to go short. Here’s my three entries in RYL, TOL, and MTH.
Quick quip: When you’re shorting, it’s best to pick on the high beta stocks of the group, or the ones that are not following the leaders. MTH falls into the latter category.
RYL – Ryland Group Inc. I was able to fill 1/5 of the shares I wanted short at 55.36, as the specialist kept dropping the ask on me. I gave up, and targeted TOL.
TOL – TOLL Brothers Inc. I’ll be sending the specialist of TOL a fruitcake next Christmas for filling me completly at 32.77. Stop set at 32.93, above the base.
MTH – Meritage Homes Corp. Another fruitcake’s in the budget for 2007 Christmas day, as this specialist filled my lot at 43.01. Stop set at 43.33 for this online trade.
The trading plan was to cover 1/2 the shares at 2R, drop the stop to breakeven, and cover the rest at 4R. So, what does this nimble trader do. Well he watches the homebuilders head his direction. South. Then, and I point it out on the TOL chart, he get’s panicked by an uptick, and covers all three stocks. His sentence. Read the psychological trading piece dealing with pulling the trigger, or selling too early. I made an R on these trades, and left more than 3R on the table.
This is why Uglychart’s automatic trading system may work… because it leaves out human emotion.
Reread Selling too Early, or not buying at all.
Stock pick FIG – Fortress Investment Group LLC, made a happy camper out of any shareholders given the shares at the $18.50 pricing. I made one trade in the stock off the 15-minute buy signal. My fill was lousy, and I scalped it for .20.
Tomorrow, I’ll post the winner of the day, one of my favorite trading patterns, and start a Trading Patterns reference page.
