I received a very good analysis of a trader’s HPQ trading after the close. Let’s take a look and then discuss.

HPQ – Considering I was in the opening drive, I definitely should have made money in HPQ today. After fees/etc. I’m sure I was down in it.

I bought some (but not enough) above the 24.30-35 area. I got up to around 700-800 shares above 24.50 which was the premarket high. There was clear buying on the tape. Below was my thought process at the time…

1) We’re above the opening range (24.15 x 24.30)…I should be long
2) We got above 24.50, which was the premarket high….I should be longer
3) The market is extremely weak and HPQ is showing a ton of relative strength…Maybe this thing is going to 26-26.50 today…I should hold a swing core depending on what I see next.

HPQ began to work and approached 25 and I took a little off, maybe 200 shares getting down to 600. The first time that HPQ approached 25 it didn’t get through 25 and quickly came back to 80c – but didn’t trade below that level. Now we were holding above 25.

It was now just after 10AM and I was thinking that HPQ could see 26-26.50 today. Then it got to 25.25 and struggled a little bit. I took off another 100 shares to get to 500. My avg. price was around 24.60.

I was holding my last 500 shares as a swing. I decided that I would hold that 500 to below 24.80 – where it didn’t get below after the first approach to 25. (In retrospect I think that was the wrong stop). I got stopped out giving back almost a half point from the highs. It was the wrong thing to do in this case.

Here’s why…

1) It was steep. HPQ had an opening drive of a little over a point. This is a good size move and there’s a good chance that the stock needs to pullback, or at least a rest. (this is def. a reason to lighten up – which I did a little bit)
2) The pattern changed. The buy program wasn’t the easiest to trade with but the pattern was very recognizable. The pattern was consistent until it changed up at 25.20. (This is a reason to lighten up some more – which I didn’t do)
3) The offer stuck at 25. This was very different. This is a reason to get very light or flat…some people even flipped their positions short.
4) It was still a little bit too early in the day. The stock wasn’t trending yet. I think it’s okay to swing some, but I don’t think it’s okay to swing 70% of your position
(continued)
Thinking about it now, I kind of think I was favoring a swing long because I knew there wasn’t much going on in the market and I thought this could be my only opportunity to have a really good day. The right thing to do was to be very light or close to flat when the offer stuck 25. I ended up hitting out 79s and 74s.

I am sure too many traders just could not get long HPQ on the open and play for the opening drive. HPQ was so weak Friday. Though there was that amazing stand on the bid at 23.40. Who was that? With the market gapping up it is so tempting to fade any weakness and play for an HPQ breakdown. While such a play will work we have to honestly assess our trading and wonder how often above the top of the opening range. Did you miss the opening drive in HPQ because of a lack of trading open mindedness?

One more point about the close today. How many just watched GS crumble? Is that because of all those past bad feelings of the GS shake? (stopped out of a good position and then continues in the direction of your past position) Was today’s breaking news about Chairman Blankfein so different that you needed to find a way into GS? Was the repeated selling so different that not finding a way into GS irresponsible? These are all good questions you might ask reviewing your trading from today.

Bella
One Good Trade