Bad Luck Boeing?

On Friday the news hit of a fire on a Boeing 787. Yes, that same plane that BA was forced to take out of service because of lithium battery fires during flight. I don’t know about you but I prefer my flights without fires on board. BA tweaked and fixed the battery issue and the 787s were back in flight. And then news hit of another fire this Friday during trading action. Sell, sell, sell said the market as BA cracked on Friday. There was no verification that this fire was related to the previous battery issue. There was just the uncertainty that the fire wasn’t (see The Uncertainty Trade). This caused the sell-first-and-ask-questions-later activity.

After BA settled, I bought some with a stop below the low of the downmove. If the fire was not related to the prior battery issue, I had a potential reward of a gap fill. If I was wrong, I would lose a few bucks. The result? I got the low tick of the day. BA later traded 4+ points higher than the LOD. Outstanding. There were 30+ millions of shares on Friday and I got the low tick of the day? How is that even possible?

Fast-forward to today. We started with new news that the Friday Fire was not related to the battery issue, with a note from CRT Capital on briefing.com that made some sense:

Boeing: CRT Capital would buy on any weakness surrounding the 787 fire at Heathrow (101.87 )

CRT Capital would buy on any weakness surrounding the 787 fire at Heathrow; the fire was not related to the lithium battery and they believe a cause will be identified quickly; their long-term thesis on the name remains intact: 787 safety issues don’t change the strength of the super OE commercial aerospace cycle that, they believe, is in the fifth inning of a very long game, driven both by replacement and growth requirements.

BA settled in an intraday bullish flag pattern of between 104 and 104.30 and was holding up well. I bought some near the bottom of the flag. BA busted out of its range and I bought more. BA busted above the HOD, 104.55, repeat and rinse. I was holding this accumulated position to near a gap fill of 107, with stops below 104. Things were looking good.

I had some firm business to complete as BA was flagging near 105. I set stops for 104.49 and 104.39 as I couldn’t leave such a news risk position without stops. Maybe news would hit that that fire was related to the prior battery issue. Alabama, from our desk, pinged me while I was playing partner in my office of BA moving down. I scurried back to the desk. The result? Stopped out of 90 percent of my position with the low ticks pennies from my stops. Again? Déjà vu from Friday? BA closed the day near its high: a cool $1.50 above those playing partner stop outs.

Bad luck? A rigged market? HFTs screwing me? Nah. This was a present failure to mitigate my bad luck by buying back and setting a stop below those playing partner stop outs. Friday was bad luck, right? Nah, that was a crappy play anyway as we were all just guessing about the news. That’s not a play I crush from my PlayBook, though it is one that others do.

It is easy to succumb to a lowest-common-denominator excuse of bad luck, conspiracy theories against your trading, paranoid HFT Matrix world domination, etc. (Some jacka$$ stole my cab today in front of my apartment. He must be one of those HFTs.) Generally the truth is we can mitigate awful stop outs by buying back—or we were in some crappy position to begin with such that the stop wouldn’t matter. So don’t waste time convincing yourself your trading is doomed by greater forces and instead start to figure out how to get back into those better positions or stay out of them as well. The result? You will make more money.

You can better tomorrow than you are today!