One of three In Play names discussed in today’s AM Meeting was SODA. It was gapping up to 36 which is a longer term resistance level. My initial thought was the news didn’t seem like a big deal and it would be a nice short on the Open against this level. As the market opened it traded a few cents above 36 and then began to quickly drop out. But by 9:45 it was clearly holding above this key level.
When a stock gaps up significantly there is often some quick profit taking right after the opening bell. If by 9:45 the stock is still trading near its high and above a longer term resistance level you should be thinking about how to get long. Shorting is the low percentage play.
In the case of SODA it did short term traders the favor or actually being accumulated at 36 the key level identified in the AM Meeting. The appropriate stop on a long at 36 would be below 35.80.
Steven Spencer is the co-founder of SMB Capital and SMB Training and has traded professionally for over 15 years. His email is [email protected].
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6 Comments on “I Love Being Wrong–SODA”
I had a question about adding to this trade. Following the first pullback and consolidation above 36, the stock then starts to consolidate higher above 36.15 for about 20 minutes from about 10:55-11:15.
Is this a spot to add at like 36.18-36.19, with stops on the add maybe at 35.99 (with the stops for the initial position still down at 35.80)? And if stopped out on the add (although it doesn’t look like 36 dropped), maybe add back in upon it holding 36 for the 2nd time with a little tighter 35.90 stop as the buying is a little bit more clearly defined at 36?
If you have time, would love to hear your thoughts (or the thoughts of others in the trading community). Regardless, thanks for all the good content and work you have put in. It has been greatly appreciated over the past couple years.
I had a question about adding to this trade. Following the first pullback and consolidation above 36, the stock then starts to consolidate higher above 36.15 for about 20 minutes from about 10:55-11:15.
Is this a spot to add at like 36.18-36.19, with stops on the add maybe at 35.99 (with the stops for the initial position still down at 35.80)? And if stopped out on the add (although it doesn’t look like 36 dropped), maybe add back in upon it holding 36 for the 2nd time with a little tighter 35.90 stop as the buying is a little bit more clearly defined at 36?
If you have time, would love to hear your thoughts (or the thoughts of others in the trading community). Regardless, thanks for all the good content and work you have put in. It has been greatly appreciated over the past couple years.
I had a question about adding to this trade. Following the first pullback and consolidation above 36, the stock then starts to consolidate higher above 36.15 for about 20 minutes from about 10:55-11:15.
Is this a spot to add at like 36.18-36.19, with stops on the add maybe at 35.99 (with the stops for the initial position still down at 35.80)? And if stopped out on the add (although it doesn’t look like 36 dropped), maybe add back in upon it holding 36 for the 2nd time with a little tighter 35.90 stop as the buying is a little bit more clearly defined at 36?
If you have time, would love to hear your thoughts (or the thoughts of others in the trading community). Regardless, thanks for all the good content and work you have put in. It has been greatly appreciated over the past couple years.
mike,
i will answer in a blog post
steve
Awesome, I’m looking forward to it.
very well done technology.