Before the open BHI was identified as one of our Top Five trading opportunities. Many of our traders focused on BHI on the open. Here’s why:

a) BHI had earnings
b) BHI gapped down
c) BHI was below an important longer term technical level of 46
d) the buyers at 46 lost in the premarket

I am sure some traders did not squeeze out as much as they could have out of BHI. During earnings season stocks can trend more than you originally think. They certainly trend more so than during the off season. Sometimes we forget how much an earnings stock can trend. Out of my mouth came these words before the open to Spencer, “I am surprised BHI is down so much based on the news.” Spencer retorted like a disappointed big brother, “Yeah I am just following the price action.” Hmmmm. Kind of a good point there. I focused on shorting BHI.

One of the better SMB veteran traders just stepped out of my office, had considered trading BHI but focused on OIH. He explained, “The market was so strong so it was hard for me to be short BHI.” What did my high school baseball coach used to yammer? “Don’t think. Thinking hurts the ball club!”

Obviously we need to think as traders. And I am pretty sure Coach Dessi would not be allowed into our Class A building in his high stirrups and knit polyester pants. But there are times as traders where we overthink. BHI was weak. It gapped down. It headed lower. Most times during earnings it is better to let the stock show us it has turned. And just let the stock trend for whatever the move will reap.