I lost money trading APOL today. During my post trade review it became apparent to me that even with a few tweeks I still would have lost money day trading it. Sometimes stocks do not behave well. Perhaps APOL is better suited for swing and position trading? It has a history of trading erratically intraday. During the past few years I have passed on it many times when it has been In Play for this very reason. But today with very few names In Play I was tempted to get long after its positive earnings number and confirmatory price action.

I thought I set some fairly stringent criteria for myself before getting involved to avoid an unnecessary rip. I waited for it to trade above the top of yesterday’s range–34.50. I then waited to see more buying above 35. I initiated a very small long on its first pullback to 35. The trade worked spiking quickly up to 35.40. I got out.

On the second pullback to 35 I bought again with a little more size. When it traded up to the pre-market high of 35.70 I got flat. I spotted a repeating seller at 35.70 and decided to take a quick scalp short. I covered half when it dropped quickly below 35.50. I was stopped out for the rest when it made a new high. My focus returned to being long again.

I started buying on a 50 cent pullback to 35.30. Just nibbled. I got more aggressive as it traded closer to 35 again. It whooshed down to 34.68 and I took a large loss selling most of the position. When a large seller emerged at 35 I sold the rest of my long and got short. This tick chart illustrates the seller who was dumping stock at 35 for about 15 minutes.

When the seller lifted I covered and got long at APOL quickly traded to 35.30. At this point I thought I was in the driver’s seat. I thought that maybe it would pull back to 35 again but it would most likely resume its uptrend and then head for 36+. I was wrong. Right back down to 34.68.

I was done for the day and off the desk. I am fairly confident APOL trades up to 37.30. Maybe even as high as 39. This is a beaten down name that is finally reporting some good numbers and you can see there are many willing to get involved down here. By the time the media start talking about it you will see a short term top and it will be time to exit the swing trade.

Steven Spencer is the co-founder of SMB Capital and SMB University and has traded professionally for 16 years. His email is [email protected].

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