A small loss in the gutter

As I said yesterday, I was looking to short CALP on a morning spike and quick reversal.

However, I didn't get the morning spike. CALP started off red. Since it was down 2-3% on the day, I decided to enter a short position of 2000 shares. Put in my limit for $3.13, but only got 100 shares. Changed my order to $3.12, and only part of my order got filled. I didn't want to enter another order because I didn't want to chase it, and I didn't want to pay more commissions.

I thought about cancelling the rest of my order, but I kept it. It fell to $3.04 and bounced back into the $3.10 range and the rest of my order got filled. It stayed there for a bit, but then went up past $3.15. I got out quickly at $3.1676 for a $124 loss after commissions. It's a good thing I got out, because it ended up shooting up to $3.40.



Looking back on this one, it was a mistake to get in. First, I didn't get the morning spike I was looking for. Since that didn't happen, I shouldn't have entered the trade. Second, I took a look back at my trading rule list that I had, and noticed that one of my rules (which I had forgotten) was to not short in the morning if the stock finished off with strong volume in the afternoon on the previous day. Well, CALP did finish off with strong volume yesterday afternoon. Third, it was a mistake because the stock was very close to $3 support. This is not only a strong psychological support level because it's a round dollar number, but you can see on the chart in mid June it bounced off $3 a number of times. Thus, the potential profit on this trade wasn't large. Sure enough, the stock bounced off $3.04 before moving back up.

Unfortunately I wasted a day trade on this play. I was smart, though, to get out of the trade very quickly for only a 2% loss on my position.

LESSON LEARNED: Don't short a stock in the morning if it finished the previous day on strong volume

LESSON LEARNED: Don't short a stock in the morning if it doesn't do what you were originally intending it to do

LESSON LEARNED: Don't short a stock that is close to a strong support level

I did attempt to short ARTE into the close on its failed cup & handle breakout pattern. I got 1500 shares reserved, and it was just under $2. It was the last 15 minutes of trading. I had a chance to execute the order at $1.95, but I decided to wait until just before the close. Unfortunately, it dropped further before the close to $1.87, and I decided I wouldn't chase it at that point.

I'll be watching for prehits in Mike's chatroom tomorrow.

GUTTER ACCOUNT STATS:

June 30th: $4856.64

Yesterday: $6352.95

Today: $6228.84

Loss from yesterday: $-124.11, or -1.95%

Gain since beginning of month: $1372.20, or 28.3%

POSITIONS TRADED FOR A LOSS:

CALP: $-124.11