When Good Trades Go Bad...

Did I say I added to OMG yesterday? OMG! It has not triggered an exit yet, but yesterday I loved the entry. Tell you what....take a look at the chart below in my Bollinger Bands post (Or bring it up in the toolbox). Look over the set-up as of yesterday, and tell me what you see that would have been a direct warning that this retracement today was likely to happen. Respond as a comment, and kudos to the first correct answer.

Also I wanted to thank you all for the outpouring of e-mail I received. If one of those e-mails happened to ask a question...bad timing on your part. I doubt I will be able to answer questions in a flurry of e-mails like that, but keep those questions in your mind, we'll get them eventually. Also, if you are newer to the blog and still have questions, read my posts! Most of the questions I receive are something I have already answered in prior posts.

Anyway, I will be back in a few. I have a fun exercise we'll try to get going today.

The high volatility you bought more on a overbought point. “These bands adjust to volatility, meaning they will expand during points of heightened volatility and contract during times of low volatility. When a stock price reaches a lower band, it could be considered “oversold” and when it reaches it’s upper band it could be considered “overbought.” Now that a foundation has been laid, let’s talk about how we will be using them." (from your previous post)

Danny DR

Declining volume?

Flat / declining volume...

I noticed it was right at the top of the Linear Regression Channel-100%.

I agree on the volume, but there was a hell of amount of support in the $60- range in the past the stock sat there on both an up swing and a down swing for a total of about 4 1/2 months.... So far back it would have been easy to miss / overlook

Tom DeGroodt

I like this game Jeff! let's see...

1) the "breakout" of the flag pattern over the last week was on half the volume of the "breakout" of the previous flag pattern, so it wasn't an entry signal...

2) the longer term chart 10yr/weekly has some resistance in this area, but technically, it did close above it yesterday, but you taught us that resistance is an "area" not a line in the sand, so a longer term look might have been warranted.

3) Aside from the overbought conditions, the macd shows a bearish divergence with the last "big move" and yesterdays move... all of these are what you look for with 20-20 hindsight, and I imagine easily overlooked when you're excited about a trade that's gone your way...

The tunnel vision you spoke of earlier this week got the best of you I think. You saw what you wanted to see. Considering the repetitive pattern in the last week, I'm sure I would have expected a move up too. That, of course is no consolation.

The lower Bollinger Band had turned up as the price had began to move down off the upper band. I think I've heard or read something along the lines that this can indicate the price is pulling back or leveling off. I'm a bit fuzzy on this.

Jeff -

Thoughts are that volume was decreasing, MACD and Stoch moving down and if we look at the Bollinger Bands, they are turning in. We have old resistance in and around this area. 2 Questions - are we seeing consolidation with a channel or flag forming. It seems to be fluctuating between 56-60. Second, on October 10 they gave gave bullish guidance on earnings, have we seen the rise in price due to positive earnings and thus having a consolidation?

Also, I have learned some great lessons this earnings season about early guidance. My loss was minimum but I did not get out of MLM early enough!


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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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