Monday, February 9, 2009

Playing the Earnings Game

This is one game I never did really like to play; Buying a stock just before
earnings, and then dumping it right before the release. Only one problem; if
earnings are a hit, then I miss a big gain and kick myself in the behind for
selling. But look at the reverse; earnings miss, and it takes a big dive
south. That's what stops are for, however, and I can't blame someone for
taking a chance. It's kind of like watching LVS. Many people had the same
idea as me and the stock gapped up at open from its previous close of 3.80
last Thursday to 4.24. In preparation for a pullback after the morning rush,
I placed a limit order of 4.10 that eventually filled. I was intent on
holding through earnings, but I got spooked over the preferred share thing
and dumped it today at 4.50 for a nice little 9% gain. Should I have held on
for another day in anticipation of another run on Tuesday? Perhaps, but when
I get "spooked" I go into capital preservation mode. I still will probably
establish a long term position after earnings, and these positions take on a
totally different character than a swing trade: you buy it , set a liberal
stop, and forget it. Don't forget it literally, just don't watch it every
tic of the days ahead. All in all, it looks like the DOW is hitting that
first line of resistance in the graph of my earlier post. There is so much
anticipation over the President's stimulus package that the tension is
almost a tangible substance pushing and squeezing my gut. Lovely feeling. I
have confidence that we are going to see a steady rise from here on, and
that trading will be a little more sane, if that is even possible.

Have a good one. Roger

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