IBM, GG And MS

IBM gapped down to the bottom of the channel (in red) in response to its release of earnings. I played it short in both accounts on the rally back to the gap from the prior day's low, with a stop above the prior day's high of 101.19 in one account, and a stop of Monday's 102.04 high in the other account.

After I got stopped out above 101.19, I realized that the stop above 102.04 was ill-conceived. If IBM had the strength to take out the 101.19 high after the initial negative response to earnings, I should have gotten outta there. I abandoned the second half of the trade in the 101.60's, which saved me about $200 since the 102.04 stop eventually got taken out, but it also cost me an additional $450 by not stopping out both shorts above 101.19.

I also realized that shorting IBM, at all, was a mistake. If anything, I should have gotten long the open, with a stop below the channel. I played what I thought IBM was going to do, rather than what it is doing. What IBM "is doing," is still acting bullish, still within the channel, and still with TWO upside targets IN PLAY.

Loss on the two IBM trades: $2,400, which I very much deserved.

My weekend homework on GG paid off (see the 10 "Tells" in Sunday's post, if interested). GG rallied back to the bottom of the broken Ascending Triangle on Monday. Yesterday, it had a "Gap To Crap" opening back inside the pattern, then it fizzled and put in a Bearish Engulfing pattern on the session.

28.08 was horizontal support on Monday. When that got broken after the "Gap To Crap" opening, I shorted GG in both accounts at 28.05 and 28.11-28.12.

There was a gap below from Monday, between 27.39-27.11. I covered my shorts at 27.25 and 27.23, in the middle of that range, wanting to "jockey for position" and reshort it on a rally back toward 28.08 resistance. I didn't get the rally. Gain on the two trades: $4,150.

I shorted Morgan at 24.73 in the Right Shoulder of this possible H&S Top. After I shorted it, I wondered when Morgan was going to report earnings and thought that I'd better check. YIPES. I discovered that they will report this morning! I generally don't like having a position going into earnings, which I view as a "wild card." No matter what Morgan reports, I personally wouldn't believe it, but that's irrelevant. I don't want to get caught short on some RESPONSE to earnings that is favorable, so I covered. After I covered, Morgan broke the 24.37-24.43 neckline of this H&S Top, but closed well above it, at 24.65. Hmmm-mm...we'll see what the RESPONSE to earnings is at the open this morning. Gain: $375.

First batch...

Cover of the IBM and GG shorts.

Gain on the day: $2,125.