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On Friday, for the third time out of my last four plays in Goldman, I ended up throwing in my position for a ver-r-ry small gain. Sigh...
Of the two Rising Wedge possibilities that we have examined (the second one is the next chart), I have preferred this one because the trendlines have a "sharper" look to them, and also because after the Breakout/fakeout at Black #5, Goldman attempted to get through the top of the pattern two sessions later, and failed right there. The trendline that day came in at 150.635. Goldman rallied to 150.79, and came off. If this were a $15 stock, that failure would have been within about two pennies.
On Friday, the lower trendline of the pattern came in at 145.254. Goldman was called Gap Down about a dollar below the trendline, on what I would describe as a "payback" downgrade of GS, MS & JPM by MER, for having the BAC CEO trotted out and grilled before Congress on Thursday, but we won't try to interpret that, and we'll stick with our charts. LOL.
I shorted Goldman in one account at 144.85, just above the .618 retracement of the gap down and the prior day's low, and I shorted it in my other account in the low 145.30's, just above the broken lower trendline. On a gap down like that, below a pattern, the stock "shouldn't" be able to make much progress to the upside, back inside the broken pattern. Example: The Valero Energy (VLO) "Gap And Go"..."Take No Prisoners" June 3 opening that we looked at a week ago.
Well-ll, Goldman made A LOT of progress, back inside the pattern. It blew right threw my second short entry in the 145.30's and rallied sharply, to a high of 146.43. UGH!!
On a move like that, my thesis for taking TWO short postions is blown right out of the water. I moved in on a Gap Down out of a pattern, and I wanted to see something akin to a "Gap And Go" on the downside with maybe only a partial retracement (my 144.85 entry) or a retest of the broken trendline, with only a minor violation (my 145.30's entry, just a bit above the broken trendline). I do NOT want to see strength beyond that, and when I did, my goal was to GET OUTTA THERE with as small a loss as possible, and hopefully, and small gain.
On the position in the 145.30's, I was able to throw that in for a small gain. On the 144.85 position, I "thought" that I was fine when Goldman got down to 144.60. They were moving the BID/ASK around pretty good, and I didn't feel like handing "them" some money on what "they" like to call "slippage," a euphemism for We're gonna stick it to ya by filling your market order at a higher price" so I put in a Limit Order to cover at 144.62.
The lousy buzzards filled only 200 shares, then took the stock higher. So-o irritating, but we want always to keep our emotions in check. When Goldman got almost back to 145.00, I "gave it up" and calmly covered my remaining 800 shares AT THE MARKET, and calmly took a small loss on that portion of the position.
Lesson: Always remember never to allow ourselves to get emotional in those situations. Those DIRTY, ROTTEN, LOUSY, SCUM-SUCKING, &$#&%$# BUZZARDS :)
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This Rising Wedge possibility #2 is interesting. The lower trendline came in on Thursday, June 11, at 145.22. The low on the session was 145.00. The close was 145.15, so Goldman CLOSED the session in technical violation of that trendline, seven cents below it, which was a contributing factor in my wanting Goldman short on Friday morning.
On Friday, the lower trendline of this Rising Wedge came in at 146.11, so the morning snapback rally to 146.43 went back above it by thirty-two cents. That isn't a lot, but that was early in the session, and I didn't want to sit in my short position, "hoping" that Goldman wouldn't blow through there to the upside later on. UGH.
As it turned out, the 146.43 morning high also was the high on the session, and although Goldman closed in the green, it CLOSED below the lower trendline of this Rising Wedge.
On Monday, June 15, that lower trendline comes in at 146.994. If Goldman were to rally back to that trendline, fail somewhere reasonably close to it, do a backflip and take out Friday's 144.15 low, that would give further credence to the validity of this particular trendline.
The 145.30's position.
The 144.85 position. Overall gain on the two positions: about $125.
LOUSY BUZZARDS ;)
2 comments:
Melf,
With the lower trend line on Fri at 145.254, isn't a short at 145.30 and 144.85 too close to be a clear violation of the trend? On a $15 stock the higher price short is at the trend line and the other is 4 cents below. I realize it was a technical break but you refer often to Tech Anal as not an exact science.
Good Morning, Mark,
The closer a stock is to a point of a technical violation or a breakout, the better I like it. Less risk if the trade doesn't work out. Goldman opened on a Gap Down, to 144.38, which was a clear violation of the trendline in both "scenarios," and it could have been a "Take No Prisoners" Gap And Go on the downside, like Valero Energy (VLO) was last week.
In VLO, April Rectangle support was at 19.64 and 19.58. The Gap Down opening was 19.64, smack on the higher of two lows. VLO rallied only to 19.79 right after the opening, below my bid to short in the 19.90's, then went down for the rest of the session.
Goldman could have done the same thing. Gap Down, a minor rally to broken support, then down. When it didn't do that, I covered.
No, technical analysis isn't an exact science by any means. I thought that the break was significant "enough" to take the trade on a risk:reward basis.
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