FCX: The 55.06 - 55.44 Gap

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From Thursday:

"GIMME A BREAK!! My 53.78 order was the EXACT low in the stock this morning, and as has often been the case lately with my trading in size (large order), the buzzard faces gave me NO shares."

When we have a disappointment like that, the important thing is to get over it as quickly as possible and to try to stay focused. Continue to FOLLOW Ms. Market, as best we can and continue to maintain our discipline. What we especially DON'T want to do is "revenge trading," in which we're angry, we're not thinking clearly and we're wanting to get even for some injustice that we feel has been done us.

As we headed for the closing gong before the holiday weekend, my order at the 53.78 low of the session that "they" didn't fill was worth about $3,000. Arrrgh... I clearly saw the possiblity that I was in danger of making "the revenge trade," so I had to slap myself upside the head a few times, and get focused. What was Ms. Market telling me about FCX?

1. FCX Bulls had found support at the 53.00 neckline at the release of earnings "Gap and Crap" low, thereby re-establishing it as support.

2. In Thursday's session, after a gap up opening, The Bears weren't able to do anything more than a near gap fill of Wednesday afternoon's 53.72 high. The session low was at my order for 53.78 (stop growling, Melf. Gr-r-r...)

3. Thursday's gap up opening not only WASN'T a "Gap and Crap" opening, as we've witnessed several times in FCX in recently weeks, but The Bulls were able to rally the stock and take out the 54.90 "Gap and Crap" high of Wednesday's release of earnings session. That isn't what The Bears expected at all. On the heels of Wednesday's "Gap and Crap" black candle session, closing near the low, and near the 53.00 neckline, The Bears expected to be able to break the 53.00 neckline, but they didn't come anywhere close to doing that in Thursday's session.

4. Near Thursday's close, FCX was holding up very well, near the high of session and it would be "parked" below the 55.06-55.44 gap, "champing at the bit" to fill it at Monday's open.

Hmmm-mm...two problems that I had with buying near the close:

1. The risk:reward was very poor. I only was wanting to play FCX for a gap fill of 55.44, which was my original plan when I entered my order Thursday morning, at 53.78, so I stood to lose more than I stood to gain taking the risk of holding over the weekend if FCX gapped down Monday morning. That definitely is a rule breaker.

2. I had very little time to decide whether or not I was "revenge trading." UGH.

I decided to have "the strength of my conviction" that The Bulls' unexpected takeout of Wednesday's 54.90 "Gap And Crap" high in the very next trading session (Thursday) was "a" tell (not THE TELL) that the gap had a VERY good chance of getting filled Monday morning. The overriding factor in making my decision was my $15,000+ war chest that I had accummulated in my 21 FCX trades since March 23 to back me up in taking the very poor risk:reward "rule breaker" trade.

If I hadn't had that war chest to back me up, I would not have taken the trade.



I paid 54.91 for FCX, which was a penny above Wednesday's 54.9027 "Gap and Crap" high, which The Bears "shouldn't" have allowed to be taken out.



Sold FCX on approach to 55.44, the top of the gap, AT THE MARKET. No fooling around with a limit order on tha-at one!

Gain on the trade: $1,275
Gain on the 22 FCX trades since March 23: $16,325