Friday, May 16, 2014

Trades Opened: EMES, JWN

Long EMES:

This one had been on fire as of late.  In my opinion it got very overextended.  It crushed earnings and  rallied up to 95, it was only a matter of time before a pull bak would happened and finally the market caught up to it   In my opinion 95 to 75 in less than a week is too much for this stock.  There was no negative news, the rest of the industry has been strong.

This trade goes against most of my rules, about trying to catch a falling knife.  This is much different than a bottom fishing type scenario where you want to see a rounding bottom and some progress on the fundamental side of the business.  To that end, I entered small @ $75.38.   I'm using 70 as stop.  Targeting 85 on the rebound.  Whatever direction it goes, it is likely to happen fast.  I don't expect this trade to last more than a few days. 

JWN:  Beat earnings and guided basically in line with estimates.   A good earnings report by any standard but worth a 15% move?  I don't think so.  I suspect that it is momentum investors chasing a chart, and the move will be faded.   The money flow was actually negative.

A weekly chart demonstrates how extreme this move was.  There was a nice steady progression and no gaps on this chart.  Anyway because this is momentum, I took 1/2 a position, which will allow me to stay in this trade if it stays hot over the next day or two.  In at 69.34, we'll stop it at 73.50.   If it starts to stall, I'll add to this position.  Target 65 to play it safe. But the gap probably fills.

No comments:

Post a Comment