Monday, October 27, 2014

Opened and closed: JAKK -- Joke was on me

I was traveling but JAKK was on my watch list.  It had everything-- Nice Consolidation, good earnings, improved guidance, a small float and a allegedly huge short ratio.  At a minimum this was a nice momo burst set up, but I had Big Gain Hunting on my mind as  ESI, which put up a 250% move after beating expectations with a high short ratio.   I bought pre-market. (painfully high) and then added and added again.  I then came to my senses and puked it out.

Entry 1: $9.50 
Entry 2:  $8.94 
Entry 3. $7.51 
avg. $8.93
Exit: $7.23

There's a lot to talk about here.  First, I let my expectations override the price action.  When this trade  started to fade I should have gotten completely out.  Waiting for a bounce on a losing position is a recipe for disaster.   Second, I'm guessing that there was a lot of shorts exiting their positions well before earnings.  We had a great V shaped recovery that would force a lot of short covering.  Since short ratio's lag, I think its a fair bet that the ratio was not nearly as high as reported.  That being said, I think bulls flooded into this trade with expectations of a squeeze and when it never materialized we got destroyed. 

From my own trade, I was horrible here.  I was traveling so I gave it more time than I should have,  I then added as it went against me.  I deserved this loss. 

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