Outsized Moves

Do what?

So, you see a stock go up 20% after hours and you think oh man, I owned that last week and sold it !!! No !!!

What do you do? You have a few choices:

1) The up move happened, you missed it, get over it

2) You can choose to move on to other trade ideas (nothing wrong with this)

3) You can choose to look at this as a “to fade” opportunity, realizing that “outsized” moves have a high probability of giving up some of the gains. Wallah.

These big or outsized moves happen every day, to the upside and to the downside. If you follow me you know that I pay attention to these opportunities and will frequently participate. My approach? I am just trading the reaction, nothing more. RMBS (Rambus) is an example from this week.

An example from today is BCSI (Blue Coat Systems) and here is a current chart:

Big move, Big volume, lots of emotion tied up in this move today. Certainly this type of trade idea is not for everyone but they are worth studying for future reference in case you trade the particular stock again.



Leave a Reply

Your email address will not be published.