JimL: re: RRC... the concept of the "dance"...
Jim; I said that "I" and most everyone else expected a pop off of the announcment - actually prior to "and" leading up to the announcement.
But; once again - this is a great lesson. Far too many individual investors are 99% emotional and only 1% logical in their investing/trading behavior.
This is the very reason that factually - we are learning that only about 10% of all "daytraders" make ANY money...
It is so hard to chase and to buy into blowoffs; to just stand there and buy directly into gale force winds... Now this doesn't mean chasing each 1/8ths on a $5, or $10 stock either. That's another mistake. If someone owns RRC for example at $5 1/8th; if you want to average in - make the stock come to you; divide your desired position into "thirds" - sit at $4 7/16ths here; $4 3/16ths - and $3 7/8ths for a breakthrough of prior support. I see everyone jumping in on the first 1/4 retrace... or panicing and dumping entirely on the first sign that this did not pop.
Now ask yourself; if you were short ? Would you just start covering non-stop here ? Or, would you perhaps wait untill the "weak handed, soft money" dumps & leaves out of impatience and then cover on their weakness. Conversely if you are a buyer; wait for the potential pop to disapate, or buy into the weakness as the "weak handed - soft money" sells out of boredom and the disappointment of no overnight pop...
While the "timing" plan was important in buying RRC earlier on its blow off - knowing that the shorts would eventually cover and that there would be a nice move when the JV was formally consumated; the "timing" part of the plan is much, much less important than knowing the impact of the "events" on the "numbers" and trusting the "overall" story, trusting the numbers and allways being willing to "dance the dance" - changing you "timing" to match the rythym of the market...
The "overall story" is allways much, more important than the "timing" falling perfectly in place... as long as the overall story did not change; I'm willing to be flexible timingwise... most are not.
Its like being a quarterback in football. You huddled - you called your play (bought RRC at $4 1/4). You go to the line of scrimagge to run your play (thinking the shorts will cover and you will sell into the pop) - but; the defense (the market, or the shorts etc.) have now stacked 9 guys on the line of scrimmage and are showing "blitz"...
Now as the Quarterback (the individual investor)are you just going to take the snap & run the same play - per your original plan... or, are you going to "flow" with the rythym of the game; and be smart - "call an audible" - and react to the games flow... while not changing your overall gameplan - just audiblizing at the line and perhaps calling a different "single" play - while not changing your overall gameplan ?
What I continually see is such static - inflexible trading. Traders get an idea - formulate a plan based on expected events; - which is a good thing. But; they then become totally incapable of reacting, or changing up... being flexible if things do not fall in place perfectly...
This astounds me !?!?!
The mindset is something like this:
I bought RRC at $4 1/4 or whatever... it is supposed to pop on the JV, the shorts should cover and it should go to $6 so I can sell.... now, since that did not happen; I must dump....
BS !.... adapt, bend with the flow,,, change your rythym... stick to the overall gameplan - but call a different play.
Sell & trim a bit on that pop to $5+ a day ago... seeing that we did not get the ramp on steady volume leading up to the pre-announcement. Everyone knew the JV would close. As we had no steady rise on volume over a period of days (I never expected all the short to cover in one single damn day ????); I trimmed way back on prior bounces; and then sold a bit more on that $5 pop from what I had bought on the blowoff to near $4.
Now, I will buy today, tomorrow - or as the "flow" and "rythym" of the tape dictate... I'm calling an "audible" at the line.... I am waiting for the impatient to dump here; I'll buy $4 7/16ths - $4 1/4 and then I will wait... because while I changed the "play" at the line; I did not change my gameplan...
Also; I will not chase RRC up from here; if it does not come down to "me" - at "my" price; I pass...
Don't chase these stocks... make them come down to you... if they don't - so what ? They'll be another. Maybe it will be CRK, or EEX etc...
Make sense ?
The lack of investor patience and all this panic dumping if things do not fall perfectly in place amazes me...
MEXP - was also a textbook example....by the way (VBG). |
