Trade #79 – Held Too Long

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I got a little ahead of myself yesterday on $GEVO and lost big due to commission fees. This morning they announced another BS story that had Twitter going crazy! I’ve never seen so many enthusiastic people promoting a stock.

I shorted $GEVO this morning around 9:33am at $3.80 per share. I guessed right at the time and watched my P&L reach as high as $40.00 in the green. I suppose its still hard for me to differentiate a stock that’s going to spike, then lose all of its gains. Versus a stock that spikes, sells off then makes a newer high (as what happened today).

Around 9:52am, the Stochastics indicator was SCREAMING, cover, cover, cover! The stock was under-bought and due for a reversal. I knew I was about to get squeezed seconds before it started happening. Being stubborn, stupid and lazy I just sat and watched as the price quickly soared past my original entry.

I attribute getting squeezed out of my position to multiple factors. These factors I can now watch for in the future. The first factor had to do with the predictable short right after the open as the stock could not put in a new high of day around 9:45am.

Longs knew the shorts were stacking up. 

Add to that the overwhelming amount of cheerleaders this stock had today.

Last but not least, the stock was hovering around the $4.00 range. Whole dollar amounts are magnets, especially on bullish chaser days.

When you combine all of these factors, it leads to an early morning sell off followed by chasers that love this stock trying to squeeze the shorts all day.

$GEVO closed today at $3.70. We’re probably going to see the same thing happen with this stock tomorrow if a new press release comes out.

For me its about news, market sentiment and the chart. Combining these 3, I believe it gives me a better understanding of what I’m seeing transpire in real-time.

When people are chasing the stock, hit it and quit it. When a stock is up on some dumb ass news story, hit it and watch it.

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