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In addition to the after hours news of $HPQ CEO Mark Hurd resigning, I am also seeing that one of my holdings is getting hit because of similar news. My 1/2 long position in $LSCC is down around 6% after the bell, on news that its CEO and President will resign in early September to “pursue other opportunities.”
I wanted to write a quick post for those of you that may have followed me in to this trade. When you are blindsided with news like this, there is simply nothing that you could have done about it beforehand. If anything, it is good to see the news announced on a Friday after the closing bell, so as to mitigate the possibility of acting on emotion during the trading session. I have no way of knowing whether the stock will digest this news well come Monday morning. After all, there is nothing that has changed about the firm’s business model and products. However, the human element of changing CEO’s after the former one has had a nice run is certainly something that could weigh the stock down.
With the 50 day moving average slowly rising at $5.01, the stock has some room to drop before any major technical damage is done. If you have a big position in this name and you are having trouble sleeping over the weekend because of this development, my best idea would be to decide how you view your position. In other words, are you in this name for a quick trade? If so, there would be nothing wrong with setting a stop loss below the 50 day moving average. If you are a long term holder with conviction in this firm, you may need to research the interim CEO and possible replacements and how the change in management will affect the business operations (if any).
Personally, I will take a wait and see approach next week. If there is heavy selling volume taking us below $5, then I will obey my stop loss and move on to the next trade. If the selling reaction is relatively tame, and met with eager buyers, I could easily raise this to a full position.
As you know, if I do not accomplish anything else, I would at the very least like to distinguish myself from writers on other financial sites by not leaving my readers hanging out to dry. Therefore, if you have any fears/concerns/questions/venting to do about $LSCC, I encourage you to leave them in the comments section.
Chess I greatly admire that you care so much for those following/read your trades. Your post has been a must read for me since came across the site recently. Thank you.
Great post Chess… I don’t have a position in LSCC, but if I did, I would sure be thankful for your analysis and planning! Unexpected situations like this always lead to irrational behaviour in my opinion, so it’s good to have a plan laid out before the open of the next session!
thanks for your posts as always, they are extremely helpful!
Chess,
Not to questions your call or the chart reading skills, shouldn’t technicals forecast what’s coming? At least that is what I get to hear from everyone who does chart reading, They say everything is in charts. They don’t even have to look at news.
On a different note, would you suggest getting in now or wait for a couple of days?
sg
Anyone who says that charts forecast EVERYTHING is misguided at best. I am of the belief that, given sufficient liquidity, price action is the most accurate reflection of everything that is CURRENTLY known and knowable. That is a big reason why I try to avoid at all costs trading based on news driven events, at least the ones I can anticipate.
However, news driven events can change all of that in an instant, including earnings reports, CEO changes, etc. Incidentally, even if you (not saying you are per se) are a die-hard fundamentals based investor, news like a CEO changes, earnings reports, etc. can change your fundamental analysis models in a heartbeat.
Thank you Chess for your quick response on the LSCC news. It’s pretty sweet to know you are on top of things and watching our back at the same time. As a rookie my position size in this stock is small. I’ll remember this “lesson” in trading as $hit can happen…trade accordingly. I’d like you to know you are very much appreciated. Have a wonderful weekend.
Don’t you just LOVE this crap!?!
The YEN is telling us another story. (I went long US/JPY @ 85.29)
YES, I “get” the rest of you are talking stocks and I’m yakking currency, it’s all a numbers game and one drives the other.
I look to the EAST<—still strokin along
Forget ALL the horrible data numbers as they mean NOTHING by the end of the day, FLY has it right (poor people)
The employment numbers are lagging anyway, you have to consider the 'summer shut-down' schedules..for 2 weeks (some 3) auto companies do mass lay-offs as maintanance and re-tooling take place, add on another week (start-up) for hang overs to wear off and we are back to the races.
I live near an International Border crossing, I see Transpot volumes picking up.
We're NOT DEAD YET
Once again, you are showing everyone that you are one classy dude Chess.
CnWIG!
Have yourself a great weekend 🙂
Chess is not only a stock advisor, but a shrink too!
Nice work Chess.
Nice discussion Chess.. I’m in LSCC also…this is the 2nd CEO to kick me in the bawls in one week – SNDK’s being the other. SNDK quickly recovered from the one day idiot panic, with the help of an earnings Beat the same day. Let’s hope for something similar here rather than having our Queen stolen by a miserly Knight, or something like that…and how about SAPE?! Geeziz.
Well, I got out of SAPE before earnings. I try to control news drive events where I can. This one with LSCC was impossible to see unless I had inside info..
Chess… all that I can say is… thank you. Thank you for being here and contributing to my learning process.
As for LSCC… shit happens.
What a great blog!!!
Good to see transparency in this blogging game,keep up the great work Chess.
you are a breath of fresh air – no ego bullshit hyperbole – you actually sound like you CARE about the people who follow you…others should take note….hope you’re feeling the love cuz it.s genuine. I am in LSCC small and will wait it out. thanks for the data and the attitude.
forgot to ask – when did you go long ISLN? and are you long BZ now? also regarding wheat and the futures spot price differential – any thoughts? So far the knee jerk has been the AMD, ANDE, BG plays..but others beg the questions – who’s hedged ie food producers, the south american farmers, and the Chinese…
baron
Thanks for the kind words, it is much appreciated.
I went long ISLN on Friday for 3/4 of a full position. I have no position in BZ yet, and have not for several months now.
Wheat–looks like a short term blow off top to me. I would stay away. Ag looks short term extended here. After a pullback, I like POT and SQM the best.