Often times we find a company or product we love and as traders and investors our minds instantly gravitate toward the ticker symbol to see where the company trades. Other times we do research into an industry and find our favorites. Then, we pull up the chart and find the stock is running hot. If you’ve ever taken a hot momentum stock long the day before it starts correcting you know the feeling of a hot knife being thrust into your stomach. So you toss the name on a watch list and go your merry way.
Such has been the fate of GNRC for many months in my trading software. It has sat on my ‘stalking’ list sashaying higher. After seeing the east coast get pummeled again I really wanted to buy. Today’s selloff came at a perfect time for me, I had cash on hand so I bought.
I typically don’t buy red candles. It’s too….Keith. I can’t really explain it any other way. I’m not a heavy lifter. My transactions won’t stop a falling tape. I like to buy in the presence of other buyers. When I bought GNRC today, or when I buy a name like CREE the day it gaps up huge, I put on a smaller position because the setup isn’t my hon3y hole. For GNRC I used a half position. Here’s why, I have a larger risk:
I like GNRC but I think it sells off on earnings no matter how good. The effects of Sandy will be baked in. If earnings are good which I suspect they have to be, if there were a pullback, I would be a buyer.