Tiffany is at an interesting position. The gurus hold mixed views on whether Tiffany will rise or fall. Of course, listening too much to gurus is not part of this business. It’s about acceptable loss and risk management. [Updated: see out come on Tiffany below, after this was posted.]
Price on Tiffany has been moving up and down but overall sideways in the last few days. It’s definitely down today before the earnings release of 27th May 2015, which is not unexpected especially where people listen to gurus who are of mixed views. Obviously uncertainty leads to safe positions and you can’t blame actual stock holders.
Yes – price on Tiffany could well go down. So what? If you’re not prepared to lose and limit losses, then this is not for you.
Lannett is also in an interesting position. It’s hard to deny that there is a trend line that catches the bottom of prices. I don’t know why these things happen. It’s something in the collective unconscious of the thousands who buy and sell this ‘stock’ (just to be clear we’re not buying or holding stocks here). It’s not possible to say that Lannett will go down or up in the short term. However, it meets the characteristics of a ‘strong stock’ in it’s yearly upward trend. The issue is what sort of loss can be limited in relation to possible gains. If you have tons of dosh you’d put a 3000pt stop on that, bet long, and wait for it to rise again. But most people can’t do that. Gauging the distance from the trend line there’s probably some 500pts to go. But we can’t say whether price will actually head south to touch the trend line. It could well decide to go north. So anyone entering now going long, would probably need to take perhaps a 700-900pt stop-loss – and be prepared to lose that much times their bet size. There are of course a whole bunch of other considerations to take into account – important for this stock is the effect of confidence based on market sentiment on Wall Street (among other things and I’m not doing a list here).
There’s always the possibility that tomorrow morning Lannett could decide to take off north big time, in which case you’ll probably think, “Dam!! I’ve missed the bus.. coulda, shoulda …woulda!” And that’s the name of the game. Some of your prey will escape but if you’re stalking more than one – no problem – you just set your sights on the next and move on. You will catch a big one – and it’ll be a real feast! Or if you fire now at Lannett it could well escape and you could suffer a limited loss. Or if you fire now you could hit. The choice is yours. The Sue Yourself Principle applies. It’s a rough game. Toughen up!
2015-05-27 15:36 GMT – UPDATE ON TIFFANY – Caught my prey!! LOL
That below is an hourly chart to better show the scale of what happened. That one-hour jump actually represents what happened in 5 min.
Lessons arising from the Tiffany snipe:
1. Consider what the gurus say, but don’t let them cloud or overly influence your own judgement.
2. The Reward/Risk ratio was acceptable in the assessment. Of course, hindsight is always better but there is no other way to confirm one’s decision-making.
3. Two or three good wins on an Earnings Release play can well cover that lost on several losing trades [if strict money and risk management is adhered to].