Wells Fargo throws a wrench into best-laid plans.
Wells Fargo (WFC), by pre-announcing better-than-expected results this morning, threw a wrench into my best-laid plans. The animal-spirit enthusiasm jacked the tape - and, by extension, Apple opened on the other side of my defined risk technical context. Overnight gaps, as we've long discussed, are the fatal flaw of setting stops. It was a risk I assimilated and respected - but an unforeseen catalyst punched me in the ear.
It's not the first time Wells played the foil. Old-school Minyans will remember my infamous Letter I story, when WFC made a hostile bid that turned what would have been a multi-million dollar gain into a 7-figure loss. Just as my thought process was sound -- wrong, but sound -- 10 years ago, I view the mechanics of my recent swing equally stable. That's not post-rationalization, my friends, as these things happen. If there wasn't risk to this business, it would be called "winning," not "trading."
As for my process, I gave my position until after the first half-hour to monitor whether we would see rotation away from extended issues (big beta) into the under-owned financials. When the stock didn't "come in," I dutifully cut my position by 65%, leaving a remnant equivalent to a spare chip. We could see a magnet to $120, but anything over that will see my cut the remaining bait. Either way, it was a losing bet, and I share the process in the hope that my mistakes will be your lesson.
Better me than you, and I mean that sincerely.
Please keep BKX 32.5 on your radar, as a push above that zone will be a technically positive development. Mea culpa on the reverse Newton, and I look forward to making it up in spades.
As always, I hope this finds you well.
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