Cart (0)
business newsShowtime for Apollo: Fundamentals vs. Technicals
A technically based short isn't always the best way to trade.
PRINT
 |
|
I believe that successful trading isn't based on fundamentals or technicals, but on fundamentals and technicals; you can learn to use both.
Here’s an instance: Let’s look at a profitable trade in Apollo (APOL) that I initiated as a short, and covered when it touched $66 - our first target in the vicinity of 200-dma. Apollo is scheduled to report its earnings tomorrow.
Now, the chart has really taken on a negative connotation lately. But you may be wondering why it's still doing well today, despite a market that's not. For an answer to this bewildering question, let’s look at January 9, when Apollo shareholders enjoyed a 10% gap up in response to earnings. There might be an expectation for an encore during tomorrow’s earnings release.
Click to enlarge
That expectation might or might not come to pass; there's no way for me to predict the reaction to earnings - and that's why I don't take a position in a stock before earnings are released.
So blame it on an expected fundamental news item, or on the fact that investors remember that playing a short position based solely on technicals isn't always the best way to trade.
This note isn't meant as a trade, but to evoke the thought process behind a trade.
In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
