May 7, 2013
The stock market is driven by emotions. As the market moves higher, the emotions become more frenzied. We are seeing big moves now in stocks – big moves up when earnings are better than expected, and big moves down when they are not. Recent winners are MercadoLibre (MELI), Regeneron (REGN), and Qihoo (QIHU).
Today’s loser was Ruckus Networks, down over 25% today on their earning’s announcement. This was a stock I purchased a couple of months ago. I bought it at 22.37, but hit my sell point at 20.69 and I exited the trade. Taking a small loss is key – if I had stayed with the stock, I would have had a big loss this morning. The stock opened at 14.74, and I would have been stopped out then. Notice that when a stock gaps down, it bypasses all the stops. You will be filled at the price it opens at, not at your stop price!
With big moves becoming the norm, it is best to observe caution. Investor’s emotions are getting pushed. Greed and fear are ratcheting up here.
I am debating selling most of my PERI position ahead of earning announcement on Monday, May 13. I will see how it is faring on Friday to make my decision.