$SINO, 3900 shares in 5.08 out at 4.47 (-.61 cents per share)

-2,395 loss

 

I went aggressive with 3900 shares because of announced earnings yesterday plus this company has a solid balance sheet. The first few seconds of the normal trading day after I bought 3900 shares, the profits went up to 1100 before I started seeing them sink. I was more shocked that an earnings winner was not just shooting straight up so I held and saw the profits turn to losses and the losses turn to negative 2395 where I sold.

I am upset at myself that I didnt sell when I saw 1000 profits. Things were happening way too fast and I didnt even get to load the sell order before the stock started sinking.

What I learned from this expensive lesson is that Earnings Winners by themselves are not going to send the stock price shooting up. What is more important is that the "earnings news" brings trade volume to the low float stock. In this case there was below average daily volume on day 2 of earnings news. And. I didnt cut losses quickly because I was deer caught in headlights. I totally 100% expected this stock to go nowhere but up so I broke several rules.

1. I broke falling in love with the stock rule. I felt this was a real winner because of earnings and I convinced myself that it will go up no matter what.

2. I broke the greedy rule. I felt that the stock was going to blast off at least a dollar that I wasnt paying attention to my normal indicators of price action direction like Level 2 and Sales tape.

3. I broke Cut your losses early rule. Again I was astonished that the price of an earnings winner just dropped straight down.

After talking to people on chat I realized that earning winners by themselves do not automatically mean green day after green day. It is an indicator of potential volume.

The formula is that a catalyst brings trade volume to a low float stock. There was just no volume in SINO today.