Yesterday's market close decision was tough, today's was painful. We have all the same reasons to stay in and to sell as yesterday when I decided to stay in (see yesterday's post). So what's different today that made me decide to get out?
The first thing is we closed over the 8ema for a second day. If you zoom in super close you can see the 3 day ema (purple) has just crossed over the 8 day ema (orange). This often signals an imminent pop. Another thing is next week is a seasonally up week, being Thanksgiving week, and volume is expected to be light, which often results in a slow upward climb.
Just the fact that this is the second day we'll close above the 8ema is enough reason alone to exit. I know I should follow my rules, but my mind is screaming to stay in and not take the loss. But I did the "right" thing, overcame my strong emotions to the contrary and hit the sell button at 3:58pm ET with a limit order at just over the mid-point of the Bid/Ask spread. I waited as long as I could for a sudden and sufficient drop in the stock price at the last minute but it wasn't happening.
So I sold the GOOG Dec 1000 Put Option for a loss of $852.19. Now we'll get a big gap down on Monday, right? Oh well, can't let the fear of that influence the decision. Trade what you see, as guru Larry Pesavento would say.
When I try to find a lesson to learn from this trade, it might be that I shouldn't have taken an unhedged bearish trade so close to a seasonally up week. A vertical Put Spread would have lost less money, plus I could take off the long side and keep the short side if a bullish pattern developed. But a vertical spread would have less profit if the trade worked.
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