The top chart is the Daily, the bottom chart is the Weekly.
Today we opened with a gap up. Looks like profit taking got a little carried away. The Daily created a Bearish Engulfing pattern on high Stochastics and closed under the 8ema. It also hit my stop at 98.38 and exited with a little slippage at 98.28.
The Bearish Engulfing pattern on the Daily followed a double Doji and a Negative Stochastics Diversion. We're also about to enter a new phase going into January. This chart from 2008 - 2018 doesn't add any confidence:
Jan 2019 was an up month and Jan 2020 was a down month to complete the picture but the S&P 500 is currently very overbought.
Now, on the Weekly, THO is not yet overbought nor has it closed below the 8ema. So the Bullish indications that got us into this trade have not yet been violated. If we were trading on the Weekly chart we should still be in the trade. However, we would have needed a much lower Stop and therefore a much smaller position in order to control the risk. And the setup looked so good, I didn't want to go in that light. Options would have been a good solution but the options on THO are terrible in terms of liquidity and Bid/Ask spread.
So, the bottom line is that being stopped out of this trade, with the current price action, is better than holding on. I suspect this will bottom out on the Daily relatively quickly and start back up, unless the overall market starts to tank.
We'll monitor the THO chart and look for an entry for a new long position.
Summary:
Enter: 102.75
Exit: 98.38
98.38 - 102.75 = -4.37 * 50 shares = -$218.50 into the Loss column.
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