WLT: My Call To Not Chase WLT Long Proves Hugely Accurate, It Gets CRUSHED

July 2, 2008 10:21 PM

Wow. My call to not chase WLT long as it was not “justified” in taking out the high was rather …hmmm…good. It made a new high of $111.99 and then plunged almost 20% to close at $89.32. While I have been calling this stock a bubble for a while, (even when Cramer was blowing his stupid bull horn) I never imagined a new high plunge like this. As far as I can find out, there was no news AND oil was up big. Difficult to explain other than once it made a new high and reversed, the selling pressure gathered steam and selling just went crazy. I have never seen a 1 day reversal off a high like this on no news. Never.

This is why I have made the case, including yesterday in fact, to NEVER chase a trade unless you are 100% certain. If it makes a new high, it “could” reverse at any time. If it does and you do not understand what’s happening, you will get crushed.

The frustrating thing was I strongly believed when I had made the call to short it, that it was going to $88 area and the longs were going to get punished. Then the dollar plunged after the Fed, oil made new highs and I said I would cover the short and take the profit. The next day WLT skyrocketed. It “appeared” to be short covering, but wasn’t sure.

This is also another reason my trade opinions are not a true representation of the value of what I say. Many of my calls are “caution”, “avoid”, etc. Those “calls” do not show up in my “stats”. They are like someone making a hard slide into second base and breaking up a double play. It never is in the box score, but might have been the reason you won the game. Capital preservation is FAR more important than making a profit. There is always another trade - if you have money.

Written by Tom@StockBlade.com · Filed Under WLT

Comments

2 Responses to “WLT: My Call To Not Chase WLT Long Proves Hugely Accurate, It Gets CRUSHED”

Tom@StockBlade.com on July 2nd, 2008 10:33 pm

I still cannot believe the chart…wow. Talk about “shock and awe”. This is rare to see this type of a move off the high on no news (that I can find) to say the least. In fact, i do not ever recall it happening.
Scott on July 3rd, 2008 12:48 pm

Do you think WLT and JRCC will turn long after the beating they have taken the past 2 days? JRCC is down like 25%

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