There have been three trading days this week, and two of those days – Monday and Wednesday – each had a big disappointment. I’d like to talk about the important reason these disappointments are different.
The first one is AMD, which I was short. As of Friday’s close, there was absolutely nothing at all about this position that should have caused concern. Indeed, the stock fell nicely on Friday and seem ready to continue weakening on Monday.
And yet it was to do nothing of the sort. Thanks to a big announcement between OpenAI and AMD, the stock rocketed higher by 36% at the open, and I was instantly stopped out with a nasty loss. Judging from what happened afterward, particularly Wednesday, I’m glad to be out of it. It hurt, but this is just one of those things that no chart can predict: a surprise announcement, totally hidden (like it’s supposed to be!) from the public, and then BLAMMO, a shock event.
It’s a shame, but I wasn’t upset with myself about it. It was just bad luck.
Wednesday’s disappointment was an entirely different kettle of fish. See, I was long PALL. Very long. Very, very long. And I had terrific profits on it. So, I got the brilliant idea to……………get out. All of it. Right away. And the only reason I talked myself into this idiotic action was I spooked myself into think gold and silver had gone up so, so much that surely the entire precious metals complex was going to tumble immediately, so I’d better get out while the getting was good.
After all, everyone and his mother was chattering about gold this and gold that, so surely it was time for precious metals to pull back for a few weeks, right? Right??
Not right. On the contrary, PALL had one of its best days in its history, as palladium exploded higher by about $130 and people fell all over themselves to get the stuff. I will not repeat to you the various names I called myself through the day, but the number of epithets and insults probably went into the hundreds. I was furious with myself, and profoundly disappointed.
How come? Simple – – I let myself down by acting impulsively. In point of fact, even a cursory examination of my own Trading Rules page illustrates that I violated just about every rule. My behavior was the utter antithesis of what I’ve TOLD myself I have to do and what I’ve told all of YOU I think you should do.
Yet I acted impulsively, emotionally, and UTTERLY CONTRARY to what the chart was telling me. It pretty much spoiled my day.
The difference between AMD and PALL is a matter of blame. I didn’t blame myself for AMD. It was bad luck, and gee, that was too bad, but there was no self-recrimination that would be appropriate.
PALL, on the other hand, was 100% pure and unadulterated My Fault. I’ve charted since I was a teenager, and the setup with PALL was a screaming, jumping-up-and-down, Technical Analysis 101 bullish pattern. My decision to sell it was nothing short of brain damaged.
I feel a bit better having shared my tale with you. Learn from my mistake. Don’t do what I did.
Instead, follow the rules.
