I’m pleased, and a bit surprised, to report that I followed my trading rules for a change. To explain: I have a short position in CRWD. They report earnings tonight (and we’ll see by tomorrow if my “wisdom” was foolish or not), but PANW reported yesterday afternoon, and they absolutely exploded higher based on their earnings.
In sympathy, CRWD likewise blasted higher, and my loss was nasty. I came THIS close to covering it after hours, just to get it off my spreadsheet and not look at the damned thing anymore, but let’s review Rule Two, shall we?
AVOID THINLY TRADED INSTRUMENTS AND OFF-HOURS TRADING – Low-volume symbols and off-hours trading, is nothing but trouble: the bid/ask spreads are obscene, it’s difficult to get in and out, and big moves after hours often get reversed by the time the opening bell rings. Tempting as a given chart or event may be, be patient and wait. Stick to regular business hours with highly liquid symbols.
Hmm, “big moves after hours often get reversed“, eh? Well, let’s take a fresh look at PANW:
In turn, the big pop in CRWD (red arrow) has been laid waste. Thus, what would have been an ugly loss is, for the moment, a handsome profit.
I mean, CRWD could explode high tonight and this whole exercise in strength may be wasted, but as things stand now, I have not been stopped out, and the above just shows not to necessarily take after-hours movements at their word.
