[badcharts]

Hi Guys,
  I bought some facebook stock on April 5th. It had a great run of 37% or so, until yesterday it crashed by 20%ish...I rechecked the technical and there is no negative indicators. What could I have done to prevent it from happening? I'm think maybe sell half at a target price. But how do I determine the target price? if I use swing rule in stan's book it's around 223+
Current Highest point + (Current Highest point - Next Lowest point) = approximately near term target price
In Apirl 5th, 186.1+(186.1-149.02)= 223.18
and the stock crashed at 218.62....
If I use closed high and closed low I get target 215, maybe that's better?
another possible solution is to sell half before their earning report if it reach approx to 223.18 with a +/- predefined range?
let me know what you guys think,
thanks,
ark,

Unfortunately, anytime you sit through an earnings report with just a stop loss you are taking a gamble, as the chance of a stock gapping on the open the next day are virtually guaranteed. If you hold it through the earnings then you are gambling that the result will go your way. But it's always a coin toss as to which way it will go imo. So in this case, the reaction to the report was terrible, and nothing in the technicals before it could have helped with that.

One of the hardest aspects of trading imo, and I’m not sure how you can mitigate against it, except some kind of options strategy maybe where you sell puts or calls (not sure which) against the stock that you own, so that you are basically hedged through the earnings. Or some sort of thing like that. But don’t quote me on that as I know nothing about options trading. But I think that’s the kind of strategy that I’ve read about in the past as to how to limit your risk through earnings.

Hi Ark,

Had some fun doing an exercise of revisionist history using this Facebook case...

   

Also, for the swing rule, I use monthly candle open and closes to define breakout line, then add implied mesured move to that break line. I see the wick as "noise". Gives closer, more probable targets.

See this post on twitter https://twitter.com/badcharts1/status/10...5785325569

Let me known if that's how you see it!

Regards,

Patrick