Sometimes, longs will say a stock's downward move doesn't make any sense. I heard this more than once on Wednesday when Apple (AAPL) lost 6.4% in big volume. I heard it again on Thursday when Apple was down by as much as 3.7%. To me, the selling in Apple this week is no surprise. A stock that's been under distribution since late September remains under distribution. It's not any more complicated than that.
Sometimes, upward moves don't make sense either. Shorts were licking their chops Thursday when Lululemon Athletica (LULU) issued disappointing fourth-quarter guidance. Big sellers were in the stock between 10 a.m. and 11 a.m. ET but shares bounced back, ending the day at $73.57, up 7.3%.
As an individual investor, my job isn't to question why stocks move the way they do, especially if a new buy doesn't go as planned.
Qihoo 360 Technology (QIHU) gave the head fakes of all head fakes this week. The stock broke out in heavy volume on Monday, rising 10% to $27.44, and then proceeded to lose 11% in heavy trade over the next two sessions -- abnormal price action to say the least. Hello failed breakout.
I bought the stock on Monday and sold into strength Thursday for a modest loss. Small losses can easily be overcome. It's the big ones that can do lasting damage, and they can spiral out of control when investors argue with the market.
I learned long ago not to argue with market. When a trade doesn't go as planned, sell first and ask questions later. Objective not met. Time to move on.
[Editor's note: What have you learned from your losers? Post a comment to share below.]
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