JOYG:  Last Thursday, 8/13, it looked like all JOYG needed was a convincing breakthrough of our resistance price zone and off to the fair we go. Needless to say we didn’t get it.  JOYG has given back over $4.00 in the last two days.   So  what happened?   

JOYG_2nd_Entry.jpgIf I had made a trade at the first entry point, at $37.60 +- with a stop at $35.00, we’d still be in the trade with a gain of $2.50.  The trade would probably be at least break even or a little to the good.  If it were my trade and my pattern not developing as anticipated I’d probably take what profit I could and wait for a trade that was developing as anticipated. It’s a little like baseball,  I’m shooting for a home run but if all I hit is a little infield grounder I sure as heck don’t try and run the bases.  So we take our base hit and hope another trade will move us around the bases to score.

In this particular example of JOYG, I choose not to enter a trade at the first entry point. Several reasons; the overall trading pattern still looks bearish to me. We are in a nice bullish correction but it is still a correction of a bear.  The correction we experienced over the last year was very deep and more like a trend reversal.  When I buy into a trade early, like the first entry point, I like to see a lot of support for a movement and one of the main things I want on my side when I go for the home run is momentum.  If the market had a couple of strong patterns, bull or bear, in the direction I want then we have some momentum in our favor.  But. . . .the market looks bearish but with a bullish correction. Are we in a bull market or a bear market??  If you gotta’ ask those question then we probably don”t have momentum on our side.

Now about the second entry point,  I fully intended to enter a trade Thursday.  The price on JOYG had entered the resistance zone and rebounded off the upper side of the zone.  The price then retested “new” support at $42.22.  All I was waiting for was the price to break the upper resistance at about $43.25 and I would have been in the trade with a stop @ >$42.00.  The price didn”t and I didn’t enter the trade.  Even if I had entered the trade at this point, a tight stop placed just below the “hoped for” new support would have kept my losses down as I would’ve stopped out Friday. 

Should I re-enter the trade?  From the moment I would’ve stopped out or my anticipated pattern went south we were in a new ball game.  I still like JOYG from fundamentals but I will only re-enter a trade when the NEW patterns, I like, develop.  I’m going back to the start and try and determine where in the Elliot wave we are today with JOYG and do I see a trade developing,  bull or bear. If so does it go on my watch list or my close watch list? 

If you don’t control your loses you won’t be around long enough to hit a grand slam.