Tuesday, October 26, 2010

Bookkeeping: Stop Loss Hit in Bucryus (BUCY) as Morning Dip Swipes my Shares

I was pilfered of my Bucryus (BUCY) shares this AM as my (very tight) stop loss has hit.  That said, I am trying to decipher some bigger picture actions by the algos using BUCY as an example.  It seems stocks that continue up, with no technical damage, can be bought at any valuation.  See Netflix.

However stocks that take some hits, appear to be left to humans to buy and are hence a trickier proposition.  Humans have emotions and such; unlike the mindless buying by the computers.  The reason this matters is I am thinking about buying Cummins (CMI) today (I suppose it can replace BUCY) but its chart looks very similar to Bucryus (BUCY) from last week.  Both have a reversal on a big red 'candle'.  So if it's left to human devices now that the "straight up momentum" is over, is there actual demand?   Not sure but one I will watch closely as I try to figure out how a market dominated by automatic trading continues to evolve.

As for BUCY it was entered last week @ $68.70 with the caveat that if the 50 day moving average was broken I'd be quickly out.  That happened today @ $66.72 as I was hit by the worst price of the day in this morning's quick selloff pre POMO.   That price executed around 9:45 AM.  Once the stop losses were collected the stock shot up to $68.50 (+2.7%) within 15 minutes, just after 10 AM.  To which I say, nicely played market makers.

No position


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