Here’s a lesson on Symantec ($SYMC) (February 05, 2016)
SYMC SPY SYMC SPY
If you look at Symantec ( NASDAQ:SYMC ), they report great numbers before the bell, the stock’s up 3 percent. Yay! That’s pretty good. But it’s down 4.5 almost 5 percent from the open. Here’s the thing: This is a stock that you can buy, not just yet, they actually pay a decent dividend for a tech company, a decent dividend. But, there’s a lesson here. First of all on the weekly chart, sideways consolidation, trending lower, you don’t have to buy this right now. There’s no assurance that the stock is going to keep moving up, $21.00, $22.00, it might move down, 19.00, 18.50, 18.00. So you have to manage some risk in this. Frankly there’s no much of anything that I’m buying, except the bears argument. But the reason that I wanted to cover this stock was because it’s a good lesson. If you’re a pro, or if you want to trade like a pro, you’re looking at this and you’re short this stock, 20.80, even at 20.60, you’re short this stock. And by the end of the day you’ve made 4 percent. Because what happens is, it gaps up on really, really strong earnings number, but there’s no follow through.
You’re either going to have (and it’s one or the other), you’re going to have a gap and run, where the stock just gaps up and then it keeps running. Or you’re going to have what’s known as a gap and crap, this would be that. If you look at the SPY you’ll see that here, this gapped down and kept going today. Why am I saying that? I’m telling you that because when the market is weak, you know what the environment was on Friday, when the market opens up WEAK and your stock, no matter what it is, opens up really, really strong, expect selling to come into this stock. This is what the pros do, there’s a huge demand for a stock, great! I’ll supply it, I’m just going to mark it up a lot, just like anything else. So when the market is WEAK and a stock gaps up, you want to SELL that stock, you don’t want to be buying it. After it gaps up, even if it does keep running, it’s not going to run that hard because there’s such a sell bias in the market. So in the future when you’re seeing this, earnings reports come out four times a year, there are so many opportunities to make these kind of trades, watch for them. If you see a stock that’s up 8 percent from close to open, that’s a stock that you want to sell. That was the case here with Symantec ( NASDAQ:SYMC ); but it really comes from a weak market here.
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