Alcoa's earnings were announced in yesterday's after hours. The earnings were disappointing and led to broad weakness in today's markets. Alcoa reported fourth quarter earnings of $0.01 per share. This was $0.05 less than the consensus estimate of $0.06 per share. All aluminum stocks fell as a result of this and gapped down. The aluminum stocks showed a breakaway gap this morning on the daily charts. Its important to note that when trading a breakaway gap you want to take a position at the opening. This will allow for the high of that bar to become a pivot point in case the stock later tries to fill that gap. Also, this is important in that the position is not taken near the low of the bar which would be further from the pivot point.
I didn't get CENX (Centruy Aluminum Co) exactly at the open of the bar. The position was taken instead in the middle of the bar. I let the position go in that it didn't continue to decline from my entry point and close near the low. The trade resulted in a realized gain of $0.79. It was an unrealized gain of $155 after taking the short position but this was not intended for a day trade. My intentions are mainly on swing trading and position trading. The action of the stock will tell you whether or not its worth holding after the position has been taken. My rule of never paying up by more than 1% from the trendline or breakout point told me that this position had to be let go of. Of course, I may not always be able to get exactly 1% from the breakout point but it should be close to it.
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