What was I thinking...

I think Dierks Bentely said it: What was I thinking?!? (Hit play and keep reading!)

Okay... so, I saw the sell signs in the beginning of the week, but just like our friend Dierks, I was too infatuated with the idea of making money that I forgot to stop and use common sense. First of all, I broke Rule #1 and traded against the direction of the market.  See S&P 500:
Okay, so first up to bat for sell signals is the Doji on the 4th (open and close at the same price), and the second Doji on the 7th -- which to add insult was in the form of a "shooting star," which is a classic conclusion to a bullish run.  Certainly, if we weren't convinced on the 7th... the down day on the 8th should have had us running from any bullish positions.

So, what did we do... Jumped into an AAPL call position on the 7th of course!  See AAPL:

What hurt us was a confluence of two profitable experiences.  1) We had just profited 120% on an April call that we sold on the 7th and rolled into a May option to "ride the rest of the trend."  We had our eyes fixed on the 120% and not the technicals.  2) We entered the trade near the open of the day and rode the wick all the way up.  When I looked at it we were already up another 10% -- it was like picking fruit off the money tree!  I did take notice of the shooting star that had formed on the 7th... but found ways to rationalize it away.  Then we came up with reasons for support all the way down to the close on Friday... watching AAPL be pulled down by the general market sentiment. (Despite, I might add, news from analysts that AAPL is expecting another great earning report.)  Now we're sporting a solid -50% on our option.  The only good news is you will notice that the price stopped right at my Gold support line that I had drawn from over a year ago.  It's also the bottom of the wick on 1/22 (which was that strange gap we saw on their last earnings report.)  We'll get into more technicals on a later post -- but I think we could certainly see some much needed support (for my trade at least!).  If we break through $146 there isn't much to stop it for a while... ugh.

So, let's all watch my little movie I posted -- smile, and vow to never get infatuated with our profitability to the point that we miss the technicals (or for Dierks -- the shooting father).

As a final note, any of you boys who would steal my daughter away better know that I'm a MUCH better shot than the guy in the video.  Better drive fast!

-josh