Gap openings

There was heavy overnight weakness which gathered momentum in the US after Italian bond yields soared past the significant 7% level. It meant that the market gapped down about 100 points or 2.5%. At the moment I'm entering trades on the close but stopping out when necessary. I had moved my stop to below yesterday's low in SEK because the day's action had been disappointing immediately after a minor buy signal. However the stock opened at 566 which was a drop of 31 cents and 30 cents lower than my stop. Volume was very light and these illiquid stocks are often at the day's extreme in the first half hour as stops are filled. I waited and got out at 583 with the stock now back at 594. With the day's low being around support, I was tempted to stay long but I'm less confident of a new high now and so the logic has gone.

PXS is another illiquid stock which gapped below my stop. It found support at a recent low of 121 and has bounced back to 132. In this case, another high still looks plausible so I'm holding on with the stop at 120 now. It was the same story as SEK, probably unwise to stop out in a thin market and now it's as if I have a fresh trade – hence a new stop – as I'm looking for a double bottom and another leg up.

I've had a mildly positive day despite being net long because a couple of short positions have fallen hard. WSA is down 37 at 561 and CGF down 27 at 431. My aim is to stay in performing positions until there's a loss of momentum but I've been going through my trades and have found that it's very rare for a position to make more than 5 or 6% in the bigger dollar stocks given that I'm usually just in them for one swing. I decided to take half off at a 6% hurdle and let the rest run so I've bought back some CGF at 428 and WSA at 565 (should have been 562 but I got edgy). It may or may not be wise in the long term but it helps to smooth returns which is definitely a good thing and it takes away stress because it's a simple rule.

Here's the CGF chart. I got short at 458 on a minor new high which failed after 4 days of chop, just short of a recent high. The stop was tight, just above that congestion. I'll move my stop just above today's high for the balance.