Thursday, October 30, 2008

Position Update - Gut Check Folks!

I'm still holding short 500 shares of DIN at $17.66 from Wednesday's close, with an unrealized gain of about $400. I was almost shook out early in the trading day, especially when the stock touched $18. The spread was nauseating at times, but I kept a close watch because I felt that the reward versus the risk was worth hanging on to my position. I've looked at the big picture, specifically the 20 day chart on TOS, and there appears to be plenty of downside to this one. This stock hasn't been around these levels in a while, so I'm thinking that this would be a great chance for longtime shareholders to finally get out and take their profit. The ask/bid spread was pretty risky for me, but I liked that the volume today was lower than the daily average. I knew going into this short position that the risky spread would test my stomach at times. I watched DIN very close, especially during the first hour of trading and once it settle near the $17 mark, my mind was more at ease and my confidence in my short position increased. I find that the first hour of trading is critical in that it can give me a clue as to where the stock is heading.

2 comments:

RamtaJogi said...

Whoa. That does take lot of guts! Though overall, I agree that DIN has plent of downside and I am glad that you are holding on to your short. If it goes red tomorrow, I will short it as well.

RJ.

IL Torello said...

Thanks ramtajogi! I've looked at the chart and I liked what I saw, so I knew I had to stick to my guns. It definitely would have been a safer play taking a short position after the second down day. Good luck tomorrow!