Covered my short on BIDU at $350 for a $12/share profit at $338 this morning. I'm sure it has a great possibility of going lower, but I take the profits as they come in this volatile market. You absolutely need to stay on your toes here. Although it was a "small" position, $12/share is substantial for most traders and I will probably stay out the rest of the day unless something truly substantial shows up. My reasonings for my short sale last night included:
1. after a violent rally occurred late in the day, I continued to see short covering into the after hours market which, at $350/share, was $5.50 over the closing price. On a typical premarket morning, BIDU normally gaps up $5-7, so my typical scenario would have me at an even position to slightly down at worst. I have seen BIDU gap up as much as $8 to 10, but opening a position at 350 simply gave me the odds I was looking for.
2. I don't believe that this market is healthy, despite a late day rally
3. as mentioned earlier, it has been a while since we've had in fact a premarket gap down in the momentum names
(As a side note, I understand that some of my readers may not be familiar with the terminology I'm using here. I will try to post a "glossary" of terms used in trading.)
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