YUII Yuhe International – Gap Down 'Hole In the Wall Pattern'

by Olivier on March 11, 2010

Now that would be the perfect day to make tons of excuses. The thing is, sound trading doesn’t work that way. The market giveth, the market taketh away. Today it took. Our job as traders is to graciously accept losses, to turn the page and to move on. YUII – YUHE International gapped down and my stop loss was executed below the price level I had placed it. Looking back I don’t see any warning signals in the chart. Quite the contrary. The stock was displaying an almost picture perfect bullish ascending triangle and the stock closed slightly above the upper trendline defining the triangle pattern. No regrets. This is a trade I would take any time. As Larry Hite suggests it is all about odds and making good bets.

Now that YUII has gapped down the chart is displaying a ‘Hole in the wall pattern’. For more info on this pattern check those two past articles where I mentioned and explained that pattern.

That being said technical damage with YUHE is huge. In most cases, with stocks that encounter such a counter trend price shock, it takes a very long time for the charts to recover. Hence, the assumption that staying in when such a gap down occurs, the money you have in such a stock will probably be dead money for a while. Remember, good trading is not only about protecting your capital, you also need to protect your mental capital. Mental capital is key. If you get stuck in losing trades and churn through mental capital you will make additional, much more costly mistakes as your judgement is clouded. The goal is to be emotionally detached and to be in control of your trades. As soon as you hope a position will somehow turn around and bail you out, you are not in control of the trade anymore.

YUII Yuhe International Gap Down Technical Analysis Stock Price Chart

On to MRZ.V – Mirasol Resources which is starting to look tired to say the least. The stock is not exactly acting well. It looks like the easy money with MRZ.V is gone. Today’s price action is not typical ‘strong stock trading behaviour’. The stock is now starting to develop more overhead resistance than I’d like to see. Maybe the first indication of a much bigger than expected consolidation pattern ahead.

Great traders offer no excuses.

Have a great evening!

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