My Macy's traded didn't work out as expected. I was stopped out but it was at a very minimal loss. Yesterday the high was $30.03 and my stop out was $30. I am still going to be watching it. A decisive break of the $30 could mean its going lower.
I have a new idea and I am going to buy some Citigroup this morning. Here is why.
First of all, it was down five days in a row. It gapped down last Tuesday morning and the close was lower than the open on each consecutive day through Monday.. That is a lot of days to be down in a row so it makes me think that it is oversold and due for a bounce.
Second, on Monday it found support right at $56.50. This level is resistance / support in the end of November,
Third, yesterday it broke the downtrend that began on January 17th. This means to the forces of supply or the Bears are no longer in control of the market, The Bulls may have taken over or at the very least, have become equal.
My initial target would be around $60 because that is the level that C was at when the recent selloff began. My initial stop out would be $56.25. I assume that once the market opens Ill buy it somewhere around $57.50. So that means my theoretical potential loss is about ($1.25) and the profit is about $2.50. Generally I like to have a 3 to 1 potential Reward / risk ratio. This is 2 to 1 but I don't expect to be in this trade for too long so I am OK with it.
There should always be some logic as to where you place your stops. If not, then you are just guessing. The logic behind having my stop at $56.25 is that if it trades down to this level it will probably mean that the support at the $56.50 level has been broken.