Today's Heartbreaker: CHK

It was a pretty good setup going into the trade because oil and gas stocks have been relatively strong lately. CHK was on my radar this morning. It is one of 4 stocks that I'm tracking daily. This morning it gapped up above yesterday's high...very bullish...then it broke out of it's opening range around 9:10 (central time). This was the entry signal and a long was established at 28.27.

At this point, the trade's on and looking good and the main risk was the upcoming natural gas inventories report that would be released at 9:30. I tightened up the stop heading into the release and I established an "uncle point" back within the opening range (see chart below). This trade had some profit potential if the market reacted positively to the report. As you can imagine by the title of this post, it did not. Here's a 15 minute chart that breaks everything down:

Calling this trade a "heartbreaker" may be a bit of an exaggeration, as this was still a good trade, it just didn't work. There are a couple of lessons to take from this one: 1) be aware of economic releases...especially ones that specifically pertain to the instrument you're trading, and 2) respect your stops. Fortunately, I tightened the stop prior to the release and respected it. Had I not, I would be sitting in an underwater position that's going nowhere and tying up precious capital.

As for the market in general right now, I'm liking financials. In particular, I think there might be a good longer-term trade developing in WFC or several short-term trades. Keep an eye on WFC if it trades above and holds the $29.50 level.

Have a great day!

TLT