Analyze my Calpine Trade

As I mentioned last week – I sold my shares in Calpine after the candlestick reversal on the 24th. I was more concerned with my buy in BIDU so I never had the time to write a full post about Calpine (CPNLQ) but I did make sure I mentioned that I sold my shares in that post:

BIDU buy up 30% in two Days

4/26/07: “I sold my shares in Calpine but that may have been premature (190% gain). I will buy back into Calpine if it corrects and will let you know.”

050107_cpnlq.png

The stock is getting slammed the past two days and actually reached an early intraday low of $2.95, almost a full $1 lower than my sell of $3.82 and far from the 52-week high of $4.15 made on the reversal last Tuesday. The reversal made my decision to sell on the candlestick charts!

It was an excellent trade, my best trade of the year, especially considering it was a piece of crap stock and trades below $10 per share (not my territory).

The chart shows where I bought, held and then sold – all based on technical analysis!

Comments

  1. Morgan Allen says

    Can that be the same Calpine that went bankrupt? Morgan

  2. Chris,

    I am addicted to your website, and learning alot from it.

    one question for you – What’s your forecast of the market? I am afraid to estabilish any position at this point b/c of a market correct that everyone is talking about. I’d like to hear what you have to say.

    Thanks

  3. Morgan, yes, it is the same company. Still a crap company but it was an excellent trade.

  4. Jason,
    I don’t have a forecast as I stay away from predictions or listening to talking heads. I trade the trend and it is still higher so I am currently long. Until I see a trend reversal with my own eyes, I will continue to place long positions.

    I know the market looks extended and the NASDAQ is up over 25% since the bottom last year; but I have to ignore that until a signal happens. Trade the market, not your thoughts of what may or should happen!

  5. Any advice on how long to hold Calpine I have a good amount and i see it going down the last couple of days no news out there to show otherwise.

    I am still holding as i think that it should hit 4-6 by end of may ….any ideas

  6. Lenny
    My idea was to sell last week which is exactly what I did. I am not touching it again, for now. This is the best I can tell you.

    I sold when I saw a red flag for a possible reversal. I happened to hit it on the head for now so I will continue to listen, the immediate short term trend is down.

    The stock told us to sell and is still getting hammered! Listen to the market, not your hopes!

  7. Thanks for the advice and i will heed better the market rather then gut…

  8. Steven Mac says

    Lenny,

    I was nailed on this one too. I was at the point of selling at $3.96, and backed off thinking that it would pull back some, and big money would come to push it back up as previously over $4. I had actually recorded down an exit target price of $3.86, and didn’t take it because I wasn’t satisfied with what I could have. Yesterday, the stock opened down another -5% and based upon Chris’s comments, I realized I needed to just take a loss and just get out of this as quickly as I can. I took a -10.74% loss on this one. I am a beginner and should have never attempted to be involved in a stock like this, but I consider it an educational experience in the pocket and will never invest in a stock like this again, especially anything that was bankrupt or on the way to becoming.

    Steven Mac

  9. Steven, I feel that one should be clear as to why he bought a stock. If you bought it for pure technical(and I mean trend) reasons, then sell it for technical reasons. There is no reason to think that this company was bankrupt, etc now. It was the same company which made 191% in 2 months.

    I usually do a combination of 2 types – some of the stocks have typical CANSLIM features and some are pure speculative type trades.

  10. Nithin is right, all trades must have realistic expectations. We all understood that Calpine is not a stable and solid CANSLIM company (the typical trades I make) but I explained in detail the risk associated with a stock like this and then traded it on pure technical analysis.

    Remember, I wrote thsi in my first post at $0.97:
    * NOTE – this is not a buy recommendation of any kind! Again – this is by no means a recommendation to buy and major losses could occur if you were to speculate in this stock (I must make these statements to protect the legal aspect of my words). None of the stocks on this blog are buy or sell recommendations; just equity research based on specific criteria as noted in my disclaimers!

  11. Steven Mac says

    I knew it was a risk and I think the curiosity of this is what drew my attention to it. I don’t hold Chris or anyone else responsible as it was an action on my behalf and the nature of the game. I am still relatively exploring all of this, so it was something good to learn from.

    It is important for me in the future to follow O’Neils Guidelines in Chapter 20 of his book “How To Make Money in Stocks” with the first point being:

    “1. Don’t buy cheap stocks. Buy Nasdaq stocks mainly selling between $15 and $300 a share and NYSE stocks from $20 to $300 a share. Avoid the junk pile” Pg.265

    One day I may be able to step out of those guidelines, but as a rookie in the market just for a few months, I need to put these guidelines into practice.

  12. May 11,

    Lenny,
    What are the technical indicators saying now?

    Lee

  13. Lee,
    The stock is consolidating but I am not biting this time around. Something doesn’t seem right. it felt right a few months back.

  14. Heather McGee says

    I bought calpine last April and now my shares are in “warrent” status. They are saying I have until August to buy the new stock at $19.00 a share and at that time my current shares will be worth nothing. Are there any other options you may know of that they are not telling me?

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