EDGE TRADER

Thursday, February 02, 2006

Starbucks - SBUX closed out



I find myself playing exits very defensively these days. I closed SBUX today. I entered the position on the -200 Dow day. On a swing play, I generally set a tight stop on a portion of a position and a looser stop on the remainder. This prevents me from being fully taken out of a position on a temporary downswing. Note of course, that generally this is a mental stop, since I prefer not to display this info to market makers. I typically only use stop orders in rapidly rising markets or if I need to be away from my trading terminal.

SBUX may have a continued bull run here, depending on how the earnings flag develops. But I really don't trust this market, so I'd rather leave a small gain on the table by selling. I can always re-buy later if need be, when the post earnings trend more clearly establishes itself. I would expect an inflow of money here since SBUX has been one of the bright spots in an otherwise dissapointing earnings season.

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