Rookie Mistake and Lesson Learned

So Tuesday I noticed YHOO breaking down. Nice. Shorted 300 shares of that dog.

Now in years past, during earnings season (of which we are in the midst with most major companies reporting this week), I closely followed upcoming earnings report. See, as a trader, it makes sense to avoid positions in which earnings are imminent. You have no advantage since you generally have no idea what the company is going to say.

Lately though I have suffered from news overload. Just decided I don't care much what's in the news. It's all so depressing. Especially when you interpret every piece of news as an indication of impending doom, as I'm apt to do. Long story short, I've not even noted upcoming earnings reports. Just don't care.

Well after initiating the YHOO position, that afternoon they reported. The numbers reported were not as awful as expected. That's the game- expectations. Despite the fact they suck and earnings were totally unspectacular YHOO stock popped $2.50 afterhours. Instant $750 loss- now I care.

So traders, watch for earnings reports! Don't make the same rookie mistake I just did.

Sucks. As per my discipline I have exited some of my favorite positions this AM. COF reports tonight. Covered my short. WB reports tomorrow morning before the bell. Covered my short. Fortunately they were both down big this morning giving me a nice opportunity to exit.

Sure I think there is a good chance WB in particular will not have anything good to say. But banks are black boxes, thanks to mark-to-make-believe accounting and other trickery they could report anything. No advantage for me. No reason to accept the risk of a violent move in reaction to the report.

As for YHOO...I'm gone. My thesis, a technical breakdown imminent, was immediately proven wrong by the market. I'm gone. Discipline folks. Live to fight another day.