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Xinyuan Real Estate Co., Ltd. Message Board

  • hmmm26 hmmm26 Oct 26, 2012 12:43 PM Flag

    Mechanics of a Trading Mistake

    On another thread, I was asked if I had any hindsight thoughts about my recent, money losing short position. One primary thought: my losses were self inflicted. The play was solid; the trader was flawed.

    1. Quick Background.

    Friday, I opened a short position based on my belief that XIN's recent spike was due to its national article mentions late last week. I've played news spikes before, in XIN and in other thinly traded stocks. The basic pattern is characterized by a phenomenally fast spike up, followed by a slower decline nearly as big.

    2. My First Mistake.

    My first mistake was mis-timing the peak of the news spike. I took the position at closing Friday, when the peak wasn't until the closing on Monday.

    I got spanked pretty hard for that one day error and I found myself down 14% Monday night.

    3. Deviations From the Norm.

    Tuesday, XIN declined sharply, which lent solid support to my news spike theory (a theory I still believe to be correct), but there was a deviation from the norm: after it cratered, XIN spent the rest of the day with an upward trading bias, uncommon for a first post peak day.

    And then Weirdo Wednesday came along, a day XIN was + .07 to $3.37. That's a huge deviation from the news peak narrative. I can't remember ever seeing another news spike when "news peak + 2 day" was an up day.

    4. My Second Mistake.

    So, Wednesday night I was sitting on a position down 10%, with two deviations from a normal news spike. If Thursday was another break even or up day, it'd be another huge deviation and it would definitely prove my theory wrong.

    So I made my second mistake: I decided a strong opening would be a good enough indicator that Thursday would be entirely green. Therefore, if Thursday opened up, I should at least prevent the losses from the entire day's gains by dumping the position in the morning.

    Thursday opened up, I closed my position, but then cuz God hates me, the position began working again.

    5. My Biggest Mistake.

    I forgot that XIN makes all of its Share RePurchases right after the opening bell. I mistook XIN's repurchases for a regular market force and closed the position too early in the day to truly be sure of its direction. Ugh.

    6. I'm Rooting For XIN Again.

    Being all cash now, I'm back to rooting for XIN to go up, as many people I like own the stock.

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    • sorry for your loss, Hmmm....

      I believe XIN is NOT buying right now (they stopped this summer for about 40 or 50 days around earnings - and would be no buying Last week Sept/Oct / Nov - until earnings announced if same this time) -- since they would have insider info if they were trading.

      The pattern we saw makes sense to me in "a stronger market for XIN" with some indecision, and uncertainty around when it will take off & if Blue Ridge will keep selling.

      Result was the health move up (eg the march to 3.37 -- that was a bullish sign & opening was good on Thurs... Surprised it didn't get to $3.48 before the drop - but could well (can't prove) have been blue Ridge with big chunk starting the fall (although making a profit, with a $1.75 basis)....

      GLTA -- if in cash now -- $3.16 is a key point, if up, should jumpt to 3.25 and 3.33 fast. Also, could go to 3.10 or 3.00/2.99 (where there is tons of support) ----- Will be VERY surprising if when earnings come out, we are below 2.99. I'm guessing 3.25

    • Is the buyback window open now?? Dont think so ..another possible mistake by mr. Wonderful

      • 2 Replies to locatedmyballs
      • Yo, Dumbphuck, there is NO SEC statutory requirement of a black out period. If there was a blackout period -- and XIN has talked about one a few times -- then it was only imposed by XIN itself.

        Specify when you think the blackout period applies: Which days? Which weeks? Where did you learn that information? Do you believe it's an SEC Rule? If yes, which one?

        Most companies don't bother with blackout dates for RePurchase. They get around the Insider trading problem by completely automating the process: "We will RePurchase the maximum amount of shares possible under SEC Rule 10b-18, each day of each week until the $20 million is spent."

        Do you suppose XIN to be too stupid to adopt a plan like that?

      • Buybacks are only restricted to intra-days unlike insider trades, which should have been blacked out. Regardless, both are safe harbor provisions and unlikely but not impossible under all circumstances.

    • You might want to try a stock that doesn't have a P/E of less than 2 also...

      Sentiment: Hold

    • Face it, you're a 'LOSER' and if you GOOGLE that up there is a picture of you although I'm not sure what that is in you MOUTH but keep on sucking

6.13+0.20(+3.37%)3:05 PMEDT