Good traders play a pattern or theme like a hungry bear will return to a food source until eventually a bad experience is encountered. Good trader know that they will eventually lose, but until that loss takes place and the step back to take a look at things, they'll stay with it as long as it works.
I don't want OI to become the software shorting website of the future and this will be my last thought on the subject, but when the sun is shining and trades are unfolding right and left, you want to be all over it and don't stop until a trade works against you.
Internet Security Systems Chart - Daily Interval
For several days we watched shares of CHKP hover at the mid-point of regression until today's "bad news" finally had the stock dropping to lower end of regression. A bear in recently profiled bearish trade for Internet Security Systems (NASDAQ:ISSX) $20.49 -7.62% is now thinking similar thoughts in ISSX.
I don't know of any "bad news" in the pipeline, and all we're doing is playing a pattern of past observations. Today's break below retracement of $21.47 is undoubtedly brought on by the "bad news" in Check Point (CHKP), but a smart bear knows not to be complacent. A bear understands that risk from the above chart can be assessed to retracement at $21.47 or upper regression and 50% retracement at $25.17 (near profiled short/put).
A subscriber that "needs" some gains if trading has been tough should honor account management practices and snug a stop down to $24.55 for protection against a rally. A trader that has perhaps built some profits in recent sessions and a little more comfortable with how things are playing out can play the upper end of regression.
Not only are we going to keep an eye on Check Point Software (CHKP) from here on out, but what about PeopleSoft (NASDAQ:PSFT) $25.37 +2.46? That stock got "crushed" on Tuesday, traded a bit lower yesterday at our 19.1% retracement of $23.93 and is getting some bidders today.
Make note that PSFT is firming a bit at the 19.1% retracement. It may come in handy should ISSX find weakness to its 19.1% retracement of $15.48.
Hopefully this will help tie in to today's 01:00 EST Update too!