This post was just published on ZYX Buy Change Alert.
There was a nice gain on THC the same day it was bought. This evening a competitor of THC, CYH, is reporting lousy earnings and revenues. In sympathy THC is likely to be hit hard tomorrow. At this point investors have three options.
1. Exit the position in the after market using limit orders if you can get a favorable price.
2. Let the stops hit tomorrow and exit the position.
3. CYH earnings do not change the long-term positive aspects of hospitals under Obamacare. Under this approach, stops are to be cancelled and the plan will be to add to the trade on further dips and treat this trade as a medium-term trade. However this approach is suitable only for those investors who can handle large draw downs. The stock can easily fall to low to mid $30’s if market also starts falling at the same time.
For tracking purposes, we will be following approach number 3.