DIS and PYPL Tank On Earnings. Lesser Known Stock Soaring!

I repeatedly mention in my articles to be married to the process, not brand names. 

Whether in profit or loss, exiting and letting go of assets is arguably the most challenging part of sound investing. Unhealthy attachments to ticker symbols will only add to the challenge and seriously impact your top end. 

The majority of your 'thinking' must be done BEFORE you add an asset to that portfolio. Once the asset is in the portfolio, you must have clear rules that remove the subjectivity and bring a purely mechanical approach to managing that asset REGARDLESS of the brand name. 

In terms of exit management, my preferred method is to use a trailing stoploss (TSL). When tagged, I exit. This removes emotion, thinking, attachment and subjectivity. 

Let's have a look at how a lack of attachment and a TSL would help you exit the well-known stocks of Disney DIS and Paypal PYPL. In comparison, we will then look at how a well-placed TSL would still have your position(s) open on a third lesser-known stock. 

Disney

Below I have the daily timeframe. Price had moved circa 157% following the recovery from CV19 in March 2020 to the high of March of this year, a one-year-long trend. 

After every trend, the market consolidates which price has been in since March of this year. Ideally, we then want to see price breakout to the upside and continue the bull trend. 

With Disney, we can see that price gapped below the support of May 2021 on earnings, although the gap up formed in December 2020 could still act as support and push price back up. 

Regardless of how you define the consolidation base, the chances of having exited using a TSL are high. The drop in price since the ATH of March this year is over 21%. 

Paypal

A similar set-up to Disney. Price moved up circa 278% between March 2020 and February 2021 and has since been in consolidation. A gap down on earnings added to the circa 32% decline in price since the high of July. A drop in price that will again trigger a TSL. 

The $200 level where price is now has a high chance of acting as support and pushing price back to the upside. Below is the daily timeframe. 

The overall bias of the market is bullish, with the S&P 500 pushing to new ATHs, so a recovery is very likely on both DIS and PYPL, given the powerhouse companies they are. 

NOTE: For more advanced traders/investors, you may override the TSL and take major support levels into consideration before exiting. This will mean larger drawdowns of unrealised profits but significantly larger profit over the long term. 

Now the lesser-known stock, one that has out-performed both DIS and PYPL this year...

Old-Dominion Freight Line 

ODFL has moved circa 237% since the low of March 2020. Compare price action this year to the above 2 stocks, and you see a smoother and far more linear trend, one that a well-placed stoploss has well managed. 

In my previous article, I shared my high-probability checklist that I reference every asset against. Assets that meet the checklist make it into the portfolio. Assets which don't I stand aside on. It is as simple as that.

DIS, PYPL and ODFL all met my entry criteria at the time of entry. 

Since entry, ODFL has been a far better performer, a perfect example of focusing on the process and detaching from ticker symbols.