Knight Trading Group (NITE)

Company. "Knight provides comprehensive trade execution services in cash equities and equity options to institutions and broker-dealers, as well as asset management services for institutions and high net worth individuals." (company website) In other words, Knight is a market-maker that uses a big pile of their own money to actually execute trade orders.

Buy. In May, NITE broke the $6 barrier, then retreated. In early June it recovered and made a big jump to $7.00. I thought I was being pretty smart to wait until it fell back again and then started to rise again. Of course, I didn't feel so smug a couple of weeks later when NITE took another tumble and looked like it might settle around $6.50. Then on July 3rd, NITE raised its guidance for the quarter, and stock rallied.

Subsequently, NITE continued to climb, eventually getting as high as $9.50. It closed at $9.20 on 15 July.

Sell. Before the market opened on 16 July, NITE announced its results for the quarter. The company had benefited from recent activity in the stock market. Revenue was up 22.7%. As they had guided, Knight reported EPS of 13¢ compared to a loss of 19¢ per share a year ago. At the open, the price of NITE immediately jumped to $9.50, and I started to plan my next trip.

But not for long. No good deed goes unpunished! Although Expectations were met, the market began to punish NITE for no apparent reason. I checked the queue of orders and put in a stop-limit order of my own, "just in case."

"In case" happened. The price continued to fall, my stop-loss order was activated, and my stake sold in several small lots at my limit.

I did set my limit a bit above my rule of "8% from the highest close," so "technically" I didn't have to sell quite yet. But I recently read some advice that said, if a company announces good news, but the stock price falls, that is a sign that the market believes there is less in the news than meets the eye, so sell.

Time will tell if this was a smart move — the market knew something I didn't know — or if perhaps the stock just got caught up in a temporary downdraft and will later recover and continue its advance.