Day Trading Thoughts For Fri. Dec. 19

E

erikrkolodny

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One knows the old saw ‘a watched pot never boils.’ Well, that is the same thing with the stock market. And guess what? It inevitably works in the stock market. Last Friday, when the Madoff news broke along with the failure of the GM legislation to pass, I joined the minions who’d thought the trading day would be loaded with fireworks. After an initial decline, the markets had a slow steady rally which made it a great day for investors, but not as good for traders. However, the principle dramatically works the other way too. After a sloppy quiet session on Wednesday, stocks hovered in a narrow range for most of the day yesterday until the last couple of hours when a steep 3% plus plunge occurred. And the fact of the matter is that, on paper, things look to be slow today. There is a snowstorm forecast in Manhattan, it is a quadruple futures/options expirations day, and it is a Friday in which a lot of people will say good-bye to the 2008 trading year as they take the next two holiday weeks off. But that is what makes days like this potentially very exciting. The snow will keep some people home. People may be unloading positions options-wise. And best yet, if many people decide today is the last day they will go to work this year, they will look to close out their books. Furthermore, there is a major S&P rebalance this afternoon. So, we may have a lukewarmly quiet afternoon, but today is one of those days that will likely have some outstanding intra-day movement and a reminder of why it is we should never take a day for granted- in the trading world much less in life.

Markets throughout the world fell on the heels of Wall Street’s declines overnight. What I for one could not foresee yesterday was the delayed’ bailout conjecture which is arguably what help to feed the sell-of yesterday. So, trading today will likely hinge on the bailout talk with oil prices now seemingly a freak sideshow. Look for an active beginning, an active ending, and a slow middle with continued choppiness although things should have a slight upside bias pending what the president says as many people wind out options positions for expiration much less equity positions for the year.

Reiterating-

If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specified

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


Good- The following stocks have good news and/or a strong technical pattern

RIMM- good earnings and raised guidance; traded all over the place after-hours though. If it opens higher and goes to unch, it is a short.otherwise, likely A-B-A2 to upside

ORCL- good earnings

A.CN- decent earnings

ZQK- good earnings

DRI- great earnings

RIG- closed on its low after it came out of the S&P 500. Looking to short thru 37.90 (unch) if it gets there else A-B-A2 to upside as the decline yesterday afternoon was seemingly artificial due to imbalance selling

PHK- closed near a high

RUS- closed near a high

CADX- tried to sell off today after Wednesday’s drug news, but closed near a high…looking for A-B-A2 thru 7.


Bad-The following stocks have bad news and/or a weak technical pattern

POT, IPI- both warned

ANR- closed near a low

PTEN- one of the smaller energy entites closing weak

BUCY- downgraded yesterday and had total reversal; may pop back up if market rallies a bit

ISYS- stock has been in freefall since last Thursday’s earnings; it has fallen from 24 to 9. Momentum likely continues today, but due for an A-B-A2 bounce as the CEO is slated to ring the closing bell on Monday. As silly as that sounds, the company will not want the embarrassment of being highlighted/discussed if its stock is collapsing.

WY- warned

SYK- warned

Earnings:

FRI DEC 19 BEFORE

CTAS JBL KMX



Good luck today.

Erik R. Kolodny
 
One MAJOR correction...on the RIG, it should have read..."looking to BUY thru 37.90..."totally totally totally my fault and I apologize; I hope everyone udnerstood what I meant as it was trading down early this morning in the pre-hours. Too few hours of sleep. The people in my office did as we all bought it just shy of unch (I and several others made about 50 cents a share in it on that move thru unch), but that doesn't remedy the mistake here. So, again, my apologies.


Quote from erikrkolodny:

One knows the old saw ‘a watched pot never boils.’ Well, that is the same thing with the stock market. And guess what? It inevitably works in the stock market. Last Friday, when the Madoff news broke along with the failure of the GM legislation to pass, I joined the minions who’d thought the trading day would be loaded with fireworks. After an initial decline, the markets had a slow steady rally which made it a great day for investors, but not as good for traders. However, the principle dramatically works the other way too. After a sloppy quiet session on Wednesday, stocks hovered in a narrow range for most of the day yesterday until the last couple of hours when a steep 3% plus plunge occurred. And the fact of the matter is that, on paper, things look to be slow today. There is a snowstorm forecast in Manhattan, it is a quadruple futures/options expirations day, and it is a Friday in which a lot of people will say good-bye to the 2008 trading year as they take the next two holiday weeks off. But that is what makes days like this potentially very exciting. The snow will keep some people home. People may be unloading positions options-wise. And best yet, if many people decide today is the last day they will go to work this year, they will look to close out their books. Furthermore, there is a major S&P rebalance this afternoon. So, we may have a lukewarmly quiet afternoon, but today is one of those days that will likely have some outstanding intra-day movement and a reminder of why it is we should never take a day for granted- in the trading world much less in life.

Markets throughout the world fell on the heels of Wall Street’s declines overnight. What I for one could not foresee yesterday was the delayed’ bailout conjecture which is arguably what help to feed the sell-of yesterday. So, trading today will likely hinge on the bailout talk with oil prices now seemingly a freak sideshow. Look for an active beginning, an active ending, and a slow middle with continued choppiness although things should have a slight upside bias pending what the president says as many people wind out options positions for expiration much less equity positions for the year.

Reiterating-

If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specified

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


Good- The following stocks have good news and/or a strong technical pattern

RIMM- good earnings and raised guidance; traded all over the place after-hours though. If it opens higher and goes to unch, it is a short.otherwise, likely A-B-A2 to upside

ORCL- good earnings

A.CN- decent earnings

ZQK- good earnings

DRI- great earnings

RIG- closed on its low after it came out of the S&P 500. Looking to short thru 37.90 (unch) if it gets there else A-B-A2 to upside as the decline yesterday afternoon was seemingly artificial due to imbalance selling

PHK- closed near a high

RUS- closed near a high

CADX- tried to sell off today after Wednesday’s drug news, but closed near a high…looking for A-B-A2 thru 7.


Bad-The following stocks have bad news and/or a weak technical pattern

POT, IPI- both warned

ANR- closed near a low

PTEN- one of the smaller energy entites closing weak

BUCY- downgraded yesterday and had total reversal; may pop back up if market rallies a bit

ISYS- stock has been in freefall since last Thursday’s earnings; it has fallen from 24 to 9. Momentum likely continues today, but due for an A-B-A2 bounce as the CEO is slated to ring the closing bell on Monday. As silly as that sounds, the company will not want the embarrassment of being highlighted/discussed if its stock is collapsing.

WY- warned

SYK- warned

Earnings:

FRI DEC 19 BEFORE

CTAS JBL KMX



Good luck today.

Erik R. Kolodny
More...
 
When the stock got to unchanged at 8.20 around 10:10AM after being down, I bought it. it could not go down on the bad news so I went long at that point and sold it out a few minutes later a bit higher.

My average time horizon for holding a position is right at 2 1/2 months so I may not be the most qualified to answer except for two broad points: a)If your thought was that it was going to go to 7, have a place in your mind where you felt you were wrong and get out ,i.e. if it went to 7.75, get out. Hindsight trading 101, but when i get into a trade, the first thing I know is where I am out if I am wrong, i.e. had KMX not popped thru unchanged immediately when I bought it, I'd have sold it. b) If your time horizon is simply a 'day'trade, get out before the close. If your time horizon is longer than a day, I am not qualified to even begin to guess a response except to note that the stock is positive on bad news so that tends to indicate that the stock will go a little higher or at least stay steady.

Quote from realstockaddict:

sigh.. should i cover? its aboe 8 right now.. shorted it at 7.50 cuz i thought it was gonna go down to 7.00
More...
 
Quote from erikrkolodny:

When the stock got to unchanged at 8.20 around 10:10AM after being down, I bought it. it could not go down on the bad news so I went long at that point and sold it out a few minutes later a bit higher.

My average time horizon for holding a position is right at 2 1/2 months so I may not be the most qualified to answer except for two broad points: a)If your thought was that it was going to go to 7, have a place in your mind where you felt you were wrong and get out ,i.e. if it went to 7.75, get out. Hindsight trading 101, but when i get into a trade, the first thing I know is where I am out if I am wrong, i.e. had KMX not popped thru unchanged immediately when I bought it, I'd have sold it. b) If your time horizon is simply a 'day'trade, get out before the close. If your time horizon is longer than a day, I am not qualified to even begin to guess a response except to note that the stock is positive on bad news so that tends to indicate that the stock will go a little higher or at least stay steady.
More...

Did you mean 2 1/2 minutes as your time horizon? Again, your Epiphany Method would have been effective. Buy the new highs, short the new lows with stagnation. In this case you bought the down stock with bad news through UNCH.

You blog www.ErikKolodny.com has content from Frank Delaney. Is he the futures trader from NJ who was a partner at Bear Wagner? The reason why I ask is because I would like to overlay your Common Sense Trading with a layer of a macro view on the market. I feel that if all your stars line up, pardon the pun, in your "Seven Star Rating" and the futures are agreeing, I have to be involved.

I am on your Epiphany Chat Room. However, do you have daily meetings or any webinars?
 
Quote from hittinbidz:

Buy the new highs, short the new lows with stagnation. In this case you bought the down stock
More...

Would you actually buy a new high? I would think you would buy on the pullback from a new high. My question applies to intraday (1-minute to one day holding time).
 
Quote from NoDoji:

Would you actually buy a new high? I would think you would buy on the pullback from a new high. My question applies to intraday (1-minute to one day holding time).
More...

The Epiphany Method advocates buying a new high if there is stagnation. This means that if there was not an immediate recent move, get involved. I have found that the pull back is a territory that can be of less success. If there is no stagnation, every tick is a new high and dangerous.
 
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