erikrkolodny
ET Sponsor
One of the key characteristics of any day trade in particular is liquidity. Many trading situations can turn into roach motels if your time horizon for a trade is, say, two minutes. It can be very easy to get into a trade as different entities/market makers maneuver an appearance of making it seem that there is more liquidity than there actually is. For instance, a market maker may bid 10000 shares at 88.23 of something with an offer of 100 shares at 88.25; this makes day traders want to buy 88.25 as it seems so obvious that they can lean on the 88.23 to sell. However, what makes it that much more dangerous is when there are not that many shares on the tape meaning there are no real buyers should the entity bidding 88.23 move. This is precisely why I tend to trade only stocks that average a million shares per day or more. With all of this in mind, even that is getting harder. Volumes on the exchanges and ETFâs are down almost across the board as compared to last year. What this does is make it easy to shove stocks up and down by the remaining players as many hedge funds and mutual funds were blown out last year (another contributing factor to the declining volumes, i.e. a diminished number of players). Thus, when there is a story such as we had yesterday that CEO Ken Lewis of BAC noting that business in January was âencouraging,â there are 10% pops in BAC and a rush of short covering overall. People see BAC rallying so they buy financials which leads to buying in other stocks. That one comment was good for about a 60 point pop in the Dow rather quickly. Thus, be aware- particularly when on the wrong side of a trade- moves are becoming increasingly exaggerated. The decreased volumes are eroding the universe of stocks that I for one trade- yet it is a phenomenon here to stay for some time to come thus we as a day trading community must learn to not only accept it, but to adapt accordingly as well by keeping even tighter stops when wrongâ¦and by capturing gains in an even more compressed time horizon.
Markets in Asia were flat overnight with European bourses down around 0.5% on average. State-side, weâre dealing with a CSCO warning and continued weakness in banks. Look for a day similar to yesterday with choppiness on both sides of unchanged. I know. A broad forecast, but it is exactly what happened yesterday and is highly likely to occur today as well. The benchmark to watch here will be CSCO. If CSCO mounts a rally, the market will likely erase yesterdayâs losses if not more.
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 specifiedIf 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
V- terrific earnings
AKAM- good earnings
DLB- great earnings
PRU- missed earnings, but guidance basically in-line
TFK- decent earnings
CBL- good earnings
DYAX- positive news on its DX-88 drug; FDA advisory committee approved itâ¦but it was 6-5 and there were safety concerns
SUNH- good earnings
BBBB- great earnings
CRYP- rallied sharply yesterday and closed near a high
EXM, DRYS, GNK- all dry bulk shippers closed near their highs, but likely will back some ground this morning
CAH- good earnings
CI- good earnings
MCO- beat quarterly earnings estimates handily
WMT- beat monthly same-store sales guidance
MDR- announced huge contract
MA- beat earnings, but warned of slowing revenue growth
Bad-The following stocks have bad news and/or a weak technical pattern
CSCO- beat earnings estimates slightly, but warned on its conference call about future orders
NVLS- poor earnings
CNQR- terrible earnings
HAR- terrible earnings
HRS- bad earnings
GLAD- closed near a low
MWA- closed on its low
AJG- closed near its low
TUP- closed near its low
UTI- closed just off of its low
MEE- closed near its low
AGN- mentioned in a negative context on âMad Moneyâ last night
AINV- closed at a new trend low
FFCH- closed at a new trend low
WSH- closed near a low
WMS- closed down sharply near a low
SLM- closed down near a low as worries over student loan funding came back into play
DO- missed earnings estimates
EQR- poor earnings
KIM- missed and warned on outlook
STT- warned on outlook and slashed dividend
NCR- terrible earnings
TGT- warned on outlook
Earnings:
THURS FEB 5 BEFORE
ANR BDC BG
BPO CAH CI
CINF CSL DO
DSX DUK EL
ENS EOG EQR
EXP FLIR FLO
IEX IFF IT
K KIM LII
LNT LZ MA
MCO MF NCR
NLY PENN RX
SBH SE SON
SPR STD TEN
WBC WU
THURS FEB 5 AFTER
AINV ALKS AMX
BEZ CPHD HIG
JDSU MCRS MIL
MTD NFG NFX
NWS/A OMTR PBI
RAH ROP SRCL
THOR UEPS VRSN
Good luck today.
Erik R. Kolodny
Markets in Asia were flat overnight with European bourses down around 0.5% on average. State-side, weâre dealing with a CSCO warning and continued weakness in banks. Look for a day similar to yesterday with choppiness on both sides of unchanged. I know. A broad forecast, but it is exactly what happened yesterday and is highly likely to occur today as well. The benchmark to watch here will be CSCO. If CSCO mounts a rally, the market will likely erase yesterdayâs losses if not more.
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 specifiedIf 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
V- terrific earnings
AKAM- good earnings
DLB- great earnings
PRU- missed earnings, but guidance basically in-line
TFK- decent earnings
CBL- good earnings
DYAX- positive news on its DX-88 drug; FDA advisory committee approved itâ¦but it was 6-5 and there were safety concerns
SUNH- good earnings
BBBB- great earnings
CRYP- rallied sharply yesterday and closed near a high
EXM, DRYS, GNK- all dry bulk shippers closed near their highs, but likely will back some ground this morning
CAH- good earnings
CI- good earnings
MCO- beat quarterly earnings estimates handily
WMT- beat monthly same-store sales guidance
MDR- announced huge contract
MA- beat earnings, but warned of slowing revenue growth
Bad-The following stocks have bad news and/or a weak technical pattern
CSCO- beat earnings estimates slightly, but warned on its conference call about future orders
NVLS- poor earnings
CNQR- terrible earnings
HAR- terrible earnings
HRS- bad earnings
GLAD- closed near a low
MWA- closed on its low
AJG- closed near its low
TUP- closed near its low
UTI- closed just off of its low
MEE- closed near its low
AGN- mentioned in a negative context on âMad Moneyâ last night
AINV- closed at a new trend low
FFCH- closed at a new trend low
WSH- closed near a low
WMS- closed down sharply near a low
SLM- closed down near a low as worries over student loan funding came back into play
DO- missed earnings estimates
EQR- poor earnings
KIM- missed and warned on outlook
STT- warned on outlook and slashed dividend
NCR- terrible earnings
TGT- warned on outlook
Earnings:
THURS FEB 5 BEFORE
ANR BDC BG
BPO CAH CI
CINF CSL DO
DSX DUK EL
ENS EOG EQR
EXP FLIR FLO
IEX IFF IT
K KIM LII
LNT LZ MA
MCO MF NCR
NLY PENN RX
SBH SE SON
SPR STD TEN
WBC WU
THURS FEB 5 AFTER
AINV ALKS AMX
BEZ CPHD HIG
JDSU MCRS MIL
MTD NFG NFX
NWS/A OMTR PBI
RAH ROP SRCL
THOR UEPS VRSN
Good luck today.
Erik R. Kolodny