Day Trading Thoughts For Thurs. Jan. 8

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erikrkolodny

ET Sponsor
One of the biggest and easiest ways for traders to lose money is to scalp the seemingly ‘safe’ plays while not being aware of the news and/or while ignoring the general market trend. Traders obviously do not want to lose, but many times in playing prevent defense, they prevent themselves from actually winning. An example of such a play is Progress Energy (PGN). As noted yesterday, PGN announced a 11.5 million share offering on Tuesday night. The offering was to be priced yesterday afternoon. The stock gapped down a couple of dollars to 38, but tried to rally a little; it stagnated in a tight range between 38.35 and 38.55 for a couple of hours yesterday morning. Many day traders kept buying it every time it crept higher by a penny or two above 38.50 in thinking that it’d have a massive rally. But, the market was in a downtrend much of the day yesterday and more to the point, there was to be an offering. With the added shares of stock (at an unknown price) coming to market, underwriters were in there sizing everything up. Thus, there was no clear-cut reason to day trade it either way, but particularly from the long side. What ended up happening is that any trader who chose to try to scalp it through a new high loved it because the risk for great loss was limited…but the risk for small loss was high. The point here is that trades like these are black holes for traders to knick themselves with. Why lose $100 here or $200 there when losing plays like this can be so easily avoided with simple preparation and discipline?

Markets in Asia were hit overnight to the tune of about 3% across the board. European bourses are down 1% or so. State-side, it appears WMT’s earnings warning should set the tone. There will likely be some selling at the open because, well, if WMT cannot do very well as a retailer, who can…and what does that say about the state of the economy? Thus, a likely A-B-A2 to the downside lays ahead with relatively light volume ahead of the jobs report tomorrow. However, in the unlikely case that there is a failure in the first hour to push the market down, look for a weak, low-volume poor-breadth big cap rally this afternoon as the failure to sell off initially would show some resilience (but a questionable amount as many participants would likely stay on the sidelines in this scenario).


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

BLUD- good earnings

HOTT- beat same store sales guidance

EMC/VMW- EMC said they will issue earnings in-line or just above guidance

JNJ, FDO- mentioned on “Mad Money” last night

COGO- broke out; looking for continued momentum

SHLD- preannounced earnings to upside


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

WMT- horrible earnings warning

CAH- warned on earnings

BBBY- beat on quarter, but warned for year. If it opens down, looking to buy thru unch should it get there else A-B-A2 t odownside

SONC- missed its earnings

ISRG- warned horribly

RRI- closed near a low; looking to short Wed 5.60 low

EZPW- down on Obama comments yesterday. Looking to short thru 13.97 low else A-B-A2 to upside in a reversal

MGA- closed near a low; looking to short thru Wed 32.40 low if it gets there

BABY- closed near a low; looking for a short thru 9.35 low or A-B-A2 short covering reversal if it fails to break
BTU, MEE, ACI – coals all very weak yesterday in a terrible energy sector

MTB- broke to a new move low; very odd in a banking sector well off of its lows. Looking for A-B-A2 to downside, particularly thru 49.24 low

BBT- breaking down as well as MTB; looking for short thru Wed 23.10 low

JPM- very weak…very strange. Not going to fight it; looking to short thru Wed 28 low.

MTW- sees in-line guidance for this year, but warning for next year…yet numbers overall are impressive…$3.20 or so this year and $1.50ish next year…stock is only at 9.50 so a worse warning may be factored in

JCG- missed same store sales estimates

BMS- warned badly

ANF- warned badly

AEO- warned badly

TCK- taking a charge

M- warned

Earnings:

THURS JAN 8 BEFORE

FCSX GAP RPM

SCHN SGR

THURS JAN 8 AFTER

APOL CVX HWAY

I.HS RBN



Good luck today.



Erik R. Kolodny
 
"What ended up happening is that any trader who chose to try to scalp it through a new high loved it because the risk for great loss was limited…but the risk for small loss was high. The point here is that trades like these are black holes for traders to knick themselves with. Why lose $100 here or $200 there when losing plays like this can be so easily avoided with simple preparation and discipline?"

what you just described above is a BIG reason why traders fail. they underestimate the cumulative effects of small losses.
 
Thank you. It gives a reasonable filter to look for moves especially at the open. I don't usually post on forums, but I think when a person takes time out to try and clarify things or help others, they should be commended and thanked.

As for the on mad money part, I think that he is talking about the press effect. Cramer is an idiot, but idiots listen to idiots and then out of nowhere you have moves.
 
Quote from winstontj:

what does "mentioned on Mad Money last night" mean?

Are you implying activity just because of the press?
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yes, stocks which are mentioned on mad money (and to a lesser extent fast money) often are much more volatile.

see OREX a couple days ago, mentioned on fast money.

if it's a big stock - ie. IBM, CSCO, etc. - this effect is minimal to none. but a lesser-known stock can often experience lots more volatility...
 
Oh Erik, I hope you appreciate what I did. You are now firmly in the family. It's much more fun when people talk back. Now if your work schedule is such that you cannot devote more time to it too bad. I have been paying that price for years. I too wake up early and research and research but I cannot stand the amount of buys and sells I am forced to go through every tax season and with the etrade they don't give you cost it's a nightmare. I can't rememeber what I watched on TV last night but I have a brain blessed with lots of good stock information- that hairy armed fool on CNBC claims to know 2000- I have challenged him many many times. His viewers make me sad for America. Once he took a shirt away from me that I won in stupid street.com investing contest... If you can bare to watch that crap for one second " Bless You ".... that " bless part " caught my attention, I assumed from your well thought out long winded style that you were a stoner like me.

Why I like you is the usual types here at ET typing from their Dorm room would of made up a ton of mythical trades to show that at some point during the day they made ten cents somewhere... I like all the nothings.... if we could just have a follow up now and then... like here's what I'm doing the one or two ideas I have chosen it would greatly help keep track of everything. If you are good it will quickly be revealed.

Obviously we have very different styles but interestingly view the market in many of the same ways. My newsletter was of course called STONED INVESTING, it had a picture of Harrison Ford on the cover running from the ball in Raiders of the Lost Ark... the symbolism was twofold... the market was a ball waiting to run you over, and The big rock was supposed to be the " stone " in Stoned Investing... that little trick allowed me to get some followers who actually wore suits & worked in banking in Boston and here in NYC. Now I still shout out ideas when asked but no one gives me an IPO anymore and the problem is everyone I run into still EXPECTS A BACKROUND. they expect me TO KNOW WHAT THE STOCK REPRESENTS WHO OWNS IT HOW MUCH THEY MAKE MANAGEMENT, SECTOR ADVANTAGES, PATENTS... IT'S ENDLESS... I guess somewhere there still are a few buy and holders who want the next great biotech or whatever stock so that's what I have always done. ~stoney
 
Erik wake up!!!

Stop staring at all those screens and numbers and symbols you are driving yourself crazy. here is your ONE WEEK TRADE.... JUST DO IT.

BUY SEQUANOM NOW AS IT END OF DAY CAREENS THROUGH $23.50. That will break it out and she will run until next thursday when they have a analyst meeting... that meeting I believe is at 11:00 and you will be out of the stock by 2:35 next thursday. This will be a $7 TRADE.

Also watch VRX I liike todays daily don't know enough about the name but at $2 off a 52 week high, that might be enough....

NAVISTAR explosive move 5 day $24-$30 this is not on your list?

As we experienced this little head fake and recover stocks that showed benign relative strength the last two days will outperform that's why I have been buying them. ONWARD! ~ stoney
 
NO. BUY NOW ERIK NOW!!!!!! @ 11:19AM

23.77 SQNM
Trade Time: 11:03AM ET
Change: 0.56 (2.41%)
Prev Close: 23.21
Open: 23.31
Bid: 23.75 x 200
Ask: 23.80 x 3900

Day's Range: 22.90 - 23.78...... ~ stoney
 
Committing suicide via shotgun is faster than knicking oneself non-stop, but the same purpose is accomplished. Sorry for the morose analogy, but constant small losses leads to financial death. I know. I've been down that the 'small losses' road many times in the past; it is not a pleasant drive.

Quote from trader2000:

"What ended up happening is that any trader who chose to try to scalp it through a new high loved it because the risk for great loss was limited…but the risk for small loss was high. The point here is that trades like these are black holes for traders to knick themselves with. Why lose $100 here or $200 there when losing plays like this can be so easily avoided with simple preparation and discipline?"

what you just described above is a BIG reason why traders fail. they underestimate the cumulative effects of small losses.
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