Day Trading Thoughts For Tues. Apr. 7

[erikrkolodny]

The thing I heard the most around the ol’ trading house yesterday was “is it going to be this slow all week?” The answer is a definitive “no.” Assuming there is no extraneous event, it is going to get slower this week. Good Friday week in particular is always a tricky calendar time in which to trade- day trade in particular. It is dependent upon the lunar calendar, but typically, Passover tends to start during Good Friday week (this year, Wednesday night at sundown). Just as the markets are closed on Friday, many people take off for the first day or two of Passover (much les the whole week thereafter). Also, a lot of traders take off to celebrate Easter with their families. The litany continues. It is ‘spring break’ week in most New Jersey schools this week with New York schools to be closed Thursday, Friday, and all of next week. But it gets better. As many people take off during this time, much of corporate America does as well. Earnings season technically starts today with Alcoa (AA) leading off the earnings parade and there are a handful of fairly big companies reporting next week (many of the big financials such as GS, GE, and C are due to report next week). Yet, next Monday (the first business day after Good Friday) is the slowest earnings day of the quarter and usually one of the slowest trading days of the year for that matter. The net of all of this is this: the next four trading days in particular will be progressively slower (likely denoted in smaller than normal watch lists). Next week’s trade will be busier but illiquid due to a relative paucity of trades yet there will be some news flow. Thus, do not overtrade these next few days and save your powder for the earnings season to come…with next week being the start of the action albeit busy pockets with quiet trade during the middle of the days.

Overnight, markets in Asia were down about 1/3% on average with markets in Europe declining heavier to the tune of 1% to 2% across the board. The dollar and oil are also down. And completing the fun- futures are pointing to a sharply lower open. There is no major news out there except for reports out of Detroit regarding the ever-increasing likelihood that GM is preparing for bankruptcy. With the relative dearth of news-flow, don’t look for extreme movements today with downside action likely. As has so often been the case, again note that the corollary here is that if the financials shake off renewed weakness, you’ll see a turn rapidly as shorts rush to cover…but with the techs down with the financials this morning, it just doesn’t seem likely



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 (preferably to the downside in a downside market and the upside in an upside market) 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

BLUD- good earnings

LMT, NOC, RTN, BA- among the very strong defense stocks yesterday on comments from Defense Secretary Gates about the government’s budget plans for the next 12-18 months

RIMM, AAPL- among the strongest of the big cap techs in a weak overall tech market yesterday

FMD- the strongest of some small financials which closed near a high

CZZ- huge recent run-up; closed near intra-day high

KAMN- broke to new intermediate-term high

SPIL- mentioned on “Mad Money” positively last night

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

VTR- issued in-line guidance for 2009, but also offering 8.5 million shares and doing a notes offering as well

CHTT- beat quarterly estimates and raised guidance on underlying earnings, but missed on revenue guidance

Earnings:

TUES APR 7 BEFORE

CHTT

TUES APR 7 AFTER

AA BBBY MOS

RECN RT


Good luck today.

Erik R. Kolodny

 

[dearinfinity]

CZZ is a great potential short

 

[erikrkolodny]

For day trading purposes, the only 'easy' trade I saw was the A-B-A2 thru the high and above unch per my daily instructions. Rallied 30 cents in a minute. it may well be a good short, but to me anyway, it is a complete guess and I don't like to guess. I am not smart enough to know where it stops on the upside, when it reverses, or how much it reverses. But I know that if I am short overnight and the stock fails to go down this morning after trying, I am scared; the 30 cent rally that occurred in two minutes was a product of massive short covering. After that, I have no idea.

I note all of this so that anyone reading understands how/why I do a typical trade.

Quote from dearinfinity:

CZZ is a great potential short

 

[dearinfinity]

Hey I hear you man--I stayed in overnight ZLC. Dropped to almost 4$ this morning, covered. Good short. CZZ has potential to do the same thing; VERY SIMILAR pattern.

 

[erikrkolodny]

Agreed and understood. What I am saying is that more times than not, when I've done stuff like that over the course of my career, I've gotten burned. Not always, but more often than not. That is why I look for specific quick trades only.

With this in mind, this is exactly what this thread is for...a discourse of day trading and types as we all can learn from one another.

Quote from dearinfinity:

Hey I hear you man--I stayed in overnight ZLC. Dropped to almost 4$ this morning, covered. Good short. CZZ has potential to do the same thing; VERY SIMILAR pattern.