Day Trading Thoughts For Tues. Jan. 6

E

erikrkolodny

ET Sponsor
Well, the new year has started and…ho-hum. Volume yesterday remained very lackluster and the general malaise that has overtaken the markets trading-wise over the last few weeks continues. There are a few reasons for this. First, a lot of people are just coming back from several days if not several weeks of vacation so it takes a little time for traders to figure out exactly what they want to do. Next, many people are still on vacation. As the father of two very young daughters, trust me when I say one of the best times to go to Disney World is the first week in January. The weather is picture perfect and the crowds of winter break kids are not there. There are many travel deals out there thus there are many people simply not at that desks yet. The third reason is that few people have any conviction in their thoughts as to what the markets will do this year much less this week. The war between those who think the worst is behind us and those who feel things like GM and Madoff can continue to sink the market is causing a stranglehold in activity as there is no confidence anyway. Finally, there is still a relative dearth of news. Earnings season does not start for a couple of weeks and few companies release major news the first week back. So, as we enter a busier time (as soon as Friday when the unemployment report is issued), tiptoe back into the trading arena, but be aware that this light volume environ will likely continue for a few more days.

Markets throughout the world continued to rally overnight. Asian markets were up around 2% across the board with European bourses up 1% or so. With oil up one more time again, prices state-side are up as well. Yesterday was a prime opportunity for a sell-off and when none happened, it has given some people a bit more of an impetus to get back in. Look for the gains to hold overall as there just is no real selling pressure out there, but in relatively placid trade.


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 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

IDEV- being bought out by ENDP; unique structure…$.450 in cash plus up to $3 more based on (vague) regulatory milestones…could be particularly interesting in the pre-open as people try to figure out the true value of this deal

MOS- beat on earnings, but said forward guidance is ‘weak’

MEA- very strong; looking for continuation thru Monday 2.79 high

CTDC – has doubled in two days; looking for more momentum to the upside today with an A-B-A2 preferably through 3.80, but ignore this if the stock is trading lower

SQNM- up huge yesterday; looking for buy thru 23.56 Monday high

ACAS- up strongly yesterday; looking for more momentum thru 5.39 Monday high

LNC- broke out; looking for more momentum thru 22 Monday high

WLL- very strong yesterday; looking for buy thru 43.30 Monday high

HPQ- on “Mad Money” last night

DOW- announced it is going to launch a lawsuit against Kuwait to restore its joint venture; also announced a series of capital preservation measures

AMED- phenominal preannouncement on its earnings

OREX- received patent approval on its phase III product

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

LDK- warned badly after-hours; should lead entire solar sector down, including STP, SOLF, FSLR, SPWRA

ENDP- acquiring IDEV; story described above

ELX- warned on earnings

IMN- warned on earnings

ICE- trounced yesterday; if it opens higher, looking for short thru unch..if it holds, A-B-A2 to upside…it wad downgraded this morning, however.

RCRC- very weak; looking for continuation short thru Mon’s low of 7

ALL- among other insurers downgraded

NUE- downgraded


Earnings:

TUES JAN 6 BEFORE

AYI

TUES JAN 6 AFTER

FINL GPN RECN

Good luck today.



Erik R. Kolodny
 
Hi Erik, I agree I just got back to my chair today.
had to talk with my accountant though and that put me back into a state of shock again. As someone who has lost so much, it's just so hard to get back on the day trading again. And that's the sad part because the day to day trading puts food on the table. That's part of the mirage, I was actually doing pretty well generating $2 grand a week or so from short term stuff and then I chose to finally open my big account. It would certainly of paid off to keep track of the decline but after 20% in I just gave up... but enough about me... Let's not keep this thread to day and date... every trade idea should have enough mental heft to it and overall market interpretation to make a trade for a few days AT LEAST, my god for the days when they just kept going up and up... let's have a few non bounceback, breakouts in these daytrades... but I like your list. I've forgotten most of it now as I type but here are the stocks I am considering entering this week as we have a brief pull back in the market-

Sequanom we agree. This stock has MASSIVE possibilities so I would not day trade it but get your $22 and hold, I've done a lot of research on the name. Potential market is huge. Overbought a bit now.

Wellpoint- Sorry it's been great on a chart since $38, I don't know if Obama is good for this stock or not, but it's acting like it is....

Gen Cable part of the whole yucky infratstructure thing, I'm loath to do this trade as it's all dreams & promises at this point- also I f*ed up a huge position I had in Perrini...same sector and it's gone up so much.... still a pretty good company and breaking out.

CSKI... up up every freakin day missed this at $15 something with a limit it's been killing me up to $18.... massive break out w/ short chart history. Recent IPO... will get a lot of press soon when folks realize an IPO is actually up and roaring.

HIG as a chart was on my list but some smart guys I know just shorted it, so backing off.

World Fuel- INT- Can't remember why, stoned at the moment....

Nice job on this thread don't be discouraged by the lack of responses. You caught my eye that's all that matters... You need to brush up your overall market analysis... throw a few cycle theories in and two and three month index break outs... money flow, it always makes for good reading even if you don't really believe it... I'm an optimist but it's really tough to get back in the swing this year.

Always fun to share names.

On to 09.... ~ stoney
 
By the way in case you or anyone was worrying
MEA was the trade....

That's the thing you can scatter shoot but to get the right heft on the right name is the art of the game.

Smaller tighter lists! ~ si
 
I wrote this up awhile ago so sorry for the dated example:
Frequently, a pattern occurs which has been referred to in this space as an “A-B-A2” action. As this blog gains a bit of a following, this pattern- particularly in this market- should be explained further. Many times, a stock which has major news whether it be earnings, the resignation of an officer, or anything else, a stock will gap significantly higher or lower from the previous day’s close. For instance, Costco (COST) opened up about 60 cents from the close at 73.83 on the day it reported earnings (Thursday May 29). This open would be point A. The stock fell to a low of 73.28 shortly thereafter (point B). When the market began rallying that morning, the stock went back to 73.83 (second time at point A, i.e. A2). Within a couple of minutes, the stock rallied 80 cents to 74.63. Many many times, this pattern works. The reasoning for this is as such- continuing to use COST as an example- the stock opened higher on respectable earnings, fell as some people got rid of their shares, but immediately turned on a decent up day for the market. When it got to its opening level, many people who were short got nervous and covered as they did not want to hold through the previous high of the day. Thus, the stock spiked back through its opening level. About an hour or so before the market opens, it certainly is not a precise science to figure out the exact numbers at which this type of action will occur; however, it does occur a lot. So, hereafter, make this A-B-A2 pattern your friend; it is one of the major tools used in effective day trading.


Quote from nickdes:

Just curious what does the terminology "A-B-A2" Mean.

Thx
More...
 
The last 2 days were filled with controlled selling. The major funds were propping the futures to sell into it. If you own equities, you should be selling too. It's not a time to buy.
 
First and foremost, I am so sorry that you clearly have had a financial ordeal to endure this last year. It is ver stressful, unhealthy, and all in all wretched. So, I truly am genuinely sorry because I know what it feels like to have lost money as I took two big hits myself many years ago when I first got started day trading. Those memories are seared into my brain and are what help drive me today.

It is all up to the individual as to time horizon of positions. My average hold time last year was 2 minutes and 33 seconds in every trade I ddi based on my reporting software when I ran the analysis. Thus, yes, I agree- one can make a tremendousamount of money when buying/shorting in a swing trade type action, i.e. longer than three days. But, I don't have the stomach for it. In the midst of the terrible 2008 where violent rallies. Thus, again speaking for me, I am going for the quick 20 cents to a dollar when I do a trade. For instance, after AAPL's run-up amidst the Jobs story and MacWorld in a strong tech market at that, AAPL should have been up yesterday. Well, when it got to unchanged, I shorted it. Why did it get to uncahnged on the day? I don't know. Is it going to 85 or 100 next? I don't know. But I did know that if the stock could not stay up on the good news, itwas going to go down at least in the immediate-term. And that's how I trade. Here is the philosophhy I espouse for the firm I work with:
http://www.epiphanytrader.com/epiphany_method.shtml

The list is there for specific trades (for me anyway), but I find that a lot of people use their own interpretation...which I think is great. I learn from others and I find those lists tend to help guide people from the sclaping mentality of the MSFT's and INTC's of the world.

Will watch your six ideas below (SQNM, WLP, et al). I am not qualified to respond as I again focus on the immediate-term only, butI will certainly track the thoughts to try to learn from it. I've been doing this almost 13 years and all I know is that there is a lot more I do not know than what little I do know.



Sequanom we agree. This stock has MASSIVE possibilities so I would not day trade it but get your $22 and hold, I've done a lot of research on the name. Potential market is huge. Overbought a bit now.

I'm not discouraged at all by lack of responses...as corball as it sounds, i just hope I am able to help someone much less learn from other people's thinking on day trading.

As for market analysis, all I care about is the framework for the day. For instance, my prognostication this morning: "Yesterday was a prime opportunity for a sell-off and when none happened, it has given some people a bit more of an impetus to get back in. Look for the gains to hold overall as there just is no real selling pressure out there, but in relatively placid trade" summed up the action pefectly, I am happy to note. Why worry about Fibonacci or Elliott Wave or astrology or retracement levels or volume when what I wrote was perfectly fine? Why write about something I don't feel is necessary on any given day? There are days in which things like 'break outs' are applicable, but I find (for me) that simple is better so why confuse myself much less anyone who reads what I have to say?

Good luck and all the best...may '09 be better than '08 (for us all).





Quote from stonedinvestor:

Hi Erik, I agree I just got back to my chair today.
had to talk with my accountant though and that put me back into a state of shock again. As someone who has lost so much, it's just so hard to get back on the day trading again. And that's the sad part because the day to day trading puts food on the table. That's part of the mirage, I was actually doing pretty well generating $2 grand a week or so from short term stuff and then I chose to finally open my big account. It would certainly of paid off to keep track of the decline but after 20% in I just gave up... but enough about me... Let's not keep this thread to day and date... every trade idea should have enough mental heft to it and overall market interpretation to make a trade for a few days AT LEAST, my god for the days when they just kept going up and up... let's have a few non bounceback, breakouts in these daytrades... but I like your list. I've forgotten most of it now as I type but here are the stocks I am considering entering this week as we have a brief pull back in the market-

Sequanom we agree. This stock has MASSIVE possibilities so I would not day trade it but get your $22 and hold, I've done a lot of research on the name. Potential market is huge. Overbought a bit now.

Wellpoint- Sorry it's been great on a chart since $38, I don't know if Obama is good for this stock or not, but it's acting like it is....

Gen Cable part of the whole yucky infratstructure thing, I'm loath to do this trade as it's all dreams & promises at this point- also I f*ed up a huge position I had in Perrini...same sector and it's gone up so much.... still a pretty good company and breaking out.

CSKI... up up every freakin day missed this at $15 something with a limit it's been killing me up to $18.... massive break out w/ short chart history. Recent IPO... will get a lot of press soon when folks realize an IPO is actually up and roaring.

HIG as a chart was on my list but some smart guys I know just shorted it, so backing off.

World Fuel- INT- Can't remember why, stoned at the moment....

Nice job on this thread don't be discouraged by the lack of responses. You caught my eye that's all that matters... You need to brush up your overall market analysis... throw a few cycle theories in and two and three month index break outs... money flow, it always makes for good reading even if you don't really believe it... I'm an optimist but it's really tough to get back in the swing this year.

Always fun to share names.

On to 09.... ~ stoney
More...
 
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