Day Trading Thoughts For Wed. Dec. 10

E

erikrkolodny

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As I was filling up my gas tank last night, I couldn’t help but force a wan smile as I was able to procure just over ¾ of a tank of gas for my Camry for a mere $25. However, my smile evaporated as I remembered where I had just been- my friendly bank to make a small withdrawal. While there, I learned I was receiving 1.75% on my monies with a similar if not lower rate in all of my stock accounts as I have a ‘preferred customer’ rate at Chase bank. I then began doing some thinking on the drive to the gas station. The lower gas prices are, without a doubt, a form of progressive tax in this environment. Don’t get me wrong; it is great to pay $25 for ¾ of a tank of gas as opposed to $55 merely five months ago. However, the interest rate I was receiving on my accounts at the end of 2007 ranged from 3.25% in stock accounts to 3.75% in bank accounts. So, the interest rate has fallen 200 basis points. Now that I’ve provided a long set-up, here is some math: while it is true that most people don’t have a great deal of savings in this day and age, it is also true that the peoples who have the savings are the individuals who power the economy. Thus, if someone has a net worth of $1,000,000 in savings and/or money simply sitting in various bank accounts and/or non-traded stock accounts, that person will receive on average 2% less on his money this year than last on December 31. If that average is smoothed out over the course of the year for simplicity sake, that person will receive $20,000 less in interest. Now, my wife and I have a Sentra and a Camry and we fill up one time each on average; we now spend approximately $45 per week on gasoline versus about $105 at the worst- a savings of $3,000 annualized yet much worse than the $20,000 we’re giving up in interest if our net worth was a million bucks. Without doing hours of math and research, it is impossible to tell if the net impact on the economy is good or bad. Except that it’s not. For the lower wealth class citizen, it is a boon. For the upper wealth class citizen, it is a diminishment of annual wealth which hurts in combination with losses in equities, but an individual worth eight figures won’t miss it exceedingly much. However, for everyone in the middle class, particularly those in the upper middle class trying to get ahead, this hurts a lot. It affects the way spending is done, keeps people working longer than otherwise, and simply hurts the bank accounts. This is something to watch in the markets next year in particular because the fact of the matter is that it discourages investing for the average citizen who has not been scared out which makes the environment that much more ripe much less easy for the hedgies and institutions to move markets- something which has obviously occurred these last few months- and this is symptomatic of the volatility.. One would think the average person would see that 1.75% bank interest and look for alternatives, but the average person thinks “Well, I’d rather get 1.75% than lose.” Thus, it keeps the big players dominating the landscape and make the volatility forecast pretty good for day traders for some time to come.

Foreign markets shook off Wall Street weakness overnight with Asian stocks up 2%-3% and Europe marginally higher across the board. Oil is having a nice rally in the early going and everything else is stable. Thus, this allows for a higher open state-side. The financials and energies will likely tell the tale today; if oil maintains its strength, it shows that some of the hedge fund selling is abating if no finished. But, financials will likely be mixed to higher at the outset and the situation must be watched. Overall, it is likely that trading will be range-bound, but in higher ground much of the day.


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

CPY- stock more than doubled on massive short covering; likely A-b-A2 thru yesterday’s 2.90 high or if it opens higher and comes in, it is likely a short thru unch

COO- beat earnings for quarter

GNW- acquiring Interbank; does not seem a reason for stock to rally, but it was up over 15% at one point last night after-hours

ROS- big Russian telecom; broke out today…likely a buy thru 52 if it opens below there

EXM, DRYS, FREE- dry bulk shippers in midst of short covering. EXM closed near high in particular; looking to buy thru Tuesday 7.35 high

GPM- the GM preferred mentioned on “Mad Money” last night; had huge pop...can also be a play off of GM news today AND it is shortable at most firms whereas GM common stock is not shortable at most places

BUCY- also mentioned on “Mad Money;” in decent tape, should do well today if Cramerites are out

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

ERTS- warned for next quarter

OXM- missed earnings and warned for next quarter

FDX- had atrocious earnings yesterday morning; likely an A-B-A2 off of the open in the direction the general market trends

SLG- the weakest of the REIT’s; likely an A-B-A2 short thru yesterday’s 21.76 low

AOS- warned on earnings for balance of year

EK- warned on earnings; did say balance sheet was OK

AGU- cutting back on production


Earnings:

WED DEC 10 BEFORE

KFY

WED DEC 10 AFTER

EMKR FCEL GEF


Good luck today.


Erik R. Kolodny
 
I can take all kinds of criticism (much of it well-well deserved afer having traded full-time for 12 1/2 years). However, if you are to comment, please at least read what I have to say. Please re-read (or simply read) what I wrote as far as market action today with an emphasis on the final sentence:

Foreign markets shook off Wall Street weakness overnight with Asian stocks up 2%-3% and Europe marginally higher across the board. Oil is having a nice rally in the early going and everything else is stable. Thus, this allows for a higher open state-side. The financials and energies will likely tell the tale today; if oil maintains its strength, it shows that some of the hedge fund selling is abating if no finished. But, financials will likely be mixed to higher at the outset and the situation must be watched. Overall, it is likely that trading will be range-bound, but in higher ground much of the day.

Quote from JonathanMtl:

My thoughts: Market will go up and down, maybe sideway.

Good luck today.
More...
 
The market seems to temporarily be stabilizing. I think if some real good news came out it would wasily usher in buyers and move substantially higher.

But I do not (mostly) trade off what I <i>think</i>, but in what I see.

:)
 
Quote from paysense:

The market seems to temporarily be stabilizing. I think if some real good news came out it would wasily usher in buyers and move substantially higher.

But I do not (mostly) trade off what I <i>think</i>, but in what I see.

:)
More...

I could not agree more which is why I set it up as the market will take cues from oils and financials whereas yesteray it took its cues from techs like TXN, NSM, and BRCM after they warned but traded higher, but the prognostication (read: best guess) is that the market should stay up a chunk of the day based on what I see as well. Again, you are 100% right; as someone who has a holding period average of 2 minutes and 33 seconds for my trades in 2008, I of all people react to what I see and my 'thinking' can and often does change as the situation changes.
 
Quote from erikrkolodny:

I could not agree more which is why I set it up as the market will take cues from oils and financials whereas yesteray it took its cues from techs like TXN, NSM, and BRCM after they warned but traded higher, but the prognostication (read: best guess) is that the market should stay up a chunk of the day based on what I see as well. Again, you are 100% right; as someone who has a holding period average of 2 minutes and 33 seconds for my trades in 2008, I of all people react to what I see and my 'thinking' can and often does change as the situation changes.
More...

Of what I saw from reading Erik's blog, he was 75% correct in his forecast yesterday. I follow his methodology in which we are scanning to anticipate new highs and new lows. His "Epiphany Method" also uses buying stocks that are down with bad news through UNCH. Likewise, if a company has good news and is up, we sell it through UNCH.

I find that when I do random trades, the success ratio is low. However when I do the trades with the proper set up, I make money 65% of the time. Take into account that I sell my losers quick and try to hold my winners. The biggest problem that I have is making 17 cents on a trade to see it go $1.50 in the same direction.



http://www.elitetrader.com/vb/showthread.php?s=&threadid=147386&highlight=erik+r+kolodny
 
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