Don's openings Part 3

Originally posted by lescor
I lost some money on Monday too, and it's clear to me that the reason why was because of the number of large imbalances at the close on Friday, which was the end of the quarter.

For example, I was long NKE but couldn't figure out why because on the chart, it looked like the thing had gapped up. When I looked at things more closely later, I saw that NKE's final print on friday was a full dollar higher than where it had been trading minutes before the bell. I had two other stocks there were in the same boat.

When there is an order imbalance to close the stock, the specialist can gap it anywhere he wants, which is going to give you an out of whack closing price when calculating your fair value. I had been going through intra-day charts of all my stocks to try to catch these, but stopped because it was time consuming. But not doing it cost my $250 on Monday, so now my daily routine is 20-30 minutes longer.

Nobody said it was easy.

Corey,

I ran into the same problem. I have been trying to think of a way to avoid getting hosed by the specialist like this in the future. One of my ideas was to take the "last," right when the market closes, and use that in my spreadsheet as the "previous day's closing price" for the next day. In reviewing the tape and my charts, I noticed that many of the "skewed" trades didn't print until a few minutes after the market closed, sometimes several minutes. My thinking is that if you take the "last", right when the market closes, and plug it into your spreadsheet for the "previous day's closing price," before it has been updated with the "skewed" trades, you may be able to avoid the problem. This might give you a more accurate closing price than if you load the "previous day's closing price" into your spreadsheet in the morning, which is what I have been doing. I haven't tried this yet, but it might work. It would also eliminate the need to go through charts for all your stocks in the morning, comparing the "previous day's closing price" with the "last" price on the chart when the market closed. What do you think?

Scott
 
That would work, but I automatically pull my closing prices into my spreadsheet from my data feed and don't enter them by hand. I use qlink too and might be able to set up a column that shows the 3:59 or 4:00pm price and compare it to the official closing price. If they are out by more than say 15 cents, I'd investigate further.

Punching up 70 charts one at a time sucks.
 
I added a column that shows the price at 3:59 est. If it's more than .4% different than the official closing price, I check out the chart. It flagged 4 stocks from Friday's close and caught the 20 cent gap on HON. This should work pretty well and save a lot of time.
 
I tried premarket OPG on Citibank

Buy 300 C 37.50 OPG
SS 300 C 39.00 OPG

cancelled on both, anyone know why?

I think I should have entered the SS order as Sell
 
First Citigroup was fantastic $800!
Buy at 39.00 on a 39.07 bid
sold at 39.40

Total of 5 fills, and 5 winners...

$1820...

Even made money on FNM!!

Medium envelope: .80

Back to it tomorrow....

Don
 
Originally posted by limitdown
I tried premarket OPG on Citibank

Buy 300 C 37.50 OPG
SS 300 C 39.00 OPG

cancelled on both, anyone know why?

I think I should have entered the SS order as Sell

You had this way off, my friend...my bid was 39.07 (higher than your sell order), and my offer was 39.73. This was a .80 envelope around Fair value based on the pre opening. As you see above, Citi was my best opening this morning.

If you need help with the calculations, let me know.

Don
 
Originally posted by merchant
Don,


Can you also send me the calculations ?

I've put these up before, here goes again.

Take the closing of SPX, add today's Fair Value, get a number. Take the last trade of the Emini's prior to the opening, subtract the difference...get a number.

Multiply that by 8 to convert to Indu number (relationship to Dow Jones). Divide by Dow Jones and use that as the Fair Value for the stock. Adjust for Beta's, sectors (if need be). Envelope that number.

Good Luck...

Don
 
I understand the first paragraph, but unclear on the second ? why the relationship with the Dow if its a S&P 500 Stock ? could you provide a worked example with regards to "C"
 
Originally posted by merchant
I understand the first paragraph, but unclear on the second ? why the relationship with the Dow if its a S&P 500 Stock ? could you provide a worked example with regards to "C"

Just an (un-necessary) extra step that use for newer traders to relate to the DJIA at (about) 10,000...makes for easy division in your head.

Of course, simply divide by the SPX number and use the percentage over/under FV.

Don
 
Back
Top