Quote from chuckybrown70:
hello, i am new to the board. been reading the site on and off for 3 months, which is also how long i have been trading. i have a bunch of questions and was wondering if anyone could give me some insight.
any help would be greatly appreciated.
these are general observations:
1) why in the morning does a stock flash in the one direction then move the opposite - i call it the morning fake-out?
Market on Open orders all hit at once causing crazy action. Also if the price has gapped from the previous close, stops get activated. So if the price gapped up .50 cents short sellers may have their buy stops hit, driving the price up further, hitting more buy stops until all the weak hands are washed out, then down it goes. What I've heard as well is market makers also have the deep pockets to manipulate price based on orders lined up, so they can attempt to run the price one direction, knowing it will go the other way rapidly, and they can make a nice profit.
2) why when earnings come out positive the stock trades down in the after market?
Generally, the conference call provides details that don't come out in the "FirstCall" EPS and revenue post. Lowered future profit or revenue guidance will override a great earnings report, because future growth is more important than what happened last quarter. FSLR today is a prime example.
3) does anyone trade earnings reports, if so any strategies or insights?
I would recommend only buying options to trade earnings. That way your risk is very specific and limited. The only "strategy" I can think of (and it's not foolproof) is to check on large insider sales or purchases within the couple of months prior to earnings and if the stock has made a strong run to major support or resistance levels, put on an option play in the opposite direction. So, using STRA as an example. The day before earnings it had run up close to 52-week highs, and the CEO had dumped 200,000 shares of this very high priced stock in December. That alone is ominous. But what added to the chance of a large drop after earnings is the fact that STRA, unlike the other private education companies, is heavily impacted by layoffs and reduced business spending. They provide education to employees. This meant the chance of lowered 2009 guidance was very high. That's what happened and they dropped below 180.00 the next day. Sadly, I did not see all this until the next morning when they appeared on my gap-down radar. Silly me.
4)does anyone use etrade? if so is there an advantage to "market trader" or "etrade pro"
I use PowerEtradePro, but never used Market Trader. I do know that PwerEtradePro has excellent streaming news that you can link to any stock on your watchlist. This news includes insider sales and purchases as they are reported, often the very day they occur. It also reports market-on-open and market-on-close buy and sell imbalances.
5) if you think a stock is going to have a big move would you buy options instead of buying the actual shares?
Probably.
6) is there an advantage to trading the aftermarket or is it to risky?
I personally think it's risky, except when placing extended hours orders at your target profit, because sometimes you'll get filled out of nowhere. A lot of people make money trading extended hours though. Etrade has a lengthy set of warnings you have to agree to the first time you place an extended hours order. Read it carefully.
these are some basic questions i have been trying to get a handle on. THANKS AGAIN for any help.
