related information trading

[schonfeld_trade]

absolutely, another new-bie question. Hope you elite guys can give some ideas to me. Thanks first.

When you do day trading, which is definitely different from long or middle term trading, do you guys look at related information. Just say, if you want to trade Citigroup back to last Nov. When you saw Enron was almost dead, did you guys think about Citigroup. I am just wondering when I trade a stock, should I watch everything related with this stock, or just trade the direct news with this stock.

Today, when I watch ABC, WLP. Those stocks are going up. But there were no news which drove them up. However, the trend of the two stocks were so clear. So I am wondering whether there were some related news with those stocks which drove the stocks up.

Please help. Thanks first.

 

[LouieR]

In my opinion news is worth paying attention to when planning a trade. However, where traders err is by interpreting the news instead of letting the market interpret the news for them. Case in point; the recent weapons inspector capitulation from Iraq. Within 30 minutes of the open the dow had spiked 147. Why??? Practically speaking, had economic conditions changed or had an announcement of staggeringly positive proportions been issued. The answer is no!!! The economy still sucks (progonostications of economists not withstanding), earnings are still terrible and among other issues, mortgage apps are down. That short term blip would provide a good opportunity to go short, buy puts, sell calls or at the very least, stay on the sidelines and preserve capital while the market sorted things out, taking no prisoners in the process. I know the example I used was probably broader than what you were looking for but I think it illustrates the point that news must be used cautiously. I am sure that you will get many other prospectives on this issue. I hope this helps. Good luck with your trading.