Day Trading Thoughts For Mon. Mar. 16

Discussion in 'Trading' started by erikrkolodny, Mar 16, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    What occurred on Friday is one of the primary reasons I get into the office so very early. Besides the everyday things I do (this commentary, compose a watch list, and such), I am able to get early clues for how the day will progress. Sometimes all one has to do is pay attention and one cannot help but learn when he/she sees things. On Friday around 8AM ET, despite most of the techs and the financials trading higher, I mentally noted that Capital One (COF) was actually trading a little lower, Apple (AAPL) was off of its high after its earnings were reduced at a tier 1 brokerage firm, and Amazon (AMZN) could not seem to rally whatsoever. So, I knew if the markets broke a bit, those were relatively weak and those were the stocks I’d short. Put another way- let’s say you are picking players for your basketball game pick-up style. There are 10 of you there of seemingly relatively equal ability…two of you, however, have slight physical issues (say slight hamstring pulls, but want to play anyway). As the game starts, which two players do you think will struggle from the get-go both physically and mentally to keep up with the flow of the game? Well, it is the same here. If the market is holding strong but there is a possibility it could weaken, wouldn’t you want to short the weaker stocks out there (and vice versa…on a more longer-term scale, anyone notice that GE was barely down last Wednesday and Thursday, and higher Friday and Monday before the market took off)? But, the only way to learn these early clues are to be there; this is what gives me a substantial part of whatever insight I have for the open. If one walks in the door at 9:35AM ET and says “What’s going on,” more often than not, that person is going to lose as a day trader. On point, a lot of people asked me how I ‘knew’ that AMZN, AAPL, and COF in particular would work just after the open. Well, of the people in my office, I may well be the least intelligent and certainly the least likely to hold positions for longer periods of time, but I do know that as things develop early, one can pick up on clues that others would never even comprehend simply because I pay intense attention to the pre-open. And in this case, those three stocks were the weakest of all of the financials and techs that I monitored early Friday morning. Everyone says trading is not ‘brain science.” Everyone is right. But, certainly, simply observing what is going on early in the day and mentally noting things out of the ordinary could give you a day’s pay in the trading world.

    Markets traded nicely higher throughout the world overnight. Prices in Asia and Europe are up about 2% on average. Oil is down after OPEC said there’d be no cuts at this time (not that it’d have mattered anyway per a blog piece written several weeks ago as what we have is a demand problem rather than a supply issue). Futures are sharply higher on the performance of the foreign markets plus positive comments made by Fed Chairman Bernanke on “60 Minutes” last night. For today, with financials so buoyant, there is no reason for stocks to dramatically give back these early gains. Ahead of the holiday tomorrow, look for the market’s gains to remain sustained and built upon a bit, but it will likely be a lot slower than last week on even lower volume.


    Reiterating-Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea. 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

    APP- closed near a high the company got financing for an 18% stake to Lion Capital

    ASPM- leading shareholder changed its holder status to ‘activist’ on Thursday night; stock closed near high of day

    EK- closed near high of day

    MS- strong all day in closing relatively near a high

    AMLN- up sharply several days in a row; closed near a high

    MHS, ABC, AET- among the stocks in the healthcare sector which were very strong

    AIPC, CGRB- on “Mad Money” Friday night

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

    MDT- announced a medical device it sells could be a factor in 13 deaths…and removing the wires from the heart device is very dangerous as well; watch BSX off of this news as well

    NTCT- this stock continues its horrible descent

    NFJ- slashed its dividend

    GM- the government hired bankruptcy attorneys for a task force for the automobile industry

    Earnings:

    MON MAR 16 BEFORE

    none

    MON MAR 16 AFTER

    ESC FRPT SINA

    Good luck today.

    Erik R. Kolodny
     
  2. have a good day...