Day Trading Thoughts For Thurs. Dec. 11

Discussion in 'Trading' started by erikrkolodny, Dec 11, 2008.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    Who knows with 100% certainty if we are in a correction of a bear market or a brand new bull market? However, what is certain is that the market ‘feel’ is different than it was, say, four weeks ago. The intra-day swings are not quite as violent nor as frequent. In fact, I for one have even gone back to taking my renowned brisk walks every so often in the middle of the day again – the exercise is much better for me than staring at a computer screen with information I cannot use. This leads to my point: there are a couple of new (actually old) rules now in place. First and foremost, there just is not movement every second of the day right now. Thus, one must be disciplined in only making trades in which there is likely to be some degree of rewards. Many traders become bored and are tempted to use their trading systems as small-time casinos when there is nothing going on. There is always something that you can find to do. Call your spouse. Pay your bills. Take that quick brisk walk. Check your e-mail. Study the earnings list for the afternoon. Don’t go too far because things still can change at a second’s notice; it is just that these rapid changes are becoming a bit less frequent particularly in the December market. Second, every trader loves to short stock because it is (theoretically) so much easier to make rapid profits on the downside. Plus, we’ve been in a bear market for so long that people just wait for stocks to come down. Instead, what is happening is that people are losing money shorting things like Hartford Life (HIG) as it more than doubles or any of the commodity stocks like Peabody Coal (BTU or Freeport McMoran (FCX) which are registering double digit percentage gains routinely right now. Go with the flow. Don’t overthink. Finally, we are accustomed to making (or losing) our money in 27 seconds on trades because of the rapidity of the market movement. We cannot do that right now. For instance, Chesapeke Energy (CHK) announced a restructuring on Monday morning and after a horrific decline that took the stock down from 74 in early July to 10 last Friday, the stock bounced on Monday. And Tuesday. And yesterday. Between 12:10PM ET and 3:10PM ET yesterday, the stock traded in a range of 17 to 17.49, but still up from a 14.55 close the day before so the move was over 20%. As the market rallied in the last hour yesterday, it stood to reason that CHK would get some more short covering with oil strong and no more news flow, i.e. many day traders short the stock are now paring some positions, simply put because the risk is to the upside now. Did the stock go from 17.45 to 18 in 27 seconds? No. Instead, it took 35 minutes. With one shake-out. But, what I for one did was purchase several thousand shares of the stock at 17.50 as there was a reloading bid at 17.45, watch it go to 17.55 and get stuck so I took half off. Then as it came in toward 17.50 (with resistance becoming support), I sold more. When it broke 17.50, I sold the balance at 17.49. What I should have done was realize it was all noise and stick to that 17.45 outpoint. But, I am so used to quick moves that I took myself out of the trade. I along with all of you cannot do that while we’re in a ‘different’ environment. So, be aware of a changing market- and please change with it because as is so often the case, if we as day traders fail to adapt to different market conditions, we’ll be poorer for it.

    Markets throughout Asia were quiet overnight, but generally down slightly in Europe. State-side, futures are down slightly. Much more worrisome is the notable surge in the yen right now. Today will likely not be a very good day for the markets; the oils will be an indicator as oil prices are up sharply, but it just seems like it’ll be a relatively quiet session, but mostly on the downside as yesterday…a similar feel to yesterday except down instead of up.

    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

    FCSX- closed near a high after FMR announced a stake; would love A-B-A2 through yesterday’s 5.06 high…if it opens higher, it is likely a short thru unch

    SINO- closed near a high; looking for A-B-A2 thru yesterday’s 6.25 high

    CHK- short covering may well continue; would look to buy above yesterday’s 18.05 high

    BTU- closed near a high; looking for more short covering and would buy above yesterday’s 25.94 high

    FCX- closed near a high; looking to buy thru yesterday’s 23 high

    POT- closed near a high; looking to buy thru yesterday’s 69.51 high if it opens lower

    WIN - on “Mad Money” last night

    REC- had massive 86% dividend distribution yesterday; ‘bargain hunters may creep in and price the stock out of whack

    THMD- way up on short covering; could be momentum buy thru yesterday’s 9.25 hi/close

    YUM-broke to an intermediate-term high yesterday; like a buy thru 30

    SPG, EQR- among the strong REIT’s

    GPM- House approved a $14 billion bill last night; may not pass in Senate though so look for movement here…like a higher open, but a short thru unch if it gets back down there

    OXY- among the strong oil stocks yesterday

    BTU- massive rebound on short covering; looking for more momentum thru 26

    AHD- massive percentage gainer; looking to buy thru yesterday’s 6.77 hi/close if it opens down or unch

    NFP- strong small-cap financial; looking for momentum buying thru yesterday’s 4.92 high

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

    BIDU- warned; trading lower early on as of this writing, but is likely a massive buy thru unch particularly pre-hours…may be trade of the week.

    NUE- on “Mad Money” last night, but Cramer said to wait on buying it

    NCX- broke to a new all time low yesterday in closing near a low for the day at that; looking for short thru 4.20

    CIEN- missed earnings and warned

    GIL- missed earnings and warned

    LULU- missed earnings and warned

    SWK- warned slightly

    PG- cut sales growth estimates, but kept earnings projections steady

    BCE- their deal is officially dead

    CMI- warned on earnings







    Good luck today.

    Erik R. Kolodny
  2. look at GMXR Erik. my track record speaks for itself. i think it has room to 29-30 area. not today but soon. today can give us a nice scalp in GMXR. I will buy on any weakness at/near the open
  3. mobilni


    very much for this. This is great.:)
  4. erikrkolodny

    erikrkolodny ET Sponsor

    It is quite simple. if none of the ideas get to the specific prices I point out, I don't do the trade. It shouldn't be hard to udnerstand. if the stocks get to those prices, I do what I suggest. if merely one or two do what I want them to do, it is very acceptable to me. For instance, I made three points this morning in BIDU by following my own advice. It traded down initially very early, but when it went above 104.50, it went up in a straight line...I just did not have the guts to hold it for the full nine points.

    I am not claiming to be a guru. I am not promoting myself. I am simply calling out ideas for discourse.
  5. my GMXR panned out beautifully. i was in at 24.17 and sold at 24.70. i took a quick .53 cents and am done for the day. go to the stock forum and see my post in real time.
  7. erikrkolodny

    erikrkolodny ET Sponsor

    VERY nice! What made you pick 24.17 as an entry? Congrats. And good discipline. I left a mere 12 on the table in BIDU. But, how many times have we held...just a little too long and profits become losses? overall, good job.
  8. oatmeals


    Nice job dude :D
  9. i am in pain from watching the market dying. will we get any action today?

    december is a good time to take vacation.
  10. I am amazed you look at that many stocks.
    #10     Dec 11, 2008