One of the key characteristics of any day trade in particular is liquidity. Many trading situations can turn into roach motels if your time horizon for a trade is, say, two minutes. It can be very easy to get into a trade as different entities/market makers maneuver an appearance of making it seem that there is more liquidity than there actually is. For instance, a market maker may bid 10000 shares at 88.23 of something with an offer of 100 shares at 88.25; this makes day traders want to buy 88.25 as it seems so obvious that they can lean on the 88.23 to sell. However, what makes it that much more dangerous is when there are not that many shares on the tape meaning there are no real buyers should the entity bidding 88.23 move. This is precisely why I tend to trade only stocks that average a million shares per day or more. With all of this in mind, even that is getting harder. Volumes on the exchanges and ETFâs are down almost across the board as compared to last year. What this does is make it easy to shove stocks up and down by the remaining players as many hedge funds and mutual funds were blown out last year (another contributing factor to the declining volumes, i.e. a diminished number of players). Thus, when there is a story such as we had yesterday that CEO Ken Lewis of BAC noting that business in January was âencouraging,â there are 10% pops in BAC and a rush of short covering overall. People see BAC rallying so they buy financials which leads to buying in other stocks. That one comment was good for about a 60 point pop in the Dow rather quickly. Thus, be aware- particularly when on the wrong side of a trade- moves are becoming increasingly exaggerated. The decreased volumes are eroding the universe of stocks that I for one trade- yet it is a phenomenon here to stay for some time to come thus we as a day trading community must learn to not only accept it, but to adapt accordingly as well by keeping even tighter stops when wrongâ¦and by capturing gains in an even more compressed time horizon. Markets in Asia were flat overnight with European bourses down around 0.5% on average. State-side, weâre dealing with a CSCO warning and continued weakness in banks. Look for a day similar to yesterday with choppiness on both sides of unchanged. I know. A broad forecast, but it is exactly what happened yesterday and is highly likely to occur today as well. The benchmark to watch here will be CSCO. If CSCO mounts a rally, the market will likely erase yesterdayâs losses if not more. 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 V- terrific earnings AKAM- good earnings DLB- great earnings PRU- missed earnings, but guidance basically in-line TFK- decent earnings CBL- good earnings DYAX- positive news on its DX-88 drug; FDA advisory committee approved itâ¦but it was 6-5 and there were safety concerns SUNH- good earnings BBBB- great earnings CRYP- rallied sharply yesterday and closed near a high EXM, DRYS, GNK- all dry bulk shippers closed near their highs, but likely will back some ground this morning CAH- good earnings CI- good earnings MCO- beat quarterly earnings estimates handily WMT- beat monthly same-store sales guidance MDR- announced huge contract MA- beat earnings, but warned of slowing revenue growth Bad-The following stocks have bad news and/or a weak technical pattern CSCO- beat earnings estimates slightly, but warned on its conference call about future orders NVLS- poor earnings CNQR- terrible earnings HAR- terrible earnings HRS- bad earnings GLAD- closed near a low MWA- closed on its low AJG- closed near its low TUP- closed near its low UTI- closed just off of its low MEE- closed near its low AGN- mentioned in a negative context on âMad Moneyâ last night AINV- closed at a new trend low FFCH- closed at a new trend low WSH- closed near a low WMS- closed down sharply near a low SLM- closed down near a low as worries over student loan funding came back into play DO- missed earnings estimates EQR- poor earnings KIM- missed and warned on outlook STT- warned on outlook and slashed dividend NCR- terrible earnings TGT- warned on outlook Earnings: THURS FEB 5 BEFORE ANR BDC BG BPO CAH CI CINF CSL DO DSX DUK EL ENS EOG EQR EXP FLIR FLO IEX IFF IT K KIM LII LNT LZ MA MCO MF NCR NLY PENN RX SBH SE SON SPR STD TEN WBC WU THURS FEB 5 AFTER AINV ALKS AMX BEZ CPHD HIG JDSU MCRS MIL MTD NFG NFX NWS/A OMTR PBI RAH ROP SRCL THOR UEPS VRSN Good luck today. Erik R. Kolodny