Day Trading Thoughts For Tues. Apr. 14

Discussion in 'Trading' started by erikrkolodny, Apr 14, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    A feature of day trading that many day traders get caught up in is the ‘rebates.’ For a number of years, the various electronic communication networks such as Archipelago and EDGX have given out rebates for traders who add liquidity with traders paying fees for taking liquidity. Thus, if IBM is trading 101 bid to 101.01 offer and a trader was bidding 101 with said trader getting hit at 101, he/she added liquidity. Conversely, if that trader bought his/her shares at the 101.01 offer, he/she would be taking liquidity. What many traders do when trading is to try to get that extra little bit of juice when in a position. Thus, if one was short IBM at, say, 100.98, many traders I’ve worked with will bid 101 in an effort to not only save a penny a share on the exit, but also attempting to save another half a cent a share or so in adding liquidity rather than simply exiting expeditiously. This is the exact wrong thing to do if one is day trading within a timeframe of 1-5 minutes because one expects relatively immediate reaction to their trade. Harking back to the previous example, if I for one am short IBM and the stock is trading 101 to 101.01 with heavy trading on the 101 bid yet the stock holding steady, I get out as fast as I can at 101.01. I don’t care. The stock is not acting as I thought it would so I exit. Which is worse: paying 1 ½ cents extra a share (the penny on the offer plus the net take over add rebate) or holding it and watching it go to 101.10 in seconds thus costing me 10 cents instead of 1 ½ cents? Thus, the old motto of ‘when in doubt, get out’ could not ring truer when it comes to trading (much less most other things in life). Do not try to fine-tune things if a trade is not going your way. Instead, act accordingly and save your capital for the next (winning0 trade else, net-net, it is highly likelihood you’ll be much worse off by trying to ‘save’ yourself a little here and there. T is one thing to clip coupons; it is quite another to hope for the best when the reality of many situations is that the ‘best’ is extracting yourself from said situations.

    Markets in Asia were mixed overnight with the Nikkei down 1% but Hong Kong up marginally. The European bourses, however, picked up where they left off last week with prices up 1% to 1.5%. State-side, futures are weaker after poor retail sale data and GS selling off. For the day, there are a lot of cross currents ; use financials and specifically GS as your guide. The market likely trades lower overall, but strength in selected financials and particularly GS could turn things around rapidly.



    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 (preferably to the downside in a downside market and the upside in an upside market) 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

    COF, BK, PNC, ZION, BAC, ASBC, PVTB, FMBI, EWBC, HBAN- closed near highs of day

    MET- turning down TARP funds

    DRL- very strong; closed near a high

    DBRN- pre-announced earnings to the upside

    CUBA- closed on high of day after political developments potentially allowing U.S. telecom commerce to go into Cuba

    CETV- closed near high of day

    SNDA- among the strong Chinese tech stocks yesterday

    RL- amazingly strong few days for the retailer; closed near a high

    FEED- extremely strong yesterday; closed just off of high

    MGM- received commitment from its lenders to fund 100% of current construction costs for its City Center project

    GWW- beat earnings handily

    DNDN- announced positive phase III trials; stock halted with conference call to follow at 9AM ET. However, they did not announce yet exact results so it seems ‘good’ off-hand, but that could change. Formal presentation to be April 28.

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

    GS- beat earnings substantially, but also doing a $5 billion share offering…stock traded lower after-hours; look for MS to follow in GS’s wake one way or another

    SXL- doing 2 million share offering at 50.60

    TLB- missed earnings estimate, suspended dividend, freezing defined pension plan

    HPT- continued its weakness from Friday; closed near a low

    FNF- doing a 13.3 million share offering

    Earnings:

    TUES APR 14 BEFORE

    CBSH FAST

    GWW JNJ

    TUES APR 14 AFTER

    CSX INFY INTC

    LLTC


    Good luck today.


    Erik R. Kolodny