One of the leading discussions around trading rooms nation-wide was the sudden advance in oil Monday morning. Except of course that was no decline in oil Monday morning. Many entities speculate but many more hedge their positions using futures and options contracts. Well, the contracts expire on the 3rd Friday of every month- this was last Friday. So, the lead contract changed months â and that contract was priced several dollars below the next month contract as of Fridayâs close. So, as of Monday, the lead futures contract was about $41/barrel while the spot price was about $34/barrel. This indicates that the market expects oil prices to rise over the next few weeks. For day traders, we can learn a couple of things as a group from this dense discussion: first, if something doesnât seem quite right, it usually isnât. I for one have heard the words âfree moneyâ tossed around a lot, but money is never free (insert âbailoutâ joke here). Second, we cannot simply march to our computers and push buttons. Itâs not a casino. Facets like this are worth looking into because not only is there money to be made, but much money can be lost on misinformation. Inevitably, there are some rather simple indicators to answer dense questions; in this case, the U.S. Oil Fund (USO) was not up on Monday morning so people had their answer. But the point remains the same- when something seems amiss, donât just think to yourself âWowâ¦oil is up a lot.â Make it a point to find out what is going on because as with anything in life, information is the most valuable of all commodities. Markets in Asia were generally about 1% to 2% lower while prices are slightly higher in Europe. Everything else is flat. The tone looks firmer on Wall Street, but there is a slow news flow so look for the holiday trading theme to continue; light volumes and generally little movement. The early strength will likely give way to some selling as the broader market was weaker than an indicator like the Dow Jones Industrial Average would indicate yesterday, but donât look for anything overly dramatic today in the illiquid conditions. 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 RHT- good earnings TIBX- good earnings CIT- received approval to become bank holding company EPIX- closed at a high on approval of its VaporMist drug yesterday. As it is trading higher, looking for A-B-A2 off of open one way or another HCD- closed near a high; looking at an A-B-A2 thru 1.95 LLY- on âMad Moneyâ last night Bad-The following stocks have bad news and/or a weak technical pattern SRV- closed near a low; looking to short thru Mondayâs 5.15 low MTH- closed near a low; looking to short thru Mondayâs 11 low FRG- closed near a low; looking to short thru Mondayâs 1.70 low PRU, MET- among the weak insurers yesterday; looking to short thru Mondayâs lows (PRU 25.55, MET 31.91) if weakness persists TXT- warned on earnings ZION- closed very weakly in a weak bank sector as a company they loaned $85 million to went bankrupt yesterday; looking to short thru Mondayâs 22.35 low particularly after Citicorp downgrade ARTC- continued to get crushed yesterday after accounting scandal broke Friday. Stock down 75% in two days, but could well go down more; looking to short thru yesterdayâs 4.35 low. ANR- has gotten hit hard last couple of days; looking to short thru Mondayâs 15.32 low else an A-B-A2 rally if oil turns a bit AMAG- received FDA response letter to its drug; FDA wants more data before drug can get approved much less potentially require more trials AM-terrible earnings SAY- banned from doing business with World Bank after that body noted that SAYâs accounting was poor Earnings: TUES DEC 23 BEFORE AM TUES DEC 23 AFTER MU Good luck today. Erik R. Kolodny
Guys, Erik has been phenomenal. I have had an epiphany since working with him. What I would suggest is that we all read this thread daily before the bell and try to pick "the trade of the day"
My thoughts exactly. Not that I am looking for tips...but to have a "short list" of stocks to consider would be a tremendous help!
We could even just meet / add our comments under his blog, www.ErikKolodny.com . I have also been following Frank Delaney, the futures trader from NJ. I am trying blend the two sources of info.