Day Trading Thoughts For Tues. Dec. 23

Discussion in 'Trading' started by erikrkolodny, Dec 23, 2008.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    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 – and that contract was priced several dollars below the next month contract as of Friday’s 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 doesn’t seem quite right, it usually isn’t. I for one have heard the words “free money’ tossed around a lot, but money is never free (insert ‘bailout’ joke here). Second, we cannot simply march to our computers and push buttons. It’s 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, don’t just think to yourself “Wow…oil is up a lot.” 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 don’t 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 “Mad Money” last night

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

    SRV- closed near a low; looking to short thru Monday’s 5.15 low

    MTH- closed near a low; looking to short thru Monday’s 11 low

    FRG- closed near a low; looking to short thru Monday’s 1.70 low

    PRU, MET- among the weak insurers yesterday; looking to short thru Monday’s 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 Monday’s 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 yesterday’s 4.35 low.

    ANR- has gotten hit hard last couple of days; looking to short thru Monday’s 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 SAY’s accounting was poor






    Good luck today.

    Erik R. Kolodny
  2. very informative post Erik, keep up the good work.
  3. webbma


    Thanks for taking the time to put this together.
  4. skips69


    Excellent information. Thanks for the insight!
  5. 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"
  6. skips69


    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!
  7. Nice post.
  8. We could even just meet / add our comments under his blog, . I have also been following Frank Delaney, the futures trader from NJ. I am trying blend the two sources of info.