Day Trading Thoughts For Tues. Mar. 31

Discussion in 'Trading' started by erikrkolodny, Mar 31, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    So, let’s try to hash out what happened yesterday. I gave a brief preview in yesterday’s markets section should you want to re-read yesterday’s piece, but it comes to two old but important bugaboos: GM and the banking sector with one old theme of government intervention. Let’s do GM first. There is now a growing realism that the world will not know GM as is without government intervention. So, the two choices are: GM goes out of business taking with it a significant segment of the American workforce (auto parts suppliers, et al) or staying in business with Uncle Sam (oh, you and me of course) become a conduit to subsidize GM. Yeah, I don’t think either choice is particularly good either. But going with what will likely happen- the government eventually is going to take a bigger role here. With President Obama’s promise yesterday that the U.S. government will guarantee warranties of new vehicles bought from Chrysler and GM in an effort to boost sales/confidence, indeed billions of dollars have already been committed. Now, the auto task force sponsored by the government did withhold further funding until a better restructuring plan is levied, but the reality is that the U.S. government may be thrown into even worse shape by making GM the next Amtrak. In the interim, on ABC’s “This Week” Sunday morning show, Treasury Secretary Geithner noted that “Some banks are going to need some large amounts of assistance.” The Treasury, according to Geithner, has only $135 billion left of the TARP fund and gently hinted that he may have to go to Congress to seek more funds. He also noted that the big risk is that the government does too little than too much here. The markets (correctly in my opinion) focused on the first part of this. Now, let’s think about this: the market began rallying three weeks ago today when the first of a parade of bank CEO’s (Citicorp (C’s) Pandit) noted that he thought the bank would be profitable for the quarter; this was followed by similar comments by J. P. Morgan (JPM) and BankAmerica (BAC) immediately thereafter. Furthermore, there were rumblings from all three stalwarts that they were going to replace the TARP funding sooner than later. Well, in a nutshell, all that change between Thursday and yesterday. JPM’s CEO Dimon noted that March was worse than January and February, the government indicated that the TARP monies would not be returned anytime soon, and then Geithner squelched the hope that things were finally beginning to recover. Thus, it added up to the perfect combination for a nasty day yesterday. For day traders, we simply absolutely must monitor the news of the moment moreso than ever because any headline moves markets. Furthermore, with the incredible percentage moves of late, the breadth of the reaction to every headline is bigger than ever thus once again, we must absolutely understand the macro situation to focus upon our micro timeframe trades.

    Markets in Asia were mixed overnight with Tokyo down 1% yet Hong Kong was up 1%. In Europe, prices rebounded a bit from yesterday’s deep sell-off with prices up 1.5% on average. Gold and oil are flat along with bonds while the dollar is stronger against the yen. Futures are stronger today in a bit of a bounceback following the two-day sell-off. With news flow relatively light and today marking the end of a terrible first quarter (yet great march), look for a relatively quiet day. Trading will likely be particularly tricky and quite honestly, I have little confidence in my action plan today, but here it is anyway: it’d seem that there’d be some selling into the bounce, but with selling pressure not overly pervasive yesterday as it was more of a case of a buyer’s strike due to the plethora of bad news, some shorts will likely cover as the day goes on as window dressing takes hold. Thus, look for an extremely choppy relatively low volume day with an upside bias. Financials and big cap tech will be your benchmarks.

    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

    IDCC- closed near a high after being upgraded and announcing a solid licensing deal

    IBM, AMZN- amidst a lousy tape, closed near a high

    MWA- had massive buy order on close despite sell imbalance; upticked about 20% on the close

    IBOC- mentioned on “Mad Money” last night

    TBSI- great earnings; smashed estimates for the quarter

    DDRX- sold its Gloria Jean’ Coffee Int’l division which gave it a much needed capital infusion; stock was up over 200% yesterday and closed near a high

    LEN- beat earnings estimates for the quarter

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

    OXM- beat on earnings, but will not provide guidance

    AEP- warned on earnings and announced they will be issuing stock

    PFG- closed near a low

    LNC- closed near a low after withdrawing its application to the FDIC’s TLGP, but may have to reduce its dividend and/or restructure

    COF- closed near a low

    JPM, WFC, BAC, PNC, STT – all closed near their lows

    PRU, MET, AFL, ALL- among the major insurers closing near their lows

    GMXR- broke to near a new trend low yesterday

    BXP- closed near a low in a weak REIT sector

    ACOR- received ‘refuse to file’ letter from the FDA

    SCS- poor earnings


    Earnings:

    TUES MAR 31 BEFORE

    GIGM HNP LEN

    SCS TAM

    TUES MAR 31 AFTER

    APOL FUL


    Good luck today.

    Erik R. Kolodny
     
  2. Molec

    Molec

    that is a very long post

    I honestly don't see how a good trader can waste so much time making posts like that
     
  3. bellman

    bellman

    lol, yeah he must be quite the work horse. He posted well before the market open so it's possible.

    And his post was not entirely worthless. here's the crux of what he wrote

    it’d seem that there’d be some selling into the bounce, but with selling pressure not overly pervasive yesterday as it was more of a case of a buyer’s strike due to the plethora of bad news, some shorts will likely cover as the day goes on as window dressing takes hold. Thus, look for an extremely choppy relatively low volume day with an upside bias. Financials and big cap tech will be your benchmarks.

     
  4. erikrkolodny

    erikrkolodny ET Sponsor

    Because I type most of it out at 11:30PM and the balance at 5AM. I do the market sections in the morning as well as add to the watch list any company with major news after doing much of that the night before as well. I find that doing the posts on Microsoft Word at those times allows me introspection that few other traders have and prepares me more than most for the trading day. I am certainly not smarter than most people (I wish I was), but I tend to be well prepared. This is why I tend to be trading aggressively at 9AM in padding my day (I tend to start trading at 7AM) while others choose to waste their time half an hour before the NYSE open by ignorantly bashing total strangers on Internet chatrooms rather than trying to earn a living.

     
  5. One of the dumbest posts I've seen on ET.
     
  6. Cliff Notes?
     
  7. aradiel

    aradiel

    Erik, what do you watch more closely when you are trying to follow financials and big cap techs? Stocks, etfs? Which ones?
     
  8. erikrkolodny

    erikrkolodny ET Sponsor

    I use both...FAZ and FAS give an idea as to how financials are doing as they move three times as fast, but I also watch JPM, WFC, BAC, and C along with MS and GS to give me an idea for how financials are doing. For tech, I track the QQQQ, but also GOOG, AMZN, AAPL, RIMM, CSCO, and MSFT.

    Take care,
    Erik
     
  9. I watch the BKX index. Money center banks will move with the index.
     
  10. erikrkolodny

    erikrkolodny ET Sponsor

    This is the least important section of what I write. I actually prognosticate fairly accurately (as I did today although I had little confidence in said prediction). When I day trade, I go with what I see...I do not have a mindset. The crux of each of my pieces are the ideas because it is the trading of those stocks that provides me with whatever money I hope to procure that day.

    The first part of my posts tend to be a lesson or an economic discourse which educates myself (and hopefully those reading) while the last part sets up the ideas for the day (the stocks I will actually be trading). If I think the market will be up at 8AM yet it goes negative at 9:45AM, I don't care. I simply shift my focus from the 'good' side to the 'bad' side from the idea list.

    Good luck and be well,
    Erik



     
    #10     Mar 31, 2009