Day Trading Thoughts For Wed. Apr. 8

Discussion in 'Trading' started by erikrkolodny, Apr 8, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    The construction of the Golden Gate Bridge commenced in San Francisco Bay. The original film version of “King Kong,” premiered at new York City’s legendary Radio City Music Hall. Prohibition is repealed. All of these events occurred the last time the equity markets performed as well as they did in a four week period from March 3 to April 3, 2009. Yep, it was over 70 years ago way back to 1933 when the Dow Jones Industrial had as big of a percentage run as it did in the last month. The rally was built upon bank CEO’s claiming that their respective banks would have decent quarters and hopes that the liquidity crisis is easing. Furthermore, gimmickry such as the desire to change mark-to-market accounting for public companies and the prospective reinstatement of the uptick rule combined with an abatement of hedge fund selling has led to a vacuum higher. With yesterday’s decline, the markets retraced a mere fraction of its incredible gains…and when I say ‘incredible gains,’ I mean the NASDAQ for one is technically in a bull market as it rallied more than 20% off of its low. What to make of this? As discussed in a piece several days ago, the markets has changed and the market’s tone has changed. When one is short now, if wrong, the move higher can literally wreck a day because people tend to be nervous/biased to expect good news in the immediate-term. When long and wrong, it is simply because traders just aren’t clamoring on and one tends to see painful slow losses. These two tenets could not be more true in day trading these days. Thus, as always when doing intra-day trading, keep your eyes on the tape…but particularly realize that the character of the entire market has changed and if you are a day trader, you better change with it rather than sticking with what has worked for awhile.


    Markets in Asia were drubbed on the heels of Wall Street’s declines with Hong Kong and Tokyo down around 35 each. European bourses are fractionally lower. The story is setting up differently state-side though. Life insurers are going to get TARP money, there is a major merger in the homebuilder sector, and there will be discourse all day on the potential reinstatement of the uptick rule. Futures were down overnight, but have come all the way back. Trading will be increasingly illiquid today, but very frantic in the early-going…look for a small sell-off if the market opens higher as the futures laid the groundwork for where we could go should a rally fail to materalize early on, but there is seemingly too much good news to hold the market down this morning. Use life insurers and big cap tech and financials as your guide.

    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

    BBBY- great earnings

    RT- terrific earnings

    FFIV- good earnings

    PLD- announced stock offering, but debt restructuring as well

    JNPR- pre-announced earnings to the upside

    WBSN- pre-announced earnings to the upside

    MGM- rumored to be very close to getting a secured loan from Colony Capital

    S, RIMM- positively mentioned on “Mad Money” last night

    LNC, HIG, PRU, MET- among others, life insurers should be strong today as Treasury Secretary Geithner indicated that the TARP would now provide funding for this sector

    CTX- PHM acquiring this one; homeowners should be strong as takeover rumors float into the sector- keep an eye on KBH, RYL, and LEN among others

    FDO- good earnings

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

    MOS- missed estimate and warned for the future; MON and POT should follow

    AA- missed earnings estimates but restructuring seems to be on track; traded to 8.25 last night so could be a good ‘buy thru unch’ candidate in particular if it opens down and market rallies

    WMS- closed near low of day

    NIHD- closed near intra-day low

    RECN- poor earnings

    SPG, BXP, AVB, VNO- among the REIT’s which helped lead the market down yesterday afternoon; all closed near their intra-day lows

    CEF- announced share offering

    RPM- missed badly for current quarter, but sees things improving on lower raw materials costs

    R- warned on earnings

    STT- downgraded by Bank of America/Merrill Lynch; most other financials higher in the early pre-hours so something to monitor

    Earnings:

    WED APR 8 BEFORE

    FDO RPM SJR

    STZ

    WED APR 8 AFTER

    EXM GBX PBY

    SGR SMSC

    Good luck today.

    Erik R. Kolodny