Thursday, January 26, 2012

observations

My AM trading not so good, my PM trading good, so keeping sizes smaller in AM and scalping or putting stops to b/e asap. Staying away from one dollar opening bar ranges and looking for tight setups for the first 15 mins. So many days of people expecting the market to pull back, then it does not come, or does come like today, so you just have to wait and see how supportive the market will be. It has been hard (for me) to hold swings as you have to go through that morning dip routine which can keep your eyes off hotter plays, and make you feel like you are starting the day in the hole. So I have reduced my swings to only those in solid support and letting them float around, or with entries with good cushion on the close.

I go through 1-7 day old finviz heatmaps to find flag setups, and have noticed many more continuation plays. This has been going on for weeks. If a stock has a huge candle, then it is worth putting on the front burner the next day and use a top of candle trigger, red to green, intraday flag, whatever, as an entry. Szaman had a killer play in YNDX today that was just that kind of continuation. I got a good first day entry in IBKR a last week and decided to hold a 1/4 overnight, and it did the same.

The big Fed inflation day? I noticed GDX well outperformed SLV and GLD, so playing the bling makers vs the bling may be the way. There should be plenty of time to let some setups happen. Hard for me to trust the miners. Funny market when homies, banks, solars, shippers, miners, and airlines are charging (among all else). It's a rising tide, so even listing hulks are getting a ride.

Being in a new room with all new traders has been great. You learn so much with all the voices commenting on everything from stocks to economics. I also like how each individual style becomes hot for a stretch, so if you are struggling you can ride someones wake for bit, get yourself back on course. I always keep others trade ideas small and tight if I take them, especially if it not in my setup comfort zone, and always assume I am being sold into, especially the thin crap. I do trade with a tinfoil hat on.

Follow the trends until they are not.

Tuesday, January 10, 2012

Earnings season start, best and worst trades.

Nice to have earnings season here, should at least give some individual names some solid direction, and maybe hold up the market. I had a nice one in RIG which was called out in real time in the BOWS chat room, but I also got a guidance/earnings gap play first thing in the morning, and I hope there will be many more to come, you just never know how things will start shaking out. Here's the good...


... and the bad:


These gappers don't need much market support, even if the market is fading and not plunging, they have all the strength they need on their own if the volume is there.

Wednesday, January 4, 2012

Microsoft chart beauty!

Do you own MSFT and are getting fed up and thinking of selling? Do you think they are undervalued and wonder why the stock is not moving up? Did you inherit some stock and wonder whether to sell it or not? Well, it looks like MSFT is near an important inflection point, where the price could see some significant movement, hopefully to the upside. The price action the last two days is encouraging.

Part of my trading is based on technical analysis, a fancy term for analyzing stock price movement. I find it very useful for timing my entries into stocks, and setting an 'uncle' point to get out of the stock if I am wrong and the price is going down after I buy. I get nervous when I am underwater in a stock, and it helps to have a set sell point, it tells me I have planned out my trade and understand exactly how much I can lose.

The price of MSFT as drawn on a chart is setting up a triangle pattern. The price action is showing us that the people who want to sell the stock and the people who want to buy the stock are reaching a stalemate, a point where there are very equal amounts of both, and the tight action of the price is an indication of this. Typically, once one side exhausts itself, the price can move swiftly in one direction, offering a place to get into a trade, and showing some places where one could sell depending on ones tolerance to be underwater in price. You might get lucky and it may never look back, it does happen. If it happened all the time, we would all be rich, so there is no guarantee. Lets looks at the chart to see what I am talking about, then look at example of another stock that went through a similar price set up. You can click on the images to make them larger.


I went through charts of INTC, ORCL, AAPL, all have similar instances of what is happening with MSFT now. IBM I thought the best past example (all of the 1 minute I poked around, I am sure there are better comparisons).


There are lots of other things to talk of here. Where to buy? Break of the line? Over 28? Over 30? The stock may bump up against this line and fail. It may break up to 28 or so and fail. It may even break over 30 and then fail. Where to sell if you do buy? If it goes below the downtrend line again? Below the 200MA? Lots of choices to plan ones trade.

Also, what will happen with the trading volume once it breaks up and out? Will the next earnings quarter for MSFT provide a surprise upside and it will gap up overnight 3 points, or just the opposite, forcing us to wait longer for this pattern to trigger. What will the general market be doing? MSFT likely cannot go it alone and will need some support, at least from similar stocks. It may need another year or more before it breaks this downtrend line, but I am most certain it will at some point, and it may be about to happen. My guess is that things will get a bit agitated with MSFT, but it is a behemoth, a cruise ship of a stock where hedge funds, countries, high frequency algos, and traders in charge of large amounts of money all battle it out. Not my kind of trade, but I find the chart beautiful in its way and will follow its fate and maybe even buy a small amount just to be in. This stock has been dormant a long time. Will it die or rise from the doldrums here? Time will tell.

Tuesday, January 3, 2012

scanner trade

As said before, I have been using a scanner lately, and I have been finding it a useful tool in specific situations. Today we had a big gap up, and on these days I find little use for it at the open, but on weak openings I have the scanner set to identify stocks that have gapped up and are near highs of the day. On the 29th we had such a morning, and one name that popped up right away was DHI. I took a position on a breakout of the early consolidation and the stock never looked back. It turned out the homies were very strong that day and so with the help of the scanner I got in the hot industry for the day. Here is the visual:


I am starting to hold positions like this that give a good cushion in case the market is starting a serious uptrend. It would be nice to get a stable of 5-10 stocks or more as long term holds in hot industries. Not my strong suit. We'll see, the market has not offered that up in a while, so I will slowly build into it and only hold ones in the strongest industries with safe cushions.

Monday, January 2, 2012

2011 Carnac prediction results

Any bloviator worth their salt has to make a bunch of ridiculous predictions that don't count for much, so let's review how I did. My calls are below and my year end comments follow in Bold:

Gold/Precious metals: still upside

This was a no brainer, and my best long trade this year was in silver, my longest hold of the year, see the trade review here. Even if you blew it and held a GLD position all year you are still up 10%.

Food and Water: Biggest upside into 2012 and beyond, outperforms all commodities. Invest in water, hoard physical.

My worst call. Worse is that it is a worst call scenario for the world over. Shame on me for even inducing this sort of armageddon-like thinking, save that stuff for the malcontents. "hoard physical"... still love that. F+


Semi's may lurch back, but gain for the year.

Wrong both ways, it ripped in the first of the year, then ended down. F-


Market as a whole: May have a significant pullback, but ends up for year. My guess is N shaped, up, down, up. Second guess is V shape, down soon, then up. Cycle theory says this is most probable, but I am going with N.

Well, certainly had a significant pullback, and there is a N shape there, but this is a C- at best.


UNG and TBT: Still too early. Maybe TBT in last quarter. Oil up, but not enough to help UNG and solar.

UNG and TBT are dead, still. B+


Solar: still, and always, sucks (and I am a fan), ...until 2nd half, then start moving

D+. No second half bounce. This business needs to trim down and needs more time. The frakking nat gas bonanza is a game changer and it is hard to see how things will pan out on this, but it likely means a smoothing out of energy prices and an ill omen for alt fuels.

Homies: still suck, all year

My solar prediction would have been perfect for homebuilders. D+

Telecom: Outperforms in a boring way

Underperforms in a boring way. D

Retail: Outperforms in a no one can believe it way

Indeed, but not hugely. C

Energy: Good first half, bad second.

By XLU, spot on. A

Finnies: Gets everyone lathered, then breaks hearts.

Didn't even get anyone lathered, still braking hearts. B

Super Bowl: Ravens or Falcons... Falcons it is.

D. you picked the Pacs? I know, with the sports picks you just could say either A or F.

British Open: Els

F

Wimpleton: Murray, feel good story.

C

Tour: Schleck

B, second and third good but need more PED's for win. Evans? Wow, great pick for those that made it.

Bolt goes 9.54

9.7 is closest he got, needs to stop driving... and more PED's. C


ASP: Fanning

K11 = F

Coin flip: Tails

[flipping coin] Tails! A+ I needed that ;)