Wednesday, February 25, 2009
Yesterday and Today
I was out yesterday had some personnel things to take care of. Looking at yesterdays action I see that WFC made a nice move off the hammer on friday. May have a little more up side , but best part of trade is over. GS up 12 was impressive, Brk a was up nicely. Wynn Restorts making new lows this morning earning were very bad. GE and Cat still act terrible. Futures are down this morning , but I like that better then a gap higher and then failure. Ticks and vix both went in a pos direction vix down, ticks up. Lets see how market reacts in first hour. Gold trading higher after a pull back(not necc good for market. Real buying yet to come into the market, when and if it does you do not want to be short into it ,it will be viscous.Existing home sales at 10am, Bernanke at 10am. Petroleum status at 10:30 am. Politically market does not like lack of Republican interest in at least getting into the mix and negotiating with Dems.Keeping an eye on wether we get higher lows or lower highs or expand on yesterdays gains . I will be on line to tell you if I see anything concrete developing. Good Luck
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XOM very strong
ReplyDelete(Feb 25-13:48) seanl: CHK hod
(Feb 25-13:49) JackD: MS unch WFC unch
(Feb 25-13:52) seanl: GAS in time?
(Feb 25-13:53) seanl: or now
(Feb 25-13:56) gregh: mkt strong USO not..maybe a short again
(Feb 25-14:05) frankd: nice call greg shrted some
(Feb 25-14:06) frankd: look at that uso was not shrt enough
(Feb 25-14:06) gregh: good job. was trying to figure out when to get in and missed the whole move.
(Feb 25-14:08) frankd: what just happened
(Feb 25-14:08) frankd: ??
(Feb 25-14:19) RalfB: STT in time???
(Feb 25-14:29) gregh: have to head out early today. have a great rest of day all
(Feb 25-14:30) frankd: whgat stock
(Feb 25-14:30) BrendanB: STI
(Feb 25-14:33) BrendanB: SQM
(Feb 25-14:33) BrendanB: size bid 78
(Feb 25-14:34) vincentm: any thoughts on x?
(Feb 25-14:41) vincentm: just wouldnt break down
(Feb 25-14:42) ssitzer: csh, ezpw are 2 publicc pawn shops
(Feb 25-14:42) BrendanB: Guys and Girls, WFT is coming out of the S&P There is and indication to sell 4mm at the bell
(Feb 25-14:43) BrendanB: the announcement reaches the public at 3:40 on MOC imbalances
(Feb 25-14:43) BrendanB: I will be short prior to that
(Feb 25-14:43) mattR: ATI
(Feb 25-14:43) mattR: STI
(Feb 25-14:45) markk: SOHU
(Feb 25-14:53) frankd: mkt inverted head and shoulder could see melt up
(Feb 25-14:54) frankd: 775 on spoos maybe
(Feb 25-14:54) BrendanB: Ladies and Gentlemen, From now on Erik, Frank and I will be posting in different colors
(Feb 25-14:55) RalfB: who takes pink?
(Feb 25-14:55) Ron_C: WFC?
(Feb 25-14:56) seanl: the girl, the girl, the girls
(Feb 25-14:56) frankd: hello
(Feb 25-14:56) frankd: i want green
(Feb 25-14:56) frankd: lol
(Feb 25-14:56) frankd: no reds
(Feb 25-14:57) whoop: SQM closer
(Feb 25-15:02) frankd: brendan you nailed sti
(Feb 25-15:04) frankd: be careful shrting banks / face ripper
(Feb 25-15:05) seanl: MKT goong pos
(Feb 25-15:06) IvanM: USo near high
(Feb 25-15:06) IvanM: maybe XOM in time ?
(Feb 25-15:10) seanl: When will you short WFT? Bren
(Feb 25-15:11) seanl: I'm not going to do it, I'm just wondering
(Feb 25-15:20) Ron_C: any thought on banks at 3:30pm
(Feb 25-15:29) seanl: so, you'll go long?
(Feb 25-15:29) seanl: or do nothing?
(Feb 25-15:30) RalfB: what are you looking at?
(Feb 25-15:30) IvanM: DO added to S&P
(Feb 25-15:30) BrendanB: WFT now has 11 to buy
(Feb 25-15:30) BrendanB: 11mm
(Feb 25-15:31) IvanM: So Brendan you go long before 3:40 ?
(Feb 25-15:31) seanl: DO thru unch?
(Feb 25-15:31) BrendanB: yes
(Feb 25-15:32) ekolodny2: Re DO/WFT...you MUST MUST MUST have quick outs if you play these and they don't work as expected. I much prefer to do them right on the close. what Brendan's strategy employs is simply taking advantage of the fact that there is a huge imbalance and betting that retailers at 3;40PM will buy it...there is some risk involved, i.e. the imbalance can change, et al
(Feb 25-15:33) ekolodny2: COF new high
(Feb 25-15:33) ekolodny2: ditto BAC.
(Feb 25-15:33) ekolodny2: Banks leading the way per the blog
(Feb 25-15:33) ekolodny2: CNBC NOW mergers bets
(Feb 25-15:33) frankd: is wft published
(Feb 25-15:34) ekolodny2: no
(Feb 25-15:34) ekolodny2: not on tape
(Feb 25-15:34) BrendanB: DO 3.5mm to sell
(Feb 25-15:35) AL: I took some wft at 9.76
(Feb 25-15:35) AL: long
(Feb 25-15:37) BrendanB: These will be called the 3:40 trades from now on
(Feb 25-15:40) seanl: pretty nice Bren
(Feb 25-15:40) mattR: frozen
(Feb 25-15:41) AL: nice call guys
(Feb 25-15:43) ekolodny2: only imbalanbces of note are the S&P changwes: WFT 219941000 to buy and DO 4009400 to sell
(Feb 25-15:43) BrendanB: 22mm
(Feb 25-15:43) ekolodny2: 21994100 to buy...about 22 mil to buy
(Feb 25-15:44) seanl: in MN we'll call them the 2:40 trades
(Feb 25-15:49) BrendanB: Who got involved in the WFT?
(Feb 25-15:49) seanl: I did
(Feb 25-15:50) seanl: shook me out..got scared
(Feb 25-15:52) ekolodny2: WFT...26546300 to buy, DO 1247300 to sell
(Feb 25-15:52) ekolodny2: lots of earnings out after-bell...all on blog
(Feb 25-15:52) BrendanB: I bought the WFT at 9.91 with size and sold them all at .98 only looking for the pop
(Feb 25-15:53) AL: At what price are you going to put the sell order in wft?
(Feb 25-15:53) BrendanB: on the NYSE, at a price that I am confortable hodling them
(Feb 25-15:53) ekolodny2: do not know yet...will not know until 3:59PM ET
(Feb 25-15:54) ekolodny2: ONLY on NYSE..NO ECN's
(Feb 25-15:54) AL: ok
(Feb 25-15:54) AL: thanks
(Feb 25-15:55) Stephen_B: is there an imbalance on STi?
(Feb 25-15:56) mattR: SQM
(Feb 25-15:57) Ron_C: Where can I learn more about imbalance and the trade you guys did on WFT
(Feb 25-16:00) ekolodny2: bdding 62.51 WFT, offeri g 9.99 and 10.20 WFT per audio
(Feb 25-16:01) BrendanB: Ron we can chatt later after the market
(Feb 25-16:05) TyroneB: yeah im lost on the imbalances and how u trade them
(Feb 25-16:07) robm: the imbalance is a big order that has to get filled at the close. What we do is put orders on the offer for BUY imbalances and on the bid for SELL imbalances. we put the orders far away from the mkt looking for a pop or selloff due to the imbalance. If we get filled, we look for the prices to come back and we look to close our positions on the ecn's
(Feb 25-16:08) ekolodny2: nothing done
(Feb 25-16:08) ekolodny2: will cut and padste explanation momentarily re i,mbalances
(Feb 25-16:09) ekolodny2: One of the unique features of the NYSE and AMEX in particular is the concept of an order imbalance. An order imbalance occurs as a result of a case when a vast disparity exists in buy and sell orders for a particular stock which makes it extraordinarily difficult to find an equilibrium which matches the interest of buyers and sellers. For stocks that are on a listed exchange, a specialist firm can provide liquidity if the move is not overly dramatic. If there is an extreme imbalance, the stock is often halted. For instance, if a stock is trading at 5 dollars per share and declares bankruptcy, the stock will certainly open much closer to 0 than to 5 thus there’d be a massive ‘sell imbalance.’ The imbalances can occur whenever a major piece of news affects the stock price such as an earnings release or a merger announcement. The two times an imbalance typically occurs are before the open and just before the close. As day traders, we tend to be more interested in closing imbalances- particularly in smaller stocks. One type of order that traders place is called a ‘market on close’ order. So, if five people placed orders to sell 1,000 shares of Visa (V) on the close via a market on close sell order and one person put an order in to buy 2,000 shares of V on the close via a market on close buy order, the net imbalance would be 3,000 shares to sell (5 people multiplied by 1,000 shares each minus the one buyer of 2,000 shares). The imbalance information is first posted at 3:40 PM ET (20 minutes before the close) and updated at 10 minutes before the close (3:50PM ET). At the 4PM close, everybody- buyer or seller- receives the final price of the day in one print. As day traders, we seek to trade off of these imbalances in one main way. If there is a massive imbalance, one would want to place an order way away from the market and hope for the best. For instance, on March 7, 2008, Ambac (ABK) had an imbalance approaching 10 million shares to buy. At 3:59PM, the stock was trading at 6.75. Many traders at Epiphany placed short orders at prices ranging from 7.25 all the way up to 8.50. The imbalance was so huge to buy, however, that the stock closed at 9.50. All of the traders who placed those short orders got filled at 9.50, a full 2.75 above the last sale price! Put another way, if the only reason a stock is driven up or down is because one huge players wants to get in or out, much more often than not, the market reverses immediately once the huge order is executed. People who were long at 6.75 and suddenly have stock at 9.50 want to do nothing more than sell. This is the logic behind fading the imbalance. The worst price covered immediately after-hours was at 9 as the stock found its way back down to below 8 quickly as the only reason the stock rallied like that was the one huge buyer. So, the net is this: we aim to look for gigantic imbalances. If the imbalance is to the buy side, we place orders to short well away from the market. If the imbalance is to the sell side, we place orders well away from the market to buy. Most of the time, nothing happens. In the times people are executed, the prices are far away from
(Feb 25-16:09) TyroneB: interesting
(Feb 25-16:09) BrendanB: guys, we will have this explanation another time
(Feb 25-16:09) ekolodny2: the current market thus leaving lots of room for error. Thus, it is the perfect type of trade; the worst risk is that one does not get filled and the best shot is that one gets a fill and immediately exits one’s position immediately after-hours. And on no news, we love getting short a stock at 9.50 that was trading at 6.75 one minute prior.
(Feb 25-16:09) BrendanB: not immininet
(Feb 25-16:09) ekolodny2: read over thta, byut please, I have GOT to focus on eanrings now
(Feb 25-16:10) ekolodny2: CLF, CRM bid, FLR, EXRX offered PSYS crushed, TRLG bid, NUVA bid
(Feb 25-16:16) AL: How long does it usually take to get the final print? I still have not seen the final print wft
(Feb 25-16:18) tims: closed on nyse at 9.70
(Feb 25-16:19) AL: thanks I stepped away for a minute and did not see it
(Feb 25-16:25) Stephen_B: Erik When your finished for the day can you please send me an IM. I have a question for you
(Feb 25-16:37) tomh: FLR trading up
(Feb 25-16:37) BrendanB: Stephen
(Feb 25-16:37) BrendanB: I can help
(Feb 25-16:38) BrendanB: erik is comiling the list and blog
(Feb 25-17:31) bruce: gn