I reviewed a slew of entries but realized that although I’ve discussed the topic of entering orders on fast-moving stocks many times via our chat room, I’ve never written it up here. So, let me rectify that right now. What I typically will do in the current ‘normalized’ market conditions is this: if I think that a stock like NFLX will move sharply to the upside, I will enter half of the shares I seek to obtain either at or just below the high of the day. If the stock fails to go thru the high, I will sell my shares immediately and take a loss on the ½ position. If the stock does breach the high, I will seek to buy the other ½ of the position just above the high. The exact number ‘just above’ is contingent upon time of day, whether the market is rallying quite hard, the depth of liquidity, and whether there is strong news flow behind the stock move. It works the same way when I seek to short a stock. In any case, if right, I now have the confirmation and at worst case, I have half of the position on. Let me give an example to clarify. At 11:15AM yesterday, I shorted NFLX at 235.33 (it had been in a channel 75 cent channel with a 235.30 low of channel and 235.21 low of day). I knew if a buyer refreshed, I’d exit whereas if right, I’d add more. Sure enough 235.31 came in and bought everything in sight. I covered my ½ position for a small loss. About seven minutes later, the market began down-ticking. NFLX broke 30 so I shorted some at 235.26 and then a tiny bit more at 235.20 (I missed getting the entire other ½ I wanted, but came close). This time it flopped. I ended up making good money overall. Mind you, I apply this strategy to some of the slower stocks (which still move rapidly) such as MCP, FFIV, BIIB, and VRX so it’s not an AAPL-centric thought process. Thus, as algorithms become more pervasive and as volumes continue to dwindle overall, this is but one additional strategy to take with you to the day trading battle should you see to capture immediate-term moves in bigger name stocks.
Markets in Asia were generally weaker overnight with Tokyo down 0.7%. Equities are mixed in Europe with Frankfurt up 0.1%, London flat, and Paris down 0.3%. Gold and oil are both down slightly as is the dollar. The New York Empire Manufacturing Index came in slightly stronger than expected, CPI much worse than expected, and core CPI a tinge worse. Net Long-Term TIC Flows are out at 9AM, Industrial Production (0.6%) and Capacity Utilization (77.4%) at 9:15AM, and Michigan Sentiment (66.0) at 9:55AM. Futures are off a little but the overall picture is decidedly mixed with GOOG crushed on earnings but BAC up slightly on earnings. I look for a choppy albeit muted options expiration session with a slight negative bias. The focus will likely be on selected biotechs in the news (ACOR), techs (GOOG), financials on the earnings flow and yesterday’s weakness (BAC, GS), and relative strength plays which may be quite dynamic and notable off of the open.
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 specified.
If 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
MCP- closed near a high
QIHU, SINA, YOKU- closed near a high
GGG- ITW is going to enter into an agreement to sell its finishing businesses to GGG
CBST- decent earnings
SHAW- closed near a high
TITN- closed near a high
ITMN- closed near a high
HOGS- signed strategic cooperation agreement with China Construction Bank
MRK- announced settlement with JNJ on Remicade
AME- raised earnings guidance
AEN- positive clinical study of reaZin
Bad-The following stocks have bad news and/or a weak technical pattern
GS- closed near a low amid report of a negative Senate report regarding testimony GS executives gave about mortgages
GOOG- bad earnings
CBK- poor earnings
SFG- bad earnings
DLB- closed near a low amid a negative IDC report concerning global PC shipments
PAAS, CDE- closed near their lows amid reports that Bolivia’s Morales may look to expropriate more mines and that Bolivia’s state mining company may rescind contracts with several companies such as PAAS and CDE
PRGO- featured negatively on “Mad Money” last night
CRUS- poor earnings
INFY- terrible earnings
Earnings:
FRI APR 15 BEFORE
BAC GPC INFY
MAT WBS
FRI APR 15 AFTER
None today
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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