Many traders become frustrated when a stock follows a pattern they deem to be illogical. Their frustration mounts when they take a loss do to this “irrational” pattern and they may actually trade against the pattern even after they have identified the correct way to trade the stock through rational observation. DE had a large gap down after releasing their … Read More
RIMM
RIMM is about 70% from its high. It seems real cheap based on next year earnings projection of $4.50 per share. But the price action indicates that noone believes those estimates. There are probably a lot of people betting that RIMM will have trouble matching this years $3.50 per share. So perhaps RIMM will have one more down leg. RIMM … Read More
The Best Stocks Need to get Killed First…
Market leaders are the last stocks to bottom. They have the strongest fundamentals and don’t breakdown until the pressure to get out of the market becomes so great that even they will be sold. One such market leader is AAPL. We talked about AAPL in today’s AM Meeting. I remarked that we should pay close attention to AAPL’s price action … Read More
Expect The Unexpected
Today, from 12pm to 1:45pm the SPYs trended down very steadily from 87 to 83.5. There was a readable seller for the entire downmove. When the SPYs attempted a reversal it failed around 84.6. This led to a downmove to the low of the day at 83. I was able to make a nice chop in the steady downtrend. But … Read More
The Box vs. The Big Picture
I was at the office Sunday doing some admin stuff and working on some trading prep for this week. One of our senior traders was at the office reviewing some trading videos as well. He had a question for me about how he could trade the large reversals we have been seeing in the market more effectively. He is a … Read More
Find the Easy Plays
Trading is a tough profession. Every day you need to figure out a way to make money. During the first couple of years of your trading career it is important to be in the easiest plays. One such play involves getting long above a recent support level in a stock. The more recently the level was important as support the … Read More
Make This Trade
Goldman Sachs (GS) is significantly weaker than the market right now. Just a few examples: On October 29th after having rallied strongly for two days it gave back almost all of its gains in one day; as the S&P has consolidated and shown strength the past few days GS has sold off sharply on negative chatter; it dropped four points … Read More
AAPL Earnings—Oy Vey!
As you gain more experience traders develop biases about stocks and where they should be priced. Often this is helpful. At times it can lead to potential rips. As an experienced trader I have learned that my biases must be verified by the Box, the price action in the stock. Who am I to decide where a stock ought to … Read More