I ask myself this question constantly. It isn’t enough to come in each trading day armed with a series of ideas. You must evaluate the price action in the market and for each stock that you are watching. And you MUST be prepared to move your attention to the stocks or ideas that are offering the most opportunity.

This is one of the toughest things that we ask new trainees to do when they start trading. Once they are in a position they are committed to that position and find it difficult to move to something new. But because we are not machines and we have finite mental capital we must shift our attention to where the greatest opportunities are being presented.

A few of the things I use to evaluate where I should be focusing are

• stocks that are breaking out from multi-day ranges
• stocks that are trending cleanly (without wild gyrations)
• stocks that are moving in fairly tight horizontal ranges after a large move on the open
• stocks that have huge surges in volume for a sustained period of time
• stocks that are showing relative strength or weakness to the market in the same direction as the market

This morning my primary stocks to watch were MCP, SPY, LVS and RIMM. As soon as the market opened I got long LVS. It couldn’t trade above 49.50 so I moved my attention to RIMM, which was trading lower fairly cleanly and the SPY was in an intraday downtrend at the time.

At 10:00AM the SPY had bounced from a low of 120 and IBM broke above a huge long term resistance level of 174 so I bought. But I made the mistake of not turning my full attention to IBM and still focusing on RIMM. IBM had just traded above a HUGE level. RIMM was weak but wasn’t holding below its intraday low and still was 70 cents from its low the day after earnings. It was worth holding a short in RIMM but it wasn’t worth my full attention.

Two hours later RIMM is still messing around in a 30 cent range and IBM is 2.70 higher and may go another 1-2 points.