EDGE TRADER

Friday, September 30, 2005

NFLX

NFLX broke out this moring and the money is pouring in!

ECA


Note the move following the price crossing the upper bollinger band in each of the previous three crosses.

Energy stocks are tough to time - I will average in over the next week or so.

Chart of interest



Lots of positive indicators in this chart, which is why this one interests me.

Thursday, September 29, 2005

Recap


Day trade in CELG -0.3% - no dice. This one stopped me out and rose a half point before I could set up again. Score one for the market maker.

Day trade in GLBL +0.4%. Thought about holding overnight, but this issue is a little thinly traded for my taste - I'd rather wait for a better pull back to buy this one.

Purchased ENC towards the close. This one has lagged CHK which seems to be the more favored gas play by portfolio managers. I am hoping some will book profits and distribute new money next week into this security. I have been having trouble finding good pullback entries on hot energy plays like this, so instead I am going to slowly average my way in with multiple purchases of small stakes. I am going to try to focus on the home heating and oil service companies for my energy plays and try to avoid drillers and refiners from this point on. I see less catalysts in the latter two as the summer driving season wanes.

Radar

On the radar this morning are CELG, ENC, AMAT, and GLBL. As energy stocks continue to ladder up I am interested in trading - like swimming, it is always easiest if you are swimming with the current rather than against it (hence ENC and GLBL). CELG should get FDA approval next week some time for its new cancer drug which should be the catalyst to move it out of its current situation. But there was a downside breakout yesterday on low volume, so I'll need to be cautious. AMAT is on the radar because it has gotten ridiculously cheap. Sorry, semis aren't that bad and this business throws off cash like crazy.

Wednesday, September 28, 2005

10 thumbs


I paid the market a hefty fee for some remedial education today, taking a loss on a failed breakout trade. I should have known better, but I broke two key trading rules (I avoid intraday NYSE setups) and my stop was not set up properly, so I deserve what I got. To make matters worse, the bottom fell out of AAPL. I couldn't help buying on the dip. But overall I feel as if I have been poked, prodded, and otherwise violated by the market makers and money managers looking to spruce up their quarter. Not really upset about AMGN - it was a good setup that I would enter again given the chance.

In all honesty, what I am most annoyed about is posting my month to date return early - the market gods must have known and spanked me today in response.

NFLX

The tape is really going against me today. Just to be safe, I've sold half my open holdings in NFLX for +7.1% (purchased on 9/22) and am tightening up the the stop.

AMGN

Stopped out of AMGN for -0.2%. The market didn't want to cooperate, but I can't complain as I've made a clean relatively breakeven exit before the trade could go against me.

Tuesday, September 27, 2005

Took on a little bit of this.

Made a play on this security at the close. Price has declined significantly over past 2 days. Security is in a solid sector that is relatively unaffected by the Fed. This is where I take advantage of my small size and nimbleness as an individual trader, and attempt to sell at open for a small profit. Notice how around 11 the stock has established a trading range between 80.30 and 80.60. This is where the stock has found support. There is a rise in volume at the close as daytraders who bought between 10 and 11 hoping for retracement of the early decline are selling because their rules don't allow them to hold overnight. You can hear them screaming as they take their loss. The market makers, hedge funds and I are gladly buying them out (at a discount to the established support level!) looking to scalp the traders for around a half point overnight, or just grab a nice entry in a solid security at the expense of the daytrading crew. If the stock gaps up tomorrow I will ride it with a moving stop as high as it will take me. If not, I will sell at the open and take my lumps. My stats on this type of trade are very good.

Intc vs. SOX



INTC continues to fall off the proverbial cliff despite a strong business, earnings, and competitive situation, driving more than a few fundamentalists to the funny farm.

Morning Call




My NFLX trade is behaving nicely this morning with a gap up to the high 24's. If things continue like this we may be testing resistance in the area of 25.25 later in the day. Right now futures are mixed and we could be looking at an unsettled trading day.

Monday, September 26, 2005

NOV

The market did not behave as I was hoping in OSX, and unfortunately I was not position to change the game plan. Had there been a slight retracement in oil service stocks, I would definitely have hopped on board, but that is not how it played out.

AAPL

AAPL continues its rocketship ride up to the stratosphere this morning. Thank goodness I have continued to ride this winner up. It has been tempting to sell at a number of points this month.

The market is not throwing as much of a sale on the OSX as I was hoping, but there is still lots of time in the trading day.

Last weeks recap

At the end of the week, I recap my performance the previous week. I was busy over the weekend, so I am just now getting out the slide rule...

Ok - finished the week -0.6%. Not a stellar performance, but I did manage to limit my losses well below the S&P's -1.8% for the same time period. Month to date, in September I am +3.3%, which already surpasses my goal of 3%. I will just have to close out the month without making any big mistakes to finish strong.

I made two trades last week. Both were successful. Generally I am making 4-6 trades a week, but I just couldn't see anything viable out there.

Looking forward to a productive week.

Morning Call

Looks as if the market is poised for a strong day (except for the energy sector, that is). Many of my long holdings are looking as if they will gap up this morning. Not much planned for intraday today. I may buy oil services towards the close if they manage to gap down without much upwards retracement...

Sunday, September 25, 2005

Watching this one

Here's an example of one of the stocks on my watchlist for tomorrow. The less than expected damage from Rita may push this and other oil service stocks downwards. This could be a nice entry point to buy on the pullback, provided it shows some strength at a resonable support point. Other stocks in the same scenario that come to mind are BHI or HAL. They are all NYSE traded stocks however, which I generally don't trade, but I may make an exception next week. GLBL interests me as well, but NOV seems really attractive based on a Business Week article I read a week ago.

Friday, September 23, 2005

Chart of interest - What's working



Here's the type of trade I have been focusing on the last two weeks. They don't present themselves on a daily basis. I find a stock in a general uptrend that is showing a strong RSI. Note how I buy at the uptick in RSI as it bounces off its support level.

This is about the extent of what seems to be working right now from a technical standpoint, and let me tell you the pickings are slim! AAPL is another security that seems to be "working" right now.

Click on chart to enlarge.

Are refiners really a good investment?


OK, so maybe I am missing something, but aren't refiners middlemen who make money on the gap between crude prices and pump prices when you really simplify things? Aren't they businesses that are about to face significant downtime and rebuilding costs that will put a damper on earnings?

It seems to me that the drillers are really the people that profit from higher crude prices. Notice all the investigations on price-gouging that came out when gas was at $3.40 a gallon? The US public is used to seeing LOW gas prices; this builds in a heavy resistance to the price increases that refiners would need to continue rapidly growing profits....

A contrarian position might just be the way to go with a stock like VLO. Of course it is not in my particular trading strategy to try to step in front of a moving bus like some contrarians do, so you most likely won't catch me shorting VLO anytime soon.

Chart of interest



Notice the nice bull flag developing in CELG that is certainly worth watching closely.

Gutless???

My blog and my trading is boring me at the present moment. Generally, this means I need to go to cash once again. I think I may sell a bit towards the close today into this mini-retracement so I can get a fresh post-hurricane start.

Buy the hurricane?

That is my and many other swing trader's conundrum right now. To buy the hurricane or not to buy... that is the question. Not a lot of precedent to tell what to do.

I did buy NFLX two days ago and GLW yesterday on big dips.

Having the guts to buy when everyone is selling is the way to make money in this and any market, but calling the bottom is the tough part.

Will we bottom today or Monday? Or should I just get out and sit the sidelines?

The market is taking energy stocks down today, which to me is one of those little "schizoprenic" moments where the market takes action that defies reason. It seems clear that refining capacity will go down big time at least in the short term after a cat 3 or 4 hurricane hits East Texas...

The other one is taking down Home Depot in advance of what is sure to be a major rebuilding...

Tuesday, September 20, 2005

Doing nothing...

Market open seems mixed. Crude backed off a bit, and futures are up at the moment, although the street doesn't want to commit too much on the positive side thanks to the uncertainty before the Fed meeting.

Nothing to do today except wait until 2 pm... I have nothing left to sell, and certainly won't buy, since the market making crew will be bringing us all down from 11am to 2pm to build in their risk premium just in case.

I'd prefer this behavior by the mm crew over the alternative, which would be to throw a party and dramatically pull the plug at 2 pm by sending the market into a tailspin!

Monday, September 19, 2005

Missed blog...

As I am riding until tomorrow afternoon in cash , I am lamenting the dissappearance of Stephen Vita from the world of blogs. He is now entering the world of subscription stock-gurus. On the one hand, I am happy for him since he apparently feels he can turn his blog into a profitable enterprise.

By making the switch to "subscription guru service" I think he is contradicting the goal of his blog, which I felt was to distance himself from the noise of the self-declared market pundits and give an honest (not to mention entertaining) first person view of trading.

His blog was like peeking over your buddy's shoulder at his trading terminal, and I've lost that feeling now that I have to pay for it - you wouldn't give your neighbor on a trading floor $20 to find out how the market is treating them today...

Anyway thanks for the posts and good luck Stephen!

If you are a new trader, I would strongly recommend trying his service out - much more value for your money than one of those useless newsletters!

His new site is here.

Downtime

While I am parked awaiting the Fed's rate decision, a discussion of safety is in order. My trading rules prevent me from buying and holding a new investment on a Friday, the day before a Fed decision, or the day before a significant market catalyst.

For example, August's PPI numbers were released right before the Fed meeting. So if they indicated continued inflation, the market was likely to react to the following week's Fed rate decision, as reality sets in that inflation is up, and hence the Fed will not pause or indicate a stop to the series of rate hikes. In that scenario, I would not trade 24 hours prior to the August PPI numbers. In a different market, the catalyst may have nothing at all to do with the Fed. In our current market, another catalyst has to do with whether there is a hurricane approaching the Gulf of Mexico or not... This is why most mechanical trading systems fail; they fail to encapsulate current market sentiment.

That having been said, those who tread where others fear to walk are generally rewarded with outsized returns! My trading does allow me to trade on these "taboo" scenarios - options expiration, overnight trades where the holding period is the last sixty seconds of a trading day and the first fifteen minutes of the next trading day, and stocks experiencing significant bad news. Generally, it is these scenarios that generate the best trading returns for me.

Why can I earn outsized returns in these scenarios? Because there are traders too afraid to touch them, resulting in greater "risk" premiums. In my trading rules, the selection of which stocks to trade in one of these so called "risky" scenarios is the key that keeps my trading percentages high.

Friday, September 16, 2005

Prep time


I am hitting the mattresses until Tuesday afternoon in advance of the Fed meeting....

Just cashed out of some positions and have pared down basically to my core long positions. Trading portfolio is essentially in cash.

I'm not taking any chances with all the clown pundits out there hoping for a skip of the next rate hike. They might be right, or there might be sufficient signaling language in there to make them happy, but I reserve my money for more likely plays than that.

Netflix


Been watching NFLX for a few days and took the plunge today. The water turned out to be fine, as I completed it a few minutes ago for +2.4%.

Opening bell


Watching the opening with most of my holdings in green.

Check out GLW: I saw the move yesterday on no news... and it is gapping up this morning - that would have been a great overnight swing play!!!

CUTR was my other candidate, but I can only imagine due to my equipment issues yesterday preventing me from entering into any trades.

It looked real hairy for a while and I was concerned that I would not have been able to monitor and exit if I was not back up and running. My back up system just isn't powerful enough to handle the real time analysis I have running on my computer!!!

Equipment fixed

Aaaaaahhhhhhhhhhhhhhh. My terminal is up and running again finally. I spent the last three days learning all about firewalls, trojans, and what can happen to your system if you aren't incredibly careful. But I was not in my happy place until about 7:15 pm. I am looking forward to tomorrow, when I can focus my attention just on trading once again!

And lots of stuff to do with the portfolio! I was eyeing a trade in CUTR but ended up taking a pass...

Thursday, September 15, 2005

Opening bell

Sold half my CELG stake at the open for +4.31%, profiting from the continued short squeeze in process for that stock.

I am now re-examining one of the few long term holdings I have: INTC. I cannot for the life of me understand why I still own this stock after its sideways movement. The company is awesome. Call me a capitalist pig if you like, but I am not really excited about putting my investment dollars in something that pays a lousy 1.31% yield. If it actually had a yield, I could see waiting for a move, at least then I am getting some return on my capital, but at this stage in the game, the opportunity cost is killing me. I am holding this dog on emotion alone, which is not a good enough reason.

Wednesday, September 14, 2005

NFLX

NFLX behaving as predicted (-.7 today). The recenty rally appears to have been unsustainable and this one might test resistance levels soon, at which point I may contemplate an entry...

Improvements?

I've added recent return stats to the header in my blog. I am also contemplating adding portfolio holdings and trading data as well, but unfortunately I lack the time to figure these things out given my busy schedule of work, family, trading, and life. If you read this and would like to see any additions to this blog, please leave a comment!

Terminal Fun


Thanks to a problem with my firewall and virus software, my trading terminal was down all day long. I am hoping to be back up tomorrow. And with all the excitement swirling around CELG today, it was pure Murphy's Law in action! I was able to use my backup system to monitor my positions, but blogging was out of the question.

CELG was quite exciting throughout the trading halt. (Translation: a whole keg of Tums still did not protect my stomach lining). In the end, it made a nice move upwards (although a little disappointing thanks to the hype). Cramer's Mad Money sometimes unwittingly helps me, but I think his publicity probably put a lot of rookies in play in this stock and also may have contributed to the company calling for the halt. This stock and the energy holdings in my portfolio were the bright spots.

Tech was not so bright.

Tuesday, September 13, 2005


NFLX dropped about .80 today, confirming my earlier setup. I trade unleveraged, so unfortunately I was unable to capitalize on that opportunity. If this stock drops below $23.50 I will need to seriously consider an entry, even better if we see $22, which appears to be possible based on the chart!

Looks like he's talking...

Our favorite CNBC commentator opened with a piece recommending CELG today. Love when that happens. I don't follow his recommendations, but it sure is nice when he happens to pitch something that is in my inventory. Which means I can gladly offer it up for sale to one of his viewers tomorrow (at a fair markup from my purchase price, of course!).

Celgene


Due to a technical issue with my wireless equipment, my posts earlier today did not save, so here is my best efforts re-creation!

I spotted a nice day trade setup in CELG today, and made an exit for +.5% around 12 pm. It then got slammed once again, and I bought another stake, which I am holding overnight. CELG is trading all over the place since it has a drug in the final stages of FDA approval, with recommendation hearings tomorrow.

This type of play is unusual for me - typically I don't get involved in earnings or news related speculation, but in the course of my trading, I was getting the impression that we had one or more large players buying up a large stake in the company today. The trader or traders were good; they would buy up in small blocks, push the stock up 20 or 30 cents, pause and buy again. Volume slowed for a while around 3 pm and that is when the bottom fell out (also when I bought in again).

Monday, September 12, 2005

Possible short setup?



Now, I don't ordinarily short stocks, but this seems to be a nice setup in NFLX for a short. But if I go there, I won't stay long. NFLX has a reputation for managing and soundly beating expectations.

Corning


Sold some GLW into a 52 week high today. Also unloaded a little more AAPL. Other than that no real activities to speak of. Unfortunately, my life sometimes gets in the way of my trading (and posting) at times, and the past week has been one of those times. We are preparing our home to sell (according to the pundits) at the peak of the housing bubble, so that we can move up to a larger home across town.

If, I were trading today, there would have been very few setups for an overnight swing trade, and all too risky for my capital with a fed related number coming out tomorrow. Virtually all the securities that seem interesting are in the energy sector. Now it is quite possible that crude will rebound tomorrow and again push through 65. Timing as always is the key. Was today the day to buy energy, or should we wait? With every day that crude futures push down, the odds for a profitable swing trade in energy increases. My eyes would be on VLO as a possibility. RIG is another... Someone else would consider CHK, but I am already long in that stock, so I won't trade it here.

I for one am not sure that will happen. I would guess we will see sideways trading in crude for the next few days. The delusional will be watching the PPI tomorrow, and jobless claims on Thursday, hoping for signs that the Fed may reverse course and skip next Tuesday's rate hike. I for one am not counting on that happening. Let's be honest with ourselves, though people. The Fed is not looking at inflation. That is just the cover story. If you are wondering whether there will be a pause, ask yourself if the last rate hike had an effect on mortgage rates. That will tell you if they plan to continue. Still, I for one hope the Fed maniacs see what they want to see in the numbers this week so that I can profit from their delusion!!!

Friday, September 09, 2005

Lightening

Lightened my load of equities into the mini rally we had today, taking some profits in AAPL, XEC, and GLW.

All the chicken little pundits are driving me crazy with their "Fall Fall" predicitions ( I think we already had it in mid-August). Just the same I will feel like a real moron if we do actually experience a major downturn and I didn't sell some winners.

I am definitely expecting at least a mini-downturn on the day that the market gets it through it's thick skull that no, the Fed is not going to give a mercy pause in its series of rate increases thanks to the hurricane.

Opening Bell


Opening bell is looking upwards for me today. I am contemplating which stocks to put stops on and where....

SPY is +.37% and TICK is +557 at the time of this post. I greatly prefer these numbers to the alternative.

ALTR seems to want to go up but is bouncing off the ceiling at 19.91 this morning....


Everything is looking nice for a trade today, but unfortunately I will not be here to monitor - have to leave and do some work today.

YELL is on my watch list today - it got hammered after hours last night and fell off the cliff this morning, which leaves some room for a pullback, but this may be too risky for me to try today.

Good luck...

Thursday, September 08, 2005

Oils

I had a nervous moment today about energy stocks. Mostly because of all the money I've made. I don't want to give it back. I am going to unload more energy over the next few days, and use capital to make more short term trades.

So far ALTR is still in my posession. It broke through downside resistance, yes, but in after hours trading, it held firm even in the face of disappointing earnings guidance from Intel. My feeling is that this was already priced in to ALTR and it is appearing a little over sold at this point!!!

We will see tomorrow. I read the Kirk Report today, and for the first time in months he is indicating he is willing to make some trades, rather than park money and fix up his house. I don't know whether to be happy for the guy or park my trading capital in response.

Good Morning



One of the focuses for the market today is crude, once again up for the day. However, the big and less talked about issue coming up is the cost of home heating now thanks to the corresponding price in nat gas.

My long positions are for the most part running nicely. LGF made a surprise move based on the market digesting some strong insider buying of late.

ALTR has been slightly up to relatively flat this morning and had a downside breakout at about 10:30, but appears to be bouncing off support at about my entry price so the exit may not come until later.

CHK is doing a convertible stock issuance, which the market didn't like, so that position is taking a bit of a hit today. I may take my money and run at the open tomorrow.

Wednesday, September 07, 2005

Market "Gurus"


I'm having a great time listening to the self proclaimed market "gurus" (pictured at right) discuss their theories for the direction of the market, currently reaching fever pitch in media outlets everywhere near you.

"We're expecting the market to have it's standard 'Fall Fall' - (honk-honk goes the nose)... Why? Well because it almost always happens"

Out come the Ronald McDonald shoes; flop, flop flop; "I soitanly expect the market to do the opposite of what the crowd expects, so we should expect a strong September"...

I can't wait for this year's version of the "How to protect yourself from the coming crash" and "The coming bull market and how to profit from it" books to hit newsstands in time for the XMas holiday season!!!

Nice setup

Just pulled the trigger in a nice overnight setup on ALTR. I will sell at open tomorrow. Volume spiked at the close with other traders doing the same!!!

Crude Oil?

Crude oil dips yet again. Paradoxically, my energy holdings are all up, yet my tech holdings are down. Should I sell energy into this rally? Only concern is that my long energy positions act as a simple hedge against a high energy price spurred recession...

Conversely I could buy call options on OSX or something of that nature, but I will have to get out the slide rule before attempting that.

Looks like I'm going to leave the meat on the grill a little bit longer. Let's hope I don't start a fire.

Tuesday, September 06, 2005

Missed it!


Once a month I recap the previous month's performance and set personal goals for next month's performance.

Going back to my post on 7/30, my main goals were to ride out the anticipated storm with cash the last 2 weeks. My goal for monthly return was +3.0%. Unfortunately, I missed that goal and finished the month +1.9%. Of course, I outperformed the S&P's -1.2% for the same timeframe, but this is still a dissapointing number.

I was hit hard with losses on long positions on 8/18. This was the day that really killed the performance from the month. From this low point until the month end, I was able to gain +3.5%, so if there is any silver lining that was it.

My trading performance declined this month, but this was more from my lack of trading throughout the the month than anything else, looking at the numbers. I only had two trades with a loss of $500 or greater. On the flip side, I only had two trades with proceeds greater than $500. This isn't a concern - it fits in to my August goal of careful trading and preservation of capital.

My goals for September - +3% or better. +6% or more and I will treat myself.

I will resume trading on a more regular basis this month.

Good luck!

Back from Vacation Party


Welcome all. I returned from vacation yesterday, and am just now getting back into the swing of things. Looks like the market threw a party for my return. Thanks, Nasdaq!

My portfolio has been relatively boring since 8/26 when I went to about 50% cash. My long positions include AAPL, XEC, CHK, and GLW.

The only trade I made while on vacay was an overnight play on RUTH which netted me about +.2% after commissions. Tomorrow my shingle is back up again!

Thursday, September 01, 2005

RUTH

RUTH took a nosedive yesterday due to concerns regarding retail spending and the fact that two new restaurants under construction in the gulf area were reduced to toothpicks. I purchased a stake at the close yesterday and am unloading it as we speak. This stock is so thinly traded that I have to do so carefully so that I get out without sending the price into a tailspin. My orders have nudged the price downwards, but so far, I am still in the black.

I was happy to see AEOS's same store sale numbers confirm the fact that the market's sell off in that stock was pure panic. Retail I think will just be tougher this season. The strong stores will do well and exceed expectations and the laggards will fail. The pundits on CNBC would have you believe otherwise, but the truth is that a rising tide does not lift all boats nor does the flushing mechanism on the proverbial economic toilet sink all retailers either.

Since I am on vacation, I will now leave to enjoy that - I'ts looking like a great beach day.