EDGE TRADER

Saturday, January 28, 2006

Weekly Results

Took Thursday and Friday off posting - was on a business trip. My portfolio results for the week were dissapointing - I earned +1.3% vs. the S&P's +1.8%. Next week I hope to again outperform.

Wednesday, January 25, 2006

NFLX Short Squeeze

I am monitoring a short squeeze in process in NFLX this morning happily as I sell into it. NFLX is a security that is prone to short squeezes on good earnings news (check the history) thanks to the small float. I also think there are still many fund managers who are still bruised from its drop in '04 when many growth and hedge funds held this stock and were burned on it when it dropped precipitously from the 40's to 20. As a result, I think there are a lot more hedge funds shorting this stock prior to earnings than there should be. Today I set up a set of laddered stops to allow me to capture the highest possible return. Some have been taken out already and others are still in play. On the fundamental side, I am long NFLX and plan to buy it back when it inevitably settles down again, but for now I am happy counting my cash.

Looking at the chart, the volume appears to be petering out a bit now, so off I go to recheck my stops. Have a great trading day!

Tuesday, January 24, 2006

Patience, Patience

The positions I opened during Friday's selloff really started to show green in my portfolio today. I sold some positions but had to restrain myself to continue to hold the remainder. A -200 Dow day can make your quarter if your buy timing is right. So I will continue to hold positions to allow them to do just that.

Monday, January 23, 2006

VCLK - Value Click



A true technician might be concerned with the puncturing of the 50DMA on this chart. I still see an uptrend. I also see a stock that has a corrollary relationship with GOOG that didn't rally today. I bought at the close for a swing trade that I plan to close by Friday.

Sunday, January 22, 2006

Technical action in the market

Reading Cbsmarketwatch.com for Asia news and came across this article. Very interesting discussion of the technical situation of the market after Friday's close. Now I have to be honest, I really discount the DJ as an indicator, which is where most of the gloom and doom centers on. GM has really played havoc with that. I wish DJ would just drop them from the index; we'd all be a lot wealthier thanks to the better market perception had this change been made 6 months ago.

The S&P is my indicator of choice, and this is the portion of the article I focused on. I think we are in for another choppy week next week, but there may be some room to work with until the bell on Monday. As for my survival through that mini crash, I seemed to manuver surprisingly well; having gained 1.1% from 1/18 to 1/20 vs. the S&P's decline of 1.3%. Had I relied on emotions alone (rather than numbers) I'd be contemplating the cannon ball off the Tappan Zee Bridge rather than writing this post.

Friday, January 20, 2006

Shopping time

Posting a lot today. The last 10 minutes of trading today will be kind of like those supermarket game shows where they load up their cart with anything they can. With things this cheap and this bad of a down day, I can't help but do a little bargain hunting. My daytrade today was stopped out for a nominal loss, but oh boy things are looking sweet out there.

Looking cheap

There are a lot of stocks looking cheap in this afternoons sell-off. The high volatility we've seen is a concern; it seems to signal some indecisiveness in the market. I wouldn't be suprised to see the market make a big move soon (either way). The coast looks relatively clear with a lean earnings slate for Monday, so I make take some stocks home with me for the weekend.

By the way

I just put on a couple of intraday positions about a half hour before writing this last post and my last two TICKs have been in the mid 400's up. Hopefully this momentum will continue into the afternoon...

EBay, Retracements, etc


Real interesting chart in EBAY - this is the 5 day 15 minute bars. You could look at yesterday's action a couple of ways; as the beginning of an earnings flag, or as a breakout. Today both patterns failed to form. Reason is that yesterday the street was optimistic about earnings and today the street turned negative again. The question is how do you define support in this chart? EBay is looking again like a buy here at this price. This market action isn't for the faint of stomach though, all this up and down action can make you nauseous!

ATYT ATI Technologies



The action has been so frenzied over the past 2 trading days, I've neglected to post any charts. This is one of the stocks I picked up yesterday. I rode it up and was stopped out just before 3. They don't all work like this but it's nice when it does.

Thursday, January 19, 2006

Stops - Today and in general


The market continues its upward drive with force today. TICK has slowed which has me updating all my stops. The market whipsaw has made and broken quite a few people over the last two days. I had a large portfolio drawdown (in my trading and non-trading portfolios) yesterday which has been more than made up for today.

Generally if I have an intraday trade, I will update my stops based on time intervals. I choose the time intervals based on the performance of the overall market (that is to say I use differing time stops on an overall down day than I would on a steady uptrending day). Another factor considered is the performance of SPY, current TICK and intraday volume trends (if any) in my holdings.

I also work with a time stop established at the beginning of a trade. My time stop really depends on when I enter the trade, what type of trade it is, and what my objectives are. For a swing trade my time stop may be 5 days from now. For an intraday it may be 3:15 EST.

The only question in my mind for today's action is whether the pullback will happen towards the close or in a mini retracement tomorrow. Key to tomorrows action will be earnings, although tomorrow's slate is pretty lean if I remember correctly.

Solid open

The solid open today has erased my concerns from yesterday...

While my return is still lagging the S&P slightly (in all likelihood), I am at least in the black as of the open.

Volume has been dropping in some key stocks leading this advance but TICK remains positive.

I think at some point we will see at least a slight break in the bull action today, but I am very happy overall. I don't think I will put on any overnight trades today; however around lunchtime I will take a fresh look at the market.

Wednesday, January 18, 2006

Rough action out there today

Today wasn't the first time and won't be the last that I've dug a hole for myself to trade my way out of, but my month to date numbers have turned today. Which is a shame because I had some nice and highly profitable trades earlier in the month. My goal, as always is to beat the S&P each month. My month to date performance is underwater in reference to the S&P for the first time since mid-July of last year. I did spring back nicely from that point and for me the key was to use the down days as a buying opportunity. I did more buying today, but the afterhours action in AAPL and EBAY are indicative of a market with an extremely bearish bias and I'm now concerned about being long in this market. I have not yet dissected AAPL's call, but EBAY's really doesn't strike me as anything other than moderately conservative guidance (the kind that keeps analysts expectations reasonable).

I'll be looking at charts tonight - my emphasis will be focusing on sectors and areas that have shown some strength through all the selling pressure of the last two days.

Dip


Market nosedived again due to weak earnings announcements. I took this opportunity to add some long positions. After hours Intel and Yahoo tanked thanks to lower than forecast data as well. INTC seems to be a perennial dissapointer. I used to hold this stock in my long (non-trading) portfolio but got fed up with it and sold it. It is a good company with a great balance sheet and sound business. However, one of two things is wrong with it - either the market's expectations of it are continually too high, or its managers do a poor job of managing earnings expectations on the street. For the past 5 quarters (which is as long as I've noticed), the street has found something to be dissapointed in about their announcements. Yahoo, however was completely unexpected and will drive the tech sector down at least temporarily tomorrow.

Friday, January 13, 2006

Trading on Friday the 13th



Unloaded POWI this am for +1.8%. It bottomed a little before springing to life, stopping me out at 11 am.

POWI



POWI was downgraded due to valuation yesterday, gapping the stock down substantially. I am in. I think this would have backed up a little due to the rapid run up anyway. It's risen so rapidly it is tough to discern a true support level for this stock but yesterday in the face of high selling pressure due to an overall market decline it found support in the low 26's.

Force Five FFIV Unwound

I unwound the majority of my FFIV position yesterday into the early strength. I tend to slowly exit a stock in several blocks, for best execution and market timing purposes. This is one that I wish I unloaded all at once, since only one of my blocks was unloaded near the peak of $60 yesterday. But there is a very good reason for this exit strategy, and it has saved me a loss or preserved profit many, many times.

VPHM - Viropharma

Picked up a bit of VPHM yesterday as it declined substantially on no news. I may be a day early to this party based on the pre-open data, but we'll see.

Wednesday, January 11, 2006

FFIV Force Five


An interesting trading day in FFIV today. There was an overnight profit warning coming from a Lehman analyst, who gave a price target of $50, causing the stock to gap down on extremely high volume.

Now my take on this is that it is not based on any official information from the company. Two previous analysts have raised their price targets in the past 2 weeks. This particular downgrade appears to be based on surveys. It's possible this is a legit downgrade. On the other hand, its also quite possible that this is some type of monkey business, and also possible that this analyst's info is downright wrong.

The opportunity I see here is that one person moved the market downwards by over 8% in a single day. One of two things will happen. 1) he is right and the stock will drop like a stone at some point earnings release is on 1/19. 2) The majority of the analysts are right and someone will make a nice profit on this.

I am in this one. If 1) - I have some time to trade out, and from a technical standpoint there is a clean gap that has a good chance of being at least partially filled. If 2) I'll be feeling pretty good.

On the downside, I don't like the way the stock dropped in the last 3o minutes of trading and there is also the possibility of another analyst downgrade serving as a negative catalyst to drive it further down.

We'll see.

EndoPharma would have been a nice trade.

ENDP - Endopharma


Here's an overnight scalp that was on my radar today. I will be away from the trading turret tomorrow, so I could not execute this one. They lowered guidance but it looks like there's a shot at a small scalp overnight on this one.

Tuesday, January 10, 2006

CKCM

My blog is for my own entertainment and hopefully that of a few readers too, not for investment advice. A little more research makes me think there is some sort of manipulation scheme working in this stock at the moment. There may be an opportunity here but it's not for amateurs (if there are any reading this blog). As always, read for entertainment, not advice.

CKCM

CKCM followed up yesterday' unsettled day with a strong upwards move. They issuesd a press release today, which you can find here. I'm not up on all the industry-specific lingo in the press release and honestly, I'm not that inclined to translate. It doesn't seem to be all that prescient, but maybe I'm missing something. If I have some free time, I may do some research on insider holdings and SEC filings just to satisfy my curiosity.

It sure makes one suspect that all the roiling in the price was due to some insider action. It will be interesting to see the change in short ownership when the new reports come out. If indeed there still is a big short out there today was very painful for him. The other possibility is that yesterday someone was selling to drive down the price so the large position could be covered.

Unusual action in CKCM today



This stock popped up in one of my screens for a swing trade. I didn't pull the trigger, but it is very unusual. Notice the surge of almost a point at the open, with an opening range between 24.50 and nearly 25. Then on very high volume, the price plummets over $1.25 in less than 15 minutes. An alert trader might have picked up the stock around 11:30 or 12 pm only to get hammered later in the day, when at about 3 pm the price nose dives again .75 in about 15 minutes. A little research revealed a very large short interest in this stock, and some innuendo regarding manipulation by analysts and short interest holders. Now there's no way to know whether the innuendo is real or just a plant by a manipulator, but the tape does show some unusual stuff here. From a technical standpoint there appears to be some level of support at the 23 teens. Not something I'm getting involved in yet. One side of me thinks I prefer avoiding meat grinders. Another side notices a prime example of market inefficiency that might be able to be gamed. Played perfectly, this stock could have made over 2.5 points in a single day if you have the deck stacked in your favor.

Unwound EBAY postiion

I unwound half of the EBAY position at +6.8% this morning at the open. I wasn't liking the chart on it on Friday, so I reduced my exposure and locked a nice gain. No need to get roundtripped should things turn bad on me.

Saturday, January 07, 2006

New banner

I spent some no-doz time last night working on a new banner for the site. It's a little fuzzy; I really have to get better at HTML...

Ah, when to sell, or I saw this truck coming but didn't step out of the way...



Now GNSS isn't one to complain too much about; it really is a study of selling timing. If you want to get into the psychological diary of this one over the past few days, I was riding a real nice uptrend on Tuesday and Wednesday. Thursday's open gave me an upside breakout that on an overall up day for the market failed to produce any intraday upwards move. I have to confess when I say ganiss pushing 20.50 with the earlier gap fully closed my trigger finger was ready to fire. But, I have left a lot of money on the table by selling too soon, and hesitated. I realized my error today as the failed breakout resulted in a drop to support... At 11am I was ready to close the position, but I told myself that 11 am is not the time of day to close a position on an overall strong up day for the market. I dug myself a hole in this position and on Monday I'll need to try to find a way out of it ( a little luck never hurts either, but that's not something I'll count on). This is why trading is not for the faint of heart, and is one of the primary reasons for my Friday Miller time today.

EBAY - ing


I've been posting about EBAY a lot lately. Yesterday's post was a micro look at its price behavior. Today's takes it out a bit further. Now when you look at this mini-move EBAY, I am questioning whether I've overstayed my welcome and it's time for a reversal. What's a weekend without a holding to sweat over, though? Monday will be another closely watched day. One of two things will happen 1) a breakout above the resistance level since late Nov. of 46.50 or so, or 2) this drops like lead back down to support as low as 43. From a fundamental standpoint, EBAY is not a company that I'm uncomfortable holding overnight, but that doesn't mean I want to give my cash back either. Not making any snap decisions but my finger will be ready at the trigger on Monday, that's for sure.

Thursday, January 05, 2006

EBAY



The 15 minute bars on EBAY looks interesting from a technical standpoint. I will be monitoring this holding really closely for an upside breakout (46 resistance). A failed breakout will most likely be followed by a big dip...

Market open

The open is moving nicely today with two of my holdings moving up nicely; GNSS and EBAY. NFLX thus far has been a failure but the upwards open today may give me an opportunity to exit. Based on the behavior of GNSS it seems that institutional money must be flowing into this stock in volume.

Wednesday, January 04, 2006

New Look

Experimenting with some new looks to the website tonight. I wish I was better at HTML and website design. I'm not totally satisfied with this look; I'll probably change again over the next few days.

Tuesday, January 03, 2006

GNSS


GNSS was finally upgraded due to "valuation" today, sending it up substantially. It was the downgrade due to "valuation" that originally prompted me to buy this stock in late December. "Efficient" market theory in action in this chart. The analyst report published by our friendly Piper analyst reduced the price of the stock by over 8% in one day. Now an Oppenheimer analyst goes the other direction and pushes the stock up over 8% in a single day. My position stands at +8.11%. Of course that all could change if another analyst publishes a new price target before market open tomorrow!

Ah NFLX

Netflix, what fun I've had with you since I first bought you in the $11's. I jumped into NFLX once again in todays sell-off. I like a lot of things about this stock. The core product is very strong; as a customer of both Blockbuster and Netflix I can tell first hand that NFLX is just a better run company with superior product and service. NFLX has a high trading interest. NFLX has a CEO that knows how to manage earnings expectations (look at the results after earnings announcements in the last 5 quarters). NFLX has a low non-insider float that is especially prone to short squeezes and big jumps on positive news.

I jumped in with an average entry of just over $26. I'm hoping for a nice move over the next few days.