4 active stocks for daytraders

Monday morning and the markets rally to the top of
the trading range. For the first hours of the day, there was not a
lot of volatile price action in most stocks. Many stocks moved quickly higher
and then consolidated. There were no news-driven stocks of any importance during
the early hours of trading. For these reasons, I stayed very close to my scanner
and looked for specific “tape reading” picks that appeared on my scanner. Even
though it shaped up as a pretty light trading day, I was able to get in and out
of a number of different stocks like General Motors
(
GM |
Quote |
Chart |
News |
PowerRating), Valero
(
VLO |
Quote |
Chart |
News |
PowerRating),
Encana
(
ECA |
Quote |
Chart |
News |
PowerRating), and Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating). 

Late in the afternoon the news reader service came in with some news on
McDonald’s Corp
(
MCD |
Quote |
Chart |
News |
PowerRating).  Apparently CEO Jim Skinner denied the recent
speculation that McDonald’s had plans to undertake a large-scale restructuring.
The restructuring was rumored to be either through a spin-off or the creation of
a real estate investment trust. Soon after the news announcement, I began to
recognize large offers showing up in MCD’s NYSE open book. Large Cross Downs
began to appear as well as in my alert scanner.

Once I pulled up MCD on a 5-minute chart, I realized that it was trading at
$32.70 and being crossed down to $32.50. I immediately went short when the
specialist dropped his bid, the inside quote went to $32.30 by $32.40 and large
offers remained in the book. MCD continued to trade down to $32.00. It found
support there and bounced up to $32.20 a few times. When a large offer appeared
on the inside quote I looked for an entry point to get short once again. MCD
sold off to $31.60, but I had already covered my short at $31.80 and $31.71. The
reason I covered my short was that MCD was approaching an extremely important
support level and I wanted to lock in my profit. The 200-day simple moving
average is at $31.46. MCD’s previous two-day lows were also around this level at
$31.48 and $31.55. Due to this support area, I wanted to lock in my profits and
be prepared for MCD to bounce of off this price level. Immediately went long at
$31.66 and sold out at $31.85. MCD rallied up to $32.00, but then sold off
during the last 20 minutes to the day low and close to its 200 day sma. I was
unable to take part in this last sell off in MCD because the sharp sell off
never presented a good entry point. I have attached a few charts of MCD to
demonstrate what I was looking at during the course of the day as well as what I
will look for in MCD Tuesday.

Look at MCD’s daily chart below and the support levels set up at $31.50.

Other stocks that I will be looking to be active Tuesday are Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating),
as they will announce earnings tomorrow before the opening. Chesapeake Energy
(
CHK |
Quote |
Chart |
News |
PowerRating)
came in with earnings after the close today and was trading down .46 in after
hours trading. Look for other energy stocks to be active as well, like ECA and
VLO.

Michael Kestler is a
full-time professional trader and managing partner for Evolution Capital LLC., a
proprietary trading firm. Mr. Kestler specializes in intraday trading of NYSE
listed stocks. Before founding Evolution Capital LLC., Michael began his career
on the floor of the CBOE. Mr. Kestler was previously a Mid-Cap and Nasdaq Market
Maker.

www.evotrading.com