Be Selective
Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating). The company that
just may give some legs to this beleaguered market. Despite offering a pro forma
earnings report (I just paid my pro forma mortgage and car payment last night,
lol), it appears as though Wall Street really liked the number. Given the
reaction afterhours, it is tough to argue. Since I am no expert at analyzing
earnings statements, I will go with the flow until further notice. It will be
interesting though if this is one rally that is not immediately sold into like
all the other ones in the last few weeks.
If the rally does hold, it may not offer many good setups intraday on an HVT
basis, or what I call a “gap and crap” day. If this is the case, be
selective or don’t trade at all after the first hour. There will always be
tomorrow.
I received an e-mail from a reader asking me to highlight some real-world
examples of my trades in action. As always, these
types of commentaries always seem to be the most beneficial to readers, so if
you do have questions, feel free to drop me a line so I can share the answer
with everyone. As a result, I wanted to highlight some excellent setups
from yesterday’s session. The morning trading was perfect, each small rally in
the S&Ps could be sold into, with immediate downside price action. I did 4
straight trades in Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) in a
20-minute time frame. See chart below.
Naturally, people may ask:
- Since the trend was down, why not just stay short, instead of getting in
and out?
Good question, however, I never know how far the price is going to come back
toward my entry price. I am just not that smart, and I will never let a winner
become a loser. I take what the market gives me. It is always easy to read the
chart after the fact, but think what was going through your head at the time?
More importantly, though, staying in the trade until the trend is reversed is a
completely different approach altogether. I trade on a very short time frame,
period.
   2.  The moves were for only 10-15 cents, why
bother?
Well, sure it is only 10-15 cents, but the trades never went against me, and
given that the liquidity on the stock was so thick, I was able to move 4,000-6,000
shares at a time. Do that four times in a row and you have a good start to your
day. Remember, the days of the easy 1/2 points are behind us, I am not too proud
to scrounge up dimes all day. We recently had a trader leave our organization
for that very reason. To her it was becoming too much work to trade for dimes.
That’s fine. Her heart obviously was not in it anymore.
Tomorrow I will again highlight some trades in action, but they will relate
to how I use KTNs in terms of entries and
exits. This will be a valuable lesson, especially with KTNs
for Stocks and Single Stock Futures coming out in the next few weeks.
I will keep you posted for a specific launch date.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 1088 | 1247 |
| 1076 | 1227 |
| 1063 (key on opening) | 1200 |
| 1046-47 | 1189 (key on opening) |
| 1036 | 1161-63 |
| 1032 | 1139-40 |
As always, feel free to send me your comments and
questions. See you in TradersWire.