Do you scalp? Try these 4 stocks
The market was active today in
spurts. The markets and stocks would consolidate in narrow ranges for
intermittent periods. And then there would be a flurry of activity and I would
be extremely active for about 15 minutes. Then back to narrow ranges.
I found myself waiting most of the day as
everyone is positioning themselves for options expiration. There was very little
follow through and you had to be happy taking .10 to .20 cents per trade.
During the early morning hours I was trading
American Standard
(
ASD |
Quote |
Chart |
News |
PowerRating), Guidant
(
GDT |
Quote |
Chart |
News |
PowerRating), and Interpublic Group
(
IPG |
Quote |
Chart |
News |
PowerRating).
I traded them primarily to the downside as well as 1 reversal to the upside.
GDT was affected by comments from Johnson and
Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) and the merger the two companies have been planning. JNJ
indicated it was going to explore alternatives under the merger agreement. The
markets took this to mean that JNJ was going to pay less then the current agreed
price of $76.00. GDT opened at $67.15. I immediately bought for a bounce at this
price. I set a $67 stop to protect myself. I was stopped out at $67, but I
reentered the trade when GDT failed to break down further. This time I was able
to take .40 cents out of the trade.
Since the news was so negative for the stock
price, I was definitely going to be short if it approached the day low of 66.80.
I was able to get short at $67 on ECN’s and then added to my position at 66.80
when a large offer appeared in the NYSE openbook. The specialist took his bid
down to 66.50 and printed at this price. As soon as he printed size at $66.50, I
entered a market order to cover my short positions. I was able to get most
filled at $66.50. The remainder slightly higher.
Around 12:45 PM EST, there was a sell off in the
market. During this time Exxon Mobil
(
XOM |
Quote |
Chart |
News |
PowerRating) popped up on my scanner as being
crossed down. I mentioned this scan last week in Altria
(
MO |
Quote |
Chart |
News |
PowerRating). This situation
means there is a large offer that is currently below the bid. When these occur
on a large cap NYSE stock, it means get ready to trade.
In this situation, the XOM specialist had dropped
his bid from $57.90 down to $57.00. The specialist then printed a block trade of
27 million shares. Obviously some body needed to execute a large sell order of
its XOM shares. I traded XOM much like I traded GDT. I immediately bought the
bounce at $57.00 and took a quick couple of scalps.
Later on in the day the market began to sell off
and I sold XOM in anticipation of breaking its day low. This time I was able to
sell short XOM at $56.70 and covered at $56.55. When large offers began
appearing in the book, I sold XOM again and covered at $56.35. On a day when
stocks are trending in one direction and then consolidate, I try to remind
myself to take the profits. Remember you can always re-enter the trade as I did
but you can’t always get back a positive trade.
Some of the stocks I will be looking to trade
tomorrow are Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating). In aftermarket trading, MOT was crossed up .40 to
20.55. Look for MOT to break through $21.00 if the news remains positive. If
not, look for it a break of the previous day low at $19.81. I will also be
looking at GDT, XOM, ASD.
If you have any questions regarding day trading
please e-mail at
mkestler@evotrading.com
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