I’m watching for good entries in these 5 stocks

The first trading day of
the 4th quarter was a relatively light trading day.
I believe the
markets will remain relatively flat on lower-than-average volume because of
anticipated earnings reports and religious today and next week.

JP Morgan initiated coverage on Southwest Energy
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this morning
with a “buy” rating. This fired up the natural gas stock to another 52-week
high. The stock opened at a new 52 week of $75.00 and reached a high of $83.40.
The stock was also helped by a strong surge in option call volume on the CBOE.

SWN dominated my 52 week high scan all day. Although there were a few times I
was able to sell SWN on an extended 5-minute chart for a quick scalp, I found
that my best trades were always the “A” trade with the trend to the long side.
The specialist seemed to be holding market orders for a long time so I tried to
use ECNs to my advantage and lock in profits. This cost me some profit to the
upside but I was patient and found that SWN would come up with another great
entry point to go long.

Affiliated Computer Services
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came up on the stock scanner as a
new day low on very large volume. I realized that it was breaking major support
levels in the daily and 5-minute chart. Even though ACS opened higher and sold
off down to $54.00 I did not have enough confirmation to get short until a large
offer showed up in the NYSE book at $54.10 and then walked down to $53.50.

By reading the tape you definitely could identify a large seller in the stock.
Once ACS broke its previous day low at 53.20, I looked to sell short again. ACS
seemed to be in a steady free fall for the first 20 minutes of trading and I
eventually covered at $52.80 with a trailing stop.

I bought ACS for an oversold bounce, but a large offer immediately forced me to
exit the position at market. I was unable to get a sell short filled anywhere,
so I missed the move from $52.80 down to $51.80.

I again went long ACS at $52.00 and this time was able to take a nice .40 cent
move to the upside. I am always cautious holding on to a stock that has just
sold off incredibly hard. I try to lock in my profits by using a tight stop or I
scale out of my positions as it pushes upward.

Once ACS approached its day low, I looked for an opportunity to get short
through $51.60. This was an excellent trade that worked for a .40 cent once

Tuesday I will look for continuation in ACS as well as SWN. I will be prepared
to trade either of these stocks in both directions. Also look for Ford (F), and
General Motors (GM) to be active since both companies reported lower sales for
the month of September.

Keep an eye out for The Mosaic Company
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to break the $15.00 mark
to the downside or fill in the gap between 15.40 and $16 to the upside.

Mike Kestler

Please e-mail with any questions
you might have at


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