When news hits this stock, I will trade it

Frankly, the
markets did not provide a lot of trading opportunities

on Wednesday for my style. The indexes are relatively range bound and no major
sector trends up or down. A lot of up and down action without a trend. This type
of price action is difficult for me to trade. Even DNA after the first hour fell
into a relatively narrow range and edged higher without a lot of volatility.

Fortunately, the news reader saved the day again for me. About 20 minutes before
the NYSE close, the news reader announced information on Fannie Mae
(
FNM |
Quote |
Chart |
News |
PowerRating)
.

The report was that FNM may have new accounting violations. FNM immediately went
into a 9.6% free fall from $46.00 to a closing print of $41.71.

The 52-week low on FNM was 45.64. The culmination of bad news and FNM breaking
this support level caused an extraordinary amount of selling pressure. Much like
the DNA sell off yesterday afternoon I was able to take advantage of every down
move in FNM. Any time I tried to buy a bounce in FNM it proved to be at least a
.25 loss. Any time there was an opportunity to sell short FNM in the last 20
minutes it proved to be profitable. My only regret is covering my first short in
FNM at 45.10 for a .60 cent profit. If I had just remained with the trend it
would have been a much more profitable trade. On Thursday I will look for FNM
trade back up to 45.64 (old 52 week low) if the news proves to be just a rumor.
If the rumor holds true and there is a lot of selling pressure evidenced in the
NYSE OpenBook, then I will be looking to sell FNM at any opportunity that
presents itself.

On another note, I have a number of traders in my trading organization. Not
everyone in the organization trades the same way that I do.

I have always respected that there are many different ways to daytrade these
markets. In the next several weeks, I will describe some of the setups that my
fellow traders use to take money out of the markets.

Mike Kestler

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