With these 3 stocks, the trades will come to you

With the relief rally from Hurricane Rita,
(also, please let me say my prayers and thoughts are with the people that caught
the brunt of the storm) I was not expecting a lot of volatility. Usually large
gap openings result in a daytrading phenomenon called “Gap and Crap.” This type
of day is characterized by low volatility and relatively low volume.

Despite this market environment, I was able to come up with a number of
excellent trading ideas from my scanner. Walgreen
(
WAG |
Quote |
Chart |
News |
PowerRating) reported
earnings of $363.3 million, or 35 cents a share, below the average analyst
estimate of 37 cents a share. WAG opened at 41.75 and I immediately went short
at 41.65. I placed a .10 stop loss. A few seconds later I was stopped out at
41.75. The specialist continued to print at 41.75 and even with the rest of the
retail sector strength, WAG failed to rally and fill any of the gap from its
prior day close of 42.51. I decided to re-enter the trade when a large offer
re-appeared at 41.75 in the NYSE OpenBook. I finally was able to get the move
that I was looking for. WAG sold off to $41 and my trailing stop took me out at
$41.20.

Inco Ltd [N)|N] kept showing up on the scanner as a 5-day and 52-week
high. I was able to take a long position in this stock a few times for a
significant gain. Let me walk you through on how I entered this trade. I first
placed a Buy Stop at 45.35, which was the 5-day high from 9/19/05. N traded
through my stop price and I was filled at 45.40. I got stopped out of this trade
at 45.30. N reappeared on my scanner at 45.40. Examining the charts and the NYSE
OpenBook, I realized that there was a large offer at 45.50. I decided to place a
buy stop to go long at 45.51. When the large offer was finally taken out, I was
filled at 45.52. I added to my position every .25 cents higher. Raising my
trailing stop by .20 cents with each additional purchase. I widened my stop from
.10 to .20 cents because of earlier stop-outs in WAG and N. I was ultimately
stopped out at 46.70 for a very nice gain.

This was a great example of a stock that just ground up slowly. Because the
indexes were all higher, (the Dow was up 78 points) I decided to stay with the
trade and go along for the ride. I feel that if the market was down 78 points,
Walgreen would have traded much better to the short side.

Another short that worked was in Caterpillar
(
CAT |
Quote |
Chart |
News |
PowerRating). CAT opened down
.42 at 58.50. This immediately came up as a day low on my scanner. I usually shy
away from trades like this, especially when they are in a .25 range, but there
was adequate resistance in the NYSE OpenBook for me to enter the trade. My first
fill was at 58.45. I added to the position at 58 and then again when CAT broke
the low from 2 days ago at 57.78. Once CAT traded below this price, I placed a
protective stop at 57.75 and ultimately got stopped out at 57.80 on the whole
position. Another thing that backed up my initial short was my news reader. The
news said that Citigroup had downgraded CAT. Although I did not enter the trade
on this news, it definitely aided in my short and allowed me to be more
aggressive on adding to my position.

Shares of Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) climbed 2.4% Monday after the aerospace company
reached a tentative agreement with its biggest labor union to end a strike that
idled its airplane factories for almost a month. BA opened up at 65.50 and came
up on my alert as a 5-day high. I immediately entered this position at 65.57 and
place a stop at 65.50. If you look at a 5-minute chart you will see that BA
rallied up to 65.95 before selling off the rest of the day down to 64.25. I was
stopped out at 65.65 for a small gain. I was upset that I was not looking to go
short when the price fell below $65.50. Once BA returned to the day low, I
should have been looking for the opportunity to short BA and for the stock to
fill in some of the gap to its Friday close of 63.20.