Tuesday, February 24, 2009

Tick, Tick, Tick!

The market was obviously strong today.  The RKH & XLF were up 13% and 12% respectively.  There were a few tells that the market was headed much higher.  Market rejecting the overnite low early in the mornning and the gold sector being weak all day. 

However, at 1pm i saw something that basically blew me away.
I look at the 5-minute Tick chart of the NYSE stocks.  ($tick) on esignal.  There were multiple times when the tick traded above 1200.  Wow!  One time the tick nearly hit +1600.  I blurted out that i haven't seen it that strong in 12 months.  When this happens, you need to pay attention.  I don't like to fret about technicals that much, but i did mention the TICK chart at this morning's meeting because it has been very beneficial as of late.

Does that mean that we will continue higher tomorrow?  I have no clue, but that is the nice part of being a daytrader. 

Monday, February 23, 2009

Bette's words of wisdom

Congratulations to Bette Lockhart for finishing in 2nd place in the CNBC million dollar portfolio challenge.  Here are some words of wisdom from the Arizona consultant.  (all quote paraphrased from her interview on CNBC)

  • "I didn't pay that much attention all day"

  • "I do not know a lot about currencies"

  • "Do what you think won't work"

  • "Do opposite of what everyone else is doing"

I'll let you interpret/use the advice as you see fit. 

Thursday, February 19, 2009

Placing your bets

A quick poker/trading analogy.  For those poker players out there...a good, or even average, poker player does not go "all in" on every hand.  The good poker player waits for the odds to be in his favor and then pushes his chips in.  As short term traders at Trading RM, we have been experiencing selective trades that are great in 2009.  But much of the day we would be better off "folding."  I am continually fighting between what I want to happen and what is happening.  I am working on putting my chips in the market only when I believe I have good odds...however frequent or infrequent that may be today. 

one off vs crowded trades

The past few weeks have shown us the need to be selectively aggressive.   The best trades have been stock specific, without extrapolating anything regarding sectors as a whole.  However, each day throughout the day there have been opportunities that present themselves as profitable set ups. 

Yesterday, while the whole world was looking at DE puts on the open (including myself) and fighting a crowded and difficult trade, UPL was steadily going down.  A few traders on the TradingRM desk were involved, and in a matter of minutes were booking winners and moving on to the next set up.  These are the trades that "feel" easiest and produce the best results.  UPL was highlighted on our morning worksheet, and a quick examination of its intraday chart yesterday shows the steady decline it had off the opening bell.

The same can be said for LDK or HPQ today. It is important in this market environmnet to take these trades for what they are: individual trades and no more. Yesterday's action does not determine todays right now, and an individual name is not justification for a whole sector.  Until the market shows us otherwise, this is the approach the will keep us profitable.

Wednesday, February 11, 2009

I would describe the current trading environment as range bound however we continue to see several great trading opportunities each day.  At Trading RM LLC, we are focused on being selectively aggressive.  This approach allows us to be patient while at the same time looking for opportunities to get aggressive.  Today several of our traders bought AYE Feb 30 puts and profited from the move from 32 to 28.  (see chart below)

We will focus on being selectively aggressive until the market tells us otherwise.  The S&P is in a range of roughly 804.47 to 877.86 (S&P cash levels).  We will look for a decisive move through one of those levels to signal that it might be time to trade with the breakout.

Tuesday, February 10, 2009

Quick observation

Below I have posted a daily chart of the SPX.  It seems every out sized green bar is followed by an out sized red bar...and vice versa.   This is no expert technical analysis...however I am seeing/experiencing similar patterns on a short term/intra day basis. 

My best trades are the ones I take off as the market/name accelerates one way or the other.  My worst trades are when I am chasing or saying to myself: "this move is going further." 

Video interpretation of the S&P:

Sunday, February 8, 2009

We have discovered an issue with Firefox users downloading our morning worksheets.  I'll will post pictures and a snap shot on the blog today.  We will have the issue worked out shortly. 

Our Trading RM oscillator is still flat lined.  We are having success focusing on name specific trades over sector trades.  We are looking to take moves as opposed to adding after moves.  We are finding plenty of profitable opportunities.  These opportunities are presenting themselves differently than they did last fall. 

I am going to begin highlighting daily changes to our morning worksheet in red.  We have seen the short term trend in the major indices move to a short term uptrend.  However we are aware of the larger range that these same indices are in.  The important data points continue to be the ends of the larger range and 850 on the SPX acting as a support AND resistance.  Friday we saw almost every sector participate in the rally. 

Thursday, February 5, 2009

February 5th review

Today presents a good opportunity to post some of the indicators Trading RM views and uses from the beginning of the day to the end.  First I have posted our 2 morning sheets that were avilable on our website this morning.   These morning sheets are available to all those who register at our website every morning by 7am cst.   

The first one shows a lot of key information - the most important from today (in hindsight) is highlighted in red. 

  1. We noted under what's working now that we are experiencing range bound trading.  Not adding to shorts at lows and not adding to longs is prudent.  This was especially important early this morning when we began the day with a sharp sell off.  Anyone focusing only on shorts missed many great longs.  More later. 
  2. Also under whats working now we noted that both longs and shorts are paying.  Again, this was important when WFC & BAC were selling off hard.  Our desk did a good job of not being all short. 
  3. Under important data points we have noted for a few days that SPX at 850 is somewhat of a "magnet" level. 
  4. Under the trending section (arrows) we changed the KOL and MOO etfs to a short term up trend from and short term sideways trend.  We saw out performance today from both sectors: POT +6.5, BG +6.5, MOS +2.35, MON +3.28, CLF +2, BUCY +1.2, JOYG +1.2

Note: the indicators on the morning sheet bring our attention to a name or sector, we do not blindly buy or sell based on any one tool we use. 

Our second morning sheet is also available every morning for those who register at our website. 

Some of our traders use this sheet in addition to, or in lieu of, the above morning sheet.  One key thing to point out is the fact that 4 of the best longs of the day were mentioned on this morning sheet as possibly being in play for the day: GOOG +10.72, AKAM +2.56, MA +19.69, GS +4.9, BG +6.5.  This is on the right side of the sheet.  This sheet also noted the 850 SPX level.  

As I mentioned above, the worksheets do not tells us what to trade, but draw our attention to the name.  For example BG is noted as having worse than expected earnings.  Yet Trading RM ended up trading it long today.  Below shows the set up we saw for BG long, along with some others. 

The third morning worksheet is the Trading RM Oscillator.  It has shown that we are in a range bound - take moves - trade long and short environment.  This was true/helpful today. 

We opened the day with a somewhat panicky sell off in the market and select names: (BAC, WFC, DLTR, etc...)  Many guys on our desk were able to react quickly and catch DLTR, WFC, and BAC to the downside.  However those who were focused on the shorts missed the greater opportunity of the day... on the long side.

When the SPX was on its lows we saw several great long set ups.  I will let the charts speak for themselves.  Note the boxed in areas.  Note how several of these names were performing during the somewhat panicky sell off. 

Sunday, February 1, 2009

The Trading RM Oscillator slope is flat to slightly down.  In our short term trading we are seeing select trading opportunities in individual names.  We will continue to monitor the Trading RM Oscillator as well as the broader market at resistance levels. 

For those interested, a more in depth explanation of the Trading Rm Oscillator will be available this week to those receiving our newsletter.  To sign up for thenewsletter please click on the link in the left margin of this blog.   

Also please register at www.tradingrm.com to view the Trading RM Oscillator, along with our morning worksheets daily.