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.