Daytraders corner   102 comments

I was quite surprised by yesterday’s action, although I should have anticipated it. I expect the markets to tank next week, so why wouldn’t the professional traders do the same, and get out this week? The real “tell” to me was the little lift at the end of the day yesterday. When the market lifts at the end of a bad day, that tells me the short positions are increasing. Expect more days like yesterday for the rest of this week.

Futures are down slightly right now, as the markets anticipate the weekly unemployment and GDP reports before the markets open. However, I still expect the market action to head south. I am watching the S&P 500’s 20 day moving average at 1387 as the bottom if we get a big drop today. However, I think we will only end up with a small drop by the end, with 1404 (the 10 day moving average) being a likely finish.

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Posted March 29, 2012 by edmcgon in Daytrading, Market Analysis

102 responses to “Daytraders corner

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  1. “When the market lifts at the end of a bad day, that tells me the short positions are increasing” Tells me kinda the opposite-market goes up because people are covering their shorts-meaning they are buying position back thus market goes up. Means they are taking profits and do not want to risk holding positions overnight……. What that means for market direction -I have no clue………..

    • But when you have enough short-buying at the end of the day to actually lift the S&P several points, that means there are a LOT of shorts out there. While it could change today, I don’t think so.

      Also, keep in mind that some of that short-covering is from inverse etf’s.

      • Ed, short buying is to me a misnomer. When you short a stock- you borrow that stock- when you get out of that short position you “buy” the stock. Ex. 100 X @ 30.00 shows up in account as -$3000.00 stock goes down to $29.00 shows in account -$2900.00 you “buy” stock for $2900.00 and whoever lent you the stock forks over the $100. You never owned the stock. The buying process is what makes for the fast jumps up in market -when everyone decides it is time to bail on short positions the “buy” positions back which adds to volume-thus the moniker short covering rally. Probably the only way to learn how this works is to have a margin account and short a stock yourself. It is why those support and resistance numbers are so key though. Everyone buying theei position back is what makes for the bounce or the reversal.

      • I read you can’t short every stock, someone has to take that bet.

  2. Glutton for punishment JRCC 5.07

  3. nugt 15.27 sell15.57

  4. SCHA @ 36.90

  5. It is nice to see that CNBC has got the really important news as top billing. It is nice to know that the real market mover in Spain is that the hookers have cut the bankers off of their noon quicky. Now I am sure that when this gets settled the Spanish economic wows will subside. It shows how astute these business news people really are coming up with such critical news articles.

  6. Help, need a day trading lesson. When a stock drops 12% in two days does one continue to believe the day trading volatility or charting will bring the stock back up 12% in another two days or do you begin to think the underlying premise of which you bought the stock was bad?

    • Tom, which stock. In a true “daytrade” strategy you would have cut and run long ago 1% or less. but since I trade in a cash account-I can’t just switch to short from long when things turn to make up for loss. I will assume we are talking JRCC- I play range. the range right now is 5 -6.3 we are at the very bottom- I have a boatload-If needed there is a button on machine and pain disappears, we will call It SRB the stress relieve button. Until it is proven to me that we will never go back up I will use that button before the sell. Gold- it is selling because India raised the tax 2%- does anybody believe this probably more seasonal than that.

      • SRB to make it clear is the off button. πŸ™‚

      • I like the SRB button philosophy. The stock in question was NUGT not JRCC (for me is closer to a – 16%).
        More questions: Since you are playing a range and in the case of JRCC it is $5 – $6.3 do you have a predetermined price to sell at or do you look at it on a five minute chart as it closes in on your (avg.) buy price and make the decision to continue to hold or sell based on the the chart?
        One of the reasons for the above question is SCO is closing in on my buy price so I am trying to decide to I sell at the buy price or hold for my original sell price (a profit number rather than a break even).

      • NUGT- that one I do not know as well but have a bunch. I do not believe that all the miners are going out of biz tomorrow- price indicates that though. I think it is a matter of rotation- the movers and shakers buy -buy and buy at the bottom during these selloffs- LOGIC???- if economy supports market move- is economy going to continue moving along without services miners provide??? I will stick with NUGT and work around it. SCO now I have worked around this for a while. we moved out of 98-103 range and as you know have stayed there for a while- what have the headlines said- well it depends on who you read- $200 oil? or the Saudis saying we can’t even find buyers for oil we have got- our storage is full round the world- or the bummer and his people saying we can do nothing about prices- but buy the way ignore the fact that our storage is overflowing. You have to decide who to believe. Now there are the facts somewhere in that very muddy pool of info. Today though the French said they were thinking about a release from reserve- no the vast quantity of oil the french are talking about is like a guy peeing in an Olympic sized pool in the Arizona sun, in fact that guy would probably have more effect on pool than said french oil release. All this long winded response-mike get to the damn point- I will short this bounce and it will bounce back out of range- lets say to 104.80 cause I think the facts say as they always have oil should be in the 90-100 range. All guess’s I might add. Hope that helps

      • Mike and Tom – I agree with you Mike on the big boys cycle in and out of sectors. This is why I bought some BTu. The issue is the time to reap the gains may be a couple months or even a year. When stocks or sectors are out of favor – they can be out of favor for some time.

        I agree, good companies turn around, but you will need time and patience to wait.

      • Art- I agree 100%

      • Mike, you can’t agree because I agree with Artemusga. I even used to subscribe to an Ameritrade program that provided information on the flow of dollars into and out of sectors and subsectors. I am a firm believer that when everyone is headed to exit is not the time to buy but the time to buy is when everyone has decided to re-enter a sector — be first or be dead.

  7. MIKE, I still have a large position in SCO,,,today’s price is getting close to break even. Your thoughts

  8. I’m hitting the SRB on NUGT. Sold it at 15.15 for an 8.62% loss.

  9. For you that are in SCO the pit closes at 2:30EST Which is 11:30 PST (real Time) watch what it does-forex chart from 2-2:30 the strength of that move should give glimpse of where we are going-Why?- short covering- people that are short get nervous and drop their positions which should make oil go up- if this move is small oil will probably bleed off some more- Just something to watch. GOOD luck I will be using my SRB button soon.

  10. Sold my sds from tuesday, in 14.89, out 15.40. Sold my GLW from couple weeks ago for 1.5%. Wanted to get back in when it dipped, but too busy and missed it. Holding JRCC down 15%. Also bought XCO, last week down 11%. Trying to force myself to hold these two for a couple years with the expectation of money going back into coal/natgas.

    • I would not play JRCC long term. For that purpose, I might try BTU, around 24.

      • I agree with georic, though I think you would be alright to nibble at BTU at these prices. It could very well go to 24 or bottom here. It is currently at its multiyear low. When the world was ending in 08/09 and dogs and cats were seen sleeping together, the price only made it down to around 17.

      • Also just checked the May $29 call prices on BTU and they are at $1.74. Yesterday I recall the same option price being about $1.65-70 at this price. Seems BTU is reaching a bottom if options are higher today than yesterday. Granted this isn’t much of a price difference, but it is one of the things that I watch from time to time.

      • I hear what you guys are saying, but hope you’re wrong.

  11. Is finally perking up and watching the market again. If this red keeps up, there will be some opportunities coming. About damn time!

  12. Any one, has Trader been spotted recently?

  13. Wow- I thought coal was getting punished but look at Nat gas- They did a reverse split a while ago UNG and it is headed right back down to where it was before.

    • That is a really cool graph on a 3 day chart. Big steep peek right when I got my a$$ kicked on nat gas and then the slow bleed to today.

    • A very large majority of investors and natural gas companies believe the price will continue to drop before it rebounds. Look at the price of UPL which is one of the better run natural gas companies. Yes, I own it and it is the only pure natural gas equity that I still own — have decided to ride this all the way down and hopefully back up in two to three years.

      • That is one reason I like ETP. They get paid to move nat gas regardless of what the price is. As demand increases, their revenues increase. Interestingly enough, when coal dropped because everyone is going to be forced to switch to nat gas plants, ETP kept falling too. Seems that if people really believed that we are moving from coal to nat gas, the pipeline purveyors that move it would have skyrocketed. At some point that will be true, but not today. It is going to take a long time to make that transition.

      • w_seattle, I also own a gas/oil line company. Has anyone read or heard discussed what would happen to these companies if all the storage facilities are filled up later this summer (a possibility, almost happen last summer after a very cold winter). If there is no storage available, then it seems to me no gas can be moved except for that going directly to a user such as an utility or manufacturer.

      • Tom I haven’t heard. Hopefully the price would drop and give me an opportunity to pick up another half position or so. I’m actually anxious to get another postion and will likely start buying in mid 45’s.

    • I quit playing it- never could get on right side. I think it is the answer to our energy future- but do not think current mindset is to find solution- it is to stay on the impossible dreamer path………. Hell Al does not care what the mileage in his Lear or Limo is getting……………

    • I compared on Bloomberg the graphs of the 3. Starting in April 2009 with value 0, UNG is now -83; UPL is now -37; ETP is +65.
      Many people share w_seattle’s opinion: very high P/E. Too late to join the battle?

      • I would wait for a better price on ETP, certainly the low 46’s. On the other hand, I think this is a reasonable price. For me, it is a good place for a chunk of cash to sit and generate an 8% dividend. Not a spectacular return but good enough and there is the possibility that it will rise into the 60’s. If it stayed at 46 for the next 10 years, it wouldn’t make me change my decision to own though. It’s purpose in my portfolio is a cash generator with a potential upside.

      • I am with you, w_seattle.

  14. Anyone thinking AGQ in the $46 area?

    • Looking at it. To me silver and gold haven’t decided what they will do, up or down. Stil waiting. I’m not a daytrader, so more looking to the bigger waves. Will silver complete its inverted H&S it started in octobre? Or will the decline continue?

  15. I just can’t get enough of NUGT, in for more at $15.01.

  16. Out of SCO at $35.00 with a 0.85% loss.

  17. For anyone who likes NUGTat this price, but would rather not manage the volatility, you might consider Gold Corp {GG}, or some other mining stock. I just bought some GG to hold long term.
    Also, remember that β€œbeta slippage” can eat away at leveraged ETFs like NUGT. I’m holding some NUGT, but will not keep it long term.

  18. Something to look at- as everyone figures the logical (fundamentals) of the coal industry- JRCC the most erratic of the bunch- down .68% pcx -4.844% anr _1.48 ACI-2.8% BTU-1.07 What is my point- the same as always- the shearing season is close to over- don’t worry though they will sell you these up at the top of their range with the the smile of a fly by nite car salesmen. that is when all the proof and numbers will come out pointing you to the moon.. This is when the shearing the “sheeples the sequel” starts again. FEAR and GREED are the only things that really matter here- somehow you have to ignore the noise. Not EASY!!!!!!!!!!!!!!!!!

    • Please Mike, do not forget some forlorn foreigners strive to understand what you mean. Could you make it crystal clear?

      • Sorry Georic- My point is that I will agree that coal has problems- but the nature of the market is extremes-bubble-crash is what we use to describe these extremes. The hedge funds-ETC. depend on our emotions to make money. They convince us to SELL low and TO BUY HIGH. This is how they make their money. Coal- all companies are running out of sellers- My question is- with all the selling- who do you think is buying? My point is when the most erratic of the bunch stops going down we are close to finding the point where the selling stops. Go back on the charts to the last time we had these lows on coal and what happened next and you must remember- I could care less about fundamentals-just a fancy word for lies to me. Also do not feel bad, hell I barely understand my self…………. do not hesitate to ask though. πŸ™‚

      • Thank you Mike!

    • Mike, it appears to me that the big guys are shearing each other. JRCC is 88% owned by institutions. ANR and BTU are approximately 75% owned by institutions.

      • But Tom, what is definition of institution- Mutual fund? Teachers Pension fund? they do not tell you that do they as they pass them back and forth????

      • Mike, all I know is of the 3 companies I wrote about approximately 80% of the shares are owned by Big Guys (hedge funds, teacher pension funds, government pension funds, mutual funds, etc.). When the price of these equities have fallen approximately 70% in a year, then at least some of the big guys took a hit which doesn’t produce profit for them and with a lack of profits they lose business. And I believe most companies no matter what business they are in rely on profits to stay in business. What I am saying is any way you slice the pricing of coal equities when 70+% is owned by institutions and the price falls 75% then I believe someone took a hit to their profit.
        Do I think coal will rebound someday — yes. Do I believe coal will rebound to 50% of where they were 12 months ago in the next week — no, in the next month — no, in the next three months — no, in the next year — I hope (and if they do I will have sold my ANR and BTU). JRCC I bought as a day trade (not long term) and when it bounces back 10% I will be out with a small profit.

      • Tom, if your trading platform allows, take a look at time and sales. Tons of 100 share trades. Alot of little players in JRCC.

      • Tom I guess my next ? would be what is the overall institutional ownership of stocks- not just one sector. Which sectors are owned mostly and which least. next ? would be why and how much does it change? Then the suspicious side of me asked who is the buyer at top-here is where along with bottom feeders is where the real answers are………… Also there is a huge difference between mutual -teacher pension and hedge funds. Mutual fund by nature buy high sell low- teacher fund-Well I will not go there. hedge much different animal- they require volatility to profit and are large enough to create it.. I am not saying coal is a good investment- I do not know nor care- I say we are playing bottom of range. odds are in my favor there is more upside then down.

      • Mike, at today’s prices I agree there is more upside than downside and have said so several times in the last week when discussing BTU and JRCC.

      • Tom, there is one big difference in the “Big Guys”. With pensions, nobody running them cares if they are up, down, or sideways. Pensions rarely ever switch funds. They may add a new one here or there, but rarely leave a fund company for another. What the fund companies care about are the fees they generate by having dollars in the fund. The fund companies use these pensions to offload the stocks that they don’t wish to own anymore (see the Goldman resignation letter and the muppets). Now in general they want to show a positive return, but they aren’t fighting to get the best return for the pensions. That is guaranteed money. It is coming in every month regardless. I am also sure that there is some shearing of the pensions by creating situations that take advantage of automatic reallocations that have to occur. Then there is the shearing of the 20% that is not institutional. Add that up and you have a hell of a lot of wool on the floor.

        The true test is when stocks have barely moved over the course of a year and bonuses at the hedgies and banks are booming, they only made that money on volatility. Volatility can only occur when people are buying and selling. We can see who is winning the battle by the bonuses they are getting. Somebody has to be forking that money over to them. Pensions, 401k’s, and IRA’s are the only sources large enough to cough up that kind of dough. This is why many top managers say that if you don’t have the ability to trade stocks for yourself, you should just park your money in an index tracking fund and leave it alone. Too many games, fees, and rip offs on the regular funds.

      • Sorry Tom I do not mean to repeat-just stream of thought from a buzzard brain. πŸ™‚ More important is first part of post- what is average institutional ownership in market as whole compared to??

      • I have also said I don’t believe coal equities will return to their price of a year ago in the short term (0-3 months) or the mid term (3-18 months). I do believe the price will return in the lonnnnnng term if for no other reason than inflation of the dollar.

      • Institutional ownership ranging between 5% and 65% – Institutional investors are organizations that trade large volumes of securities. Percentage institutional ownership is the percentage of outstanding shares that are owned by mutual funds, pension plans and other institutional investors. Most well-known stocks have at least 40 percent institutional ownership. Typically, upwards of 70 percent of the daily trading on the New York Stock Exchange is on behalf of institutional investors. Peter Lynch uses the degree of institutional ownership to gauge market interest. His contention is that stocks with a relatively small level of institutional sponsorship offer the best return potential. When ‘Wall Street’ analysts identify a stock and institutional money begins flowing in, price growth can be dramatic. Wikipedia

        Mike, good question on institutional ownership. A couple of weeks ago I asked a question on a stock that 95% of the shares were owned by institutions. If I have a free minute this evening I will do a little more investigating because as I said, “good question”.

  19. I sold in due time a AUY April put 15$/.16. Shall likely get called. So be it: I like AUY. If not, the premium will be equivalent to an annual 9%.

    • I am in AUY as well. I own the stock and sell covered calls on them.

      • The day trading you guys enjoy so much is definitely not my piece of cake: I get stressed, sleep bad; and, on top of that, or for that very reason, I do not master the techniques necessary for that trade. On the other hand, I find playing with calls and puts just fine. That’s what I’ll do with AUY.

  20. Sold SCHA @ 36.99 + 14 cents
    missed posting an additional buy today that brought wt avg to 36.85

    • 0.38% ain’t bad at all for an unleveraged daytrade, especially considering you paid no trading fees.

      • Thanks Ed.
        Any time IWM drops more than 3/4% from the prior close, I’m pretty sure I can make money with SCHA. Since it’s almost impossible to pick the bottom, I usually average down with smaller additions.

  21. Went to the shop for a while- bounce in oil was very weak. Lemme see the price goes down $5 a barrel equates to about 1/2 cent at the pump- no sarcasm here. move down sure does not have much steam on the market though????

    • Hey Mike, great call on NUGT and JRCC today. You picked the bottom.

      • No way that Tom he beat me- he has a great price- you have to be crazy to do what I do and I am here to tell you that I am definitely highly qualified-just ask Kathie!!!!!!!!!!! πŸ™‚

  22. See you just go out-make some sawdust come back and the coal and mining industry is saved again……………… πŸ™‚

    • Jrcc is on a tear.

      • So I’ve been buying JRCC with Mike all the way down (5.95, 5.71, 5.59, 5.45, 5.07). It’s been a little nerve racking. Feeling better that it’s back up to 5.35. Trying to decide if I should sell the 5.07 position @ 5.35 before close.

      • Hell you are as crazy as me I sold one 5.07 position I will hold what I still have. which is a bunch……..

  23. sold one position in jrcc for 5.35 and one in nugt for 15.90- have plenty left…………. ye ha feel kinda like one of those bull riders at the rodeo-rough ride………..

  24. Great trades-butttttttttt anybody got some spare tums?????????? πŸ™‚

    • still doing taxes, when i finish, I’ll send some over. I bought a 10 lb case on amazon so there should be a couple rolls left.

    • Mike, when did buzzards especially an ol’ buzzard begin requiring tums?

      • You ever seen what buzzards eat- they can smell something dead 25 miles away. Just makin light of the fact -buy fear sell greed- back to the basics of post it notes. hey I come here to learn, get a few laughs- today all of you-it was fun. Stress hell I had 5 teenagers in the house at one time-this aint nothin compared to that!!!!!!!!!!!!!!!!!!!

      • Mike, 5 teenagers is beyond tums. You’re talking Jack Daniels now…

      • Ed, nothing is worth drinking Jack Daniels. I would drink battery acid before that stuff. Sorry, bourbon snob here. πŸ™‚

      • You are not telling me anything I don’t know- my hair is white and it is all their fault- I was normal before that. πŸ™‚

      • w_seattle,
        Sorry. I should have said, “insert preferred hard liquor of choice here”. πŸ˜›

        Mike,
        Did Kathie read what you just said? If so, has she quit laughing yet? πŸ˜‰

      • Now If I did not know better…………………….. πŸ™‚

      • No kidding Ed… Normal compared to what? A cockoo? πŸ™‚

    • Ed
      My preferred hard liquor of choice is Scotch.

  25. Go coal! I went to a meeting and came back to this. One sell triggered on my JRCC @ 5.30, bot @ 5.08. BTU calls soared, but am holding those. Hopefully they don’t tank again tomorrow! Hard not to sell when you’re up 45% in a day, but am looking for a double on these. I have a feeling that I will be hiring Kathie to drive over and put a few lumps on my head tomorrow. πŸ™‚

  26. Congratulations to you JRCC and NUGT traders. I didn’t trade either today. Didn’t want to add any more.

  27. Just wanted to be the 100th post today.

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