Market overview for April 2

Today, once again, I had issues with eSignal application in the AM and late aftenoon just before the close. I missed the very first signal of the day (the first 15 minute bar). I had a bias towards shorting the market as we were gapping up right into resistance and last week's highs.

I attempted a low risk short trade (highlighted in the red arrow) as rejection of R1 in the SPY (and ES). However, I was stopped out for .50 loss on SDS long. I also attempted another short which also did not work and broke even on that one. It was time to step aside and look for entries to go long the market. My patience paid off as I got a signal to go long at around 1:15PM - so I shorted SDS, good for about .80 profit. I also scalped SKF long a couple of times but ended up with a scratch as the last hour was quite volatile - this is where one should stick to their plan! Financials were not very strong relative to the market, so it will be interesting how tomorrow plays out as the March unemployment numbers come out. We have again gone up too far too fast, so we'll see if the buyers will give this market a chance for a breather.

RIMM is on fire in the after hours and I almost took a trade long but did not pull the trigger. It was up over $10 in the late session. We'll see how it plays out tomorrow.

Good luck!

Market overview for April 1 - Roller coaster ride...

Today was a wild ride in the market. We started the day with yet another gap - this time down big, after the ADP unemployment numbers came out this morning. However, after the 10:00AM numbers came out, buyers came out with vengeance. The market recovered all its losses and quickly closed the gap and ended the day up 150 points - that's a swing of over 300 points from low to high. Of course, we had the last hour shenanigans messing with traders as well. It looked like we might reverse and go lower, but buyers emerged yet again in the final 30 minutes to push us into the highs of the day.

I had some issues today! Everytime there is a surge in volume in the market, my eSignal application freezes up! This has occurred frequently and only happens during high volume periods (like yesterday afternoon, this morning, and every time there is some news event - e.g. Fed announcements). It is driving me crazy and support has not been able to fix. So, having said this, I missed my first (and most important) signal of the day at around 10:15AM. By the time I saw it (after I re-booted my PC), the market had continued its move and I did not feel confident with the entry. Luckily, I was able to go short SDS at around 11:15 after the SPY bounced from the daily pivot - managed to squeeze about .70c from the trade. My second signal was counter-trend - but I took it anyway around 1:00PM and got stopped out on the SDS long. But immediately after, I got a long signal in the SPY and took a short in SDS. That was good for 70c and I was able to recoup my losses from the earlier call.


I also took some trades in SRS long (REITS were underperforming) and short, and POT short (twice - I was stopped out on the first and got the second one to work). My missed trades of the day were RIMM (which I highlighted on Twitter) where it was positive right from the get go in a bad down market, and APOL. Yes, the same APOL I have been blogging about all week!!! My short entry point was below 75, but it gapped way below that around 72 and I decided NOT to take the short! (You may insert expletive here _____ )! I'd like to know if anyone took the trade - which was good for oh about $8 from the open! This is a multi-day move in my opinion, so I'll look to short in the coming days.

I think it's going to be wild again in the coming sessions with unemployment numbers tomorrow and Friday, lots of headline news risk, and earnings season coming up.

Good luck and don't forget to stick to your trading plan!

How I use earnings in my trading, and a look at MON and RIMM

Someone said that the we have had the "largest three-week move in stocks since 1938". Wow - that's quite amazing. Does this signal the all-clear? I don't know, but I sure hope so. I would much rather go long than short, but I'll take my setups either way.

With earnings season coming up, I wanted to share some of my thoughts on how I use earnings along with chart setups to build a watchlist of stocks to trade. I am not a big fan of holding stocks into earnings announcements. Even though that's how I made most of my $$ a few years ago - anyone who remembers Forward Industries (FORD) and Dynamic Materials (BOOM) knows what I am talking about. I remember riding these for 200% and 300% gains (among others) - aaah, the good old days!

But knowing HOW to trade a stock prior and post earnings takes out the 'unknown' factor and gives you a much better advantage to trade. In general, I usually look at 'whisper' numbers for a stock that interest me at a site like EarningsWhispers.com about a week or so prior to earnings. Knowing if a stock is overbought or oversold prior to earnings, combined with analyzing the whisper number and then finally when the earnings result comes out, gives a trader many ways to trade a stock prior and post earnings. For example, if a stock is overbought into earnings, the whisper is below consensus, and the earnings are not good - definitely a very strong candidate to short after earnings.

Keeping in mind that we are in one of the worst bear markets ever, momentum type trades are almost non-existent (some exceptions include AMZN and NFLX). So I would definitely NOT be chasing any strength in this market (yet).

Looking at MON and RIMM, both are reporting earnings next Thursday. Like many stocks, both are over-extended in the short-term.

MON is sitting right around resistance at 87-88, with the 200MA lurking above around 90-91. I believe it is too late to go long here, and the stock is definitely primed for a pullack. I am expecting good results from MON and I believe a close above the resistance levels would push this stock back towards 100.






RIMM gave a warning back in February, and after an unbelievable run in January, dropped like a rock. So, even though the bad numbers might already 'baked' in, the stock is still overbought going into earnings and looks ready for a pullback. It is late to go long here, however, if the stock pulls back to around 40, holds and then cracks 46-47 again after earnings, then look for the gap in early Feb to be closed with a move back to 60.

Update on APOL - will be releasing earnings on Tuesday (thanks Crazycolo1).

Good luck!