TUES. OCT. 21- Compression Of Time Horizon In Trading

An added type of trade many day traders have been doing in recent days has been ostensibly a hyperspeed scalp. With the rapidity of the market moves and typical patterns of news factored in to the market (or not depending on who you speak to), different types of trades are creeping in for day traders as the VIX eclipses 80. One of these is to trade the major trend of a stock after a pretty significant countertrend move- particularly if there is a reason for the major trend. Let’s give an example in English- Gilead (GILD) posted great earnings after the close on Thursday. The stock traded up 4 ¼ points by mid-afternoon. From 2:15-2:25PM, the stock broke almost 1 ½ points from 45.15 to 43.75. Suddenly, a reloading bid came in at 43.75 and the Dow/NASDAQ began rallying well off of their lows. In this case, it is good to take a quick shot buy buying GILD around 43.78-80ish with an out the instant 43.75 bid left if it did. The stock was still well up and many shorts would use the opportunity to cover. So, basically, one would be risking about 8 cents to make 30-50 cents in a bounce with the odds in favor of said bounce. It is the type of play we should all be looking at as the simple momentum game is much harder to play in the afternoons in particular when the market is gyrating on no particular news. Thus, focus on new lows and new highs with stagnation, but if you get one of those types of deep contra-moves within a major move, it is something that one just has to pay attention to at this point.

Markets were mixed in Asia overnight with prices higher in Tokyo while down in Hong Kong yet universally higher by about 0.5% to 1% throughout Europe. Futures, however, are down state-side with oil down as well. Thus, look for some profit taking on the open followed by a lot of choppiness. There will likely be a continuation of yesterday’s rally at some point today, but the strength seems to be capped today by the ceiling on oil as well as mixed earnings guidance.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

MPEL- up in a weak casino group yesterday; could be continuation buy thru 4.60

POT, COP, XOM, DVN, RIG, SLB, MON, APA, NOV- among others, very very strong oil group yesterday; looking for A-B-A2 depending on oil’s direction

AXP- great earnings

BIIB- good earnings

COH- good earnings

MMM- good earnings

FRX- good earnings

Bad-

AMAG- down yesterday on FDA concerns; would look to short thru yesterday’s low of 31.30ish

DDR- very weak; 13.85 is multi-week low. If stock breaches that level, likely a good short

TXN- missed earnings and warned

NFLX- in-line guidance

SNDK- terrible earnings and no comment about the 26 dollar a share offer on table

MGM, LVS, WYNN- all weak yesterday; looking to short thru yesterday’s lows in all of them

BLK- poor earnings and cautious comments about future

DD- terrible numbers

LMT-bad earnings

WU- bad earnings

MAN- bad earnings

FCX- missed its numbers


Earnings list:

TUES OCT 21 BEF

AKS AME AXE

AVY BIIB BLK

CAT CE COH

DGX DD EAT

FCX FITB FRX

GNTX JEF KEY

LXK MAN MICC

MMM MNI MTB

NCC OMC OXPS

PCAR PCP PFE

PNR RE RF

SGP STT SWK

SY UAUA UNH

USB WAT WU




TUES OCT 21 AFT

AAPL AMLN BRCM

BSX CENX CERN

CHRW CNI CREE

CRI CYMI EW

ILMN INFN IVGN

NSC PNRA PPDI

PTV QLGC SIAL

TCO TMX TSFG

TUP VMW WCN

YHOO




Good luck today.

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