Big Bank Fall Hard?

We were watching Bank of America (BAC) on Tuesday, expecting to see the stock drop, but a brokerage upgrade pushed it higher most of the day. The stock rallied before the east coast lunch hour, but could not hold up and finished the day at lows. The stock gapped down last Friday, after they reported earnings. BAC is breaking below the gap low and should break down once it can break the $17.00 price level. We see a possible drop to at least $16.00, if not lower. If BAC does not hold the $16.00 level, there should be nothing holding it back from a quick ride down to $15.00. We like this short in BAC as a day trade as well as a possible swing move if it breaks down and closes near lows.

Two of our favorite upside picks are ROVI and PALM. Check out their charts for Wednesday.

You can see these 2 picks, plus many more on our free daily watch list at http://www.todaytrader.com/watch.html You do not have sign up, just click on the watch list word on the left side of the page. No registration is required.

This is not a solicitation or recommendation to buy or sell. These are stocks we are watching for traders. We may or may not trade these picks and do not make any guarantee of success. Commentary of these stocks is for educational purposes only.

Mickey Welcher is President of Spectral Asset Management LLC and works with Today Trader. He has extensive trading experience and money management for clients. If you have any questions, please contact him at mickey@spectralam.com

Stock Focus PETM

We have 3 stocks that we will watch closely on Tuesday, but our favorite is Petsmart (PETM). The stock gapped higher last Thursday on good earnings and guidance. PETM consolidated on Friday and yesterday, which is a good sign for an upside move. We are using Friday’s high of $25.68 as resistance and we expect to see a strong move once it breaks through that price level. What’s nice about this trade is the possibility that we could see a multi-day move once the stock breaks through. There is a chance the stock will consolidate again on Tuesday, but you want to watch in case it takes. The worst feeling is when you see a move coming, but forget about the stock and it takes off without you.

We also like Smithfield Foods (SFD) for a bull flag breakout move.

You can see these 3 picks, plus many more on our free daily watch list at http://www.todaytrader.com/ You do not have sign up, just click on the watch list word on the left side of the page. No registration is required.

Mickey Welcher is President of Spectral Asset Management LLC and works with Today Trader. He has extensive trading experience and money management for clients. If you have any questions, please contact him at mickey@spectralam.com

CREE Looks Interesting (Earnings 10-20)

The market continues to trend higher, even as the smartest people on Wall Street think we are due for a sell-off. I am not disagreeing with those people and I do believe the market continues to move higher because most people think its going lower. Saying that, when it comes to trading, you have to follow the market and let your trades work for you. Trying to short this market has proven to be a losing proposition, but going long has been tough as well. You have to trade each stock based on its own merit and hopefully things will work out for you.

For Monday we are watching Cree Incorporated (CREE) for a breakout move. As you can below, the stock has been trading in a decreasing consolidation range, waiting for a high volume breakout. We have seen a few moves, but there was no follow through, which pushed the stock back into this range. The high of this range is $40.61, which is the price we are watching for this upside move.

You can see our free daily watch list at http://www.todaytrader.com/ You do not have sign up, just click on the watch list word on the left side of the page. No registration is required.

Mickey Welcher is President of Spectral Asset Management LLC and works with Today Trader. He has extensive trading experience and money management for clients. If you have any questions, please contact him at mickey @spectralam.com

Change is Still the Only Constant.

Here is the link to a recent article written for SFO magazine about changing with the market.
Thanks to the people at SFO for letting me write for them. I will be writing for their weekly E-Newsletter twice a month and the email is free. Sign up, and see you there.

Steve

Here is the link to article http://sfomag.com/article.aspx?ID=1409&issueID=c

Change is the Only Constant

If you like day trading the rush of volatility and reversals in the first and last 15 minutes of each day, then by all means surf that tsunami. For the most part, we prefer to sit on the shore and watch.

Since the death of Lehman last year, the market has shown increased volume and volatility in the first and last half hour of trading. It seems there is no longer a major appetite to hold positions over night. Also contributing to the increased open/close volatility is the volume of HFT (High Frequency Trading) algos being discussed as of late.

Being slow to adapt to market changes can be one of the biggest hurdles we face as a trader.

Looking back the last two months, it became obvious that the first 30 minutes were hurting our end of day performance. Most of the big losers were trades bought or shorted in the first 15 minutes of our live service. The tremendous whipsaw action in this time frame was not only costing us money, but also the opportunity cost of nursing losing positions instead of hunting for better setups. Having to play catchup all day and churn more commissions has been the result of starting too early in this market.

It's been 8 days in a row of starting green and remaining green since making a conscious effort to not trade in the first 25-30 minutes each day. With the exception of one small position here and there, the first 30 minutes have become the "observation" period and avoiding that period has helped the bottom line tremendously. This example is subjective and the point is to look within your own performance to find areas that need improvement or tweaking. Maybe it's the lunch hour that is killing your method?

500 Prop Traders in China.

last year Andy and I were contracted to travel to China and train a small group of traders once a month. They only trade US markets so they are all night dwellers. This is a video clip taken from my first visit in March 08. For those that like to scalp stocks with low liquidity, these are many of the traders you are competing against. They are mostly Econ majors chosen from local universities. Foreign prop shops are increasingly sprouting up across the globe.