Quiet Stock Market Continues, how to survive

We are in the dog days of summer with very low volume and very tight ranges, but there is still some opportunity to make money. As an intraday trader we have the luxury of finding many stocks and even on the most quiet days there are stocks that are moving.

I traded a number of stocks yesterday and was positive for the day with low volume.

First tip for survival is to keep expectations low. If you are used to making $1,000 a day, that number may need to be cut down.

Second tip is to make “A” trades primarily. You do not want to get stuck in a trade that does not have the best chance for success. Be very choosy and if you feel the need take larger size to offset your lack of trades.

Third tip is to notice when the markets are trading and when they are stalling. 9:30 am to 10:30 still seems to have some volume in it, but the remainder of the day has been quiet. Don’t be afraid to get up and leave once you have achieved a good day, refer to tip #1.

Fourth tip is to stay close to home. Trade the names that you know, this will give you a comfortable feeling when in a trade and allow you to guage the action in the market.

Final tip is to have some fun and learn from the market that we are in.

Happy Trading and keep your comments and questions coming in to member chat.

Another Bore of a Blackberry

The Technology/Telecom book had a tough day but managed to slightly outperform the broad markets.  The book closed the day down 44 basis points vs. the S&P 500 which closed down 48 basis points and the NASDAQ Composite down 52 basis points.  The winners were RIMM, V, CREE, and SNDK.  RIMM was down 2.54% after rallying into the release of the BlackBerry Torch/OS 6 which I’ll speak more about later.  V was strong today and recovered the majority of the losses from yesterday.   V has clearly been stronger than MA the last few days.  CREE was solid for the majority of the day and grinded up into the close to end the day up 54 basis points.  Lastly, SNDK was down 51 bps but we were able to make some money on the long side on a intra-day trade.

The losers were INTC, DELL, MA, STX, and MTSN.  INTC and DELL were down 1.32% and 1.40% reversing their roles from yesterday when they were the best performers in the book.  MA was down another 79 bps following their earnings release before the bell.  STX and MTSN continue to show weakness down 3.56% and 4.01%, respectively.  We sold ERTS before the earnings release since we felt we had no edge in the name.

The big news out in tech land today was the RIMM and T conference in NYC.  RIMM released their newest BlackBerry, a slider phone called the Torch and their new operating system BlackBerry OS 6.  The new features in the OS that RIMM pushed this morning were Universal Search, Social Feeds, Enhanced Messaging, a new WiFi –powered media sync , and a new WebKit-based browser with support for HTML5.  Putting all the new functions aside the real question is can this phone compete with Apple and Android?

My immediate thought was well the phone is intriguing and maybe it can, then I took a step back and thought no chance and here’s why.  For one if someone wants a device that is good with media they’re going to get an Apple or Android.  If they want a phone for a web browser they’re going to get an Apple or Android.    The younger generation is being brought up on Apple and will continue to use their products just like the prior generation did with PC’s.  Everyone is beginning to move to Apple and Android phones and very few who use BlackBerry’s are willing to remain loyal customers.  BlackBerry is left with one demographic the middle aged businessman/woman that is forced to use their product because of their place of employment or they don’t want to learn how to use the new technology.  If this is the case RIM just wasted a lot of time and money developing OS 6 because this group could care less about a new OS, if anything it’s probably a nuisance.  One last thing, why the hell would you release the phone with AT&T, so you can exclusively compete with Apple for the first few months until the phone comes out on Verizon.  VZ is the one of the main reasons people still use BlackBerry’s why release it with AT&T?

Money Solves Everything, From 3-D Movies to IPOs

I’ve always been a believer in the power of money.  I know it sounds like a subliminal way of saying I’m a money-hungry, greedy person, but that is not what I’m getting at (and a blog is not the place to argue that).  A charitable person-the stereotypical selfless, non-profit worker-would argue against those who think that money solves all.  In fact, I did have this small debate once with a friend.  But let’s face it.  In the end, it all comes down to money- even charity work.  You can spend all your time and effort volunteering somewhere, but if you don’t have funds, your contributions are very limited.  Non-profit organizations will choose financial supporters over those who want to volunteer their time in a heart beat .  Ok, I will stop being so attacking now.  But I chose this blog topic because I see several great business ideas out there that I do not view favorably right now.  However, in a rich economy/bull market, I would definitely switch my perspective on these same products/ideas.  Take for instance, 3-D movies.  There has been a lot of talk around the New York Times article  from Monday discussing the resistance that the 3-D movie industry is facing.  One of the several challenges around this space is the high ticket pricing.  Even though I personally am not a fan of 3-D movies, I believe that if we weren’t in this borderline recession period, this industry would be thriving.  Similarly, new tech gadgets like the iPad, though I promise you I will never buy one, would be a much bigger deal if we were in a rising economy.  I don’t think people are even willing to upgrade their aging laptops, which people view as more of a staple gadget than an supplementary product like the iPad, right now given cutbacks in consumer spending.  So I don’t think the iPad has been given the chance to realize its full potential.  It’s just all poor timing- especially for IPOs.  Facebook, has yet again, pushed back their IPO.  They can use their “we need time to prepare for growth” excuse, but the truth is that the economy is too weak right now for them to go public.  I guess my bottom line is stating the obvious here- money is the answer to everything.

How Not to Trade

This morning I violated my risk parameters of $200 and lost $300 within the first half hour of trading. Last Friday, I had my best trading day at HedgeFundLIVE and backed up that gain with another solidly positive day of trading on Monday. I walked into the office this morning amped up and ready to extend my streak for another day. My impatience led to my demise as I neglected to practice the habits that had allowed me to succeed in the previous two sessions. My first mistake was getting too big, too fast. By 9:50 I found myself long 500 shares of GE and 400 shares of CLF. When these trades began to move against me, I found my P&L decreasing at an uncomfortable rate. Furthermore, having two large positions on simultaneously led to my second mistake, failing to properly plan my trades. When my trade in CLF began to move against me, I did not define a clear stop out number and found it difficult to calculate my P&L losses between the two positions. Normally, whenever I enter a trade I calculate exactly how much money I will lose if stopped out and place this number within the context of my P&L for the day. If the loss is too large to stomach or threatens my risk parameters, I always reduce my share size or modify my stop. My failure to practice this discipline today led to disastrous results. My final mistake was carrying both of my positions into the Pending Home Sales number. I underestimated the importance of this data and its impact on the market. As the market aggressively sold off, I had exceeded my risk limits without immediately knowing it. Also, a trader completely loses his or her edge holding into a number and becomes victim to the whims of the overall market. That is the moment when trading becomes gambling. Today I learned that failure to strictly adhere to discipline and trade in a methodical, robotic manner is always a losing proposition. I hope that documenting these thoughts in writing will allow me to avoid these same mistakes in the future and others to avoid these mistakes in the first place. Today reminded me of a lesson that I believe in whole-heartedly; if you fail to plan, you are planning to fail.

HFL Portfolio Recap: 8-3-2010

Another day of underperformance for HFL closing down 1.17% versus the S&P 500 which closed down 48 basis points.  It was very clear traders were selling cash equities today as every book at the firm finished negative and healthcare was lone positive sector.

The top winners on the day were ATLS, POT, WHR, RIMM, and V.  ATLS was one of the few strong names today finishing up 2.04%.  POT was down 1.17% but was traded intra-day and generated roughly $700 of profit.  WHR is a short we’ve had one for a few weeks and was down 1.93% today.  RIMM is a trade we have been putting on the last few days as we have faded the rally into the BlackBerry Torch/OS 6 release.  RIMM rallied throughout the first 40 minutes of the conference but once it came to an finish was sold for the remainder of the day closing down 2.54%.  Lastly, Visa had a strong day after an in line earnings report and possibly some short cover following yesterday’s sell off.

The top losers on the day were BBY, XIDE, LULU, INTC, and CBS.  BBY was down 2.65% and was the biggest loser in the book after being the biggest winner the day prior.  XIDE was down 2.73%, LULU was down 1.32%, INTC closed down 1.32% and CBS closed down 1.90%.  We did some broad based selling added to our futures hedge to take our net exposure down by 14% leaving it at 28.6% overnight.

You heard it here first – America is Fat

A report released by the Center for Disease Control today ( reinforced a well-known fact – Americans are fat.  About 10 years ago, the U.S. government laid out its Healthy People 2010 Goals and Objectives; a set of health goals for the Nation to achieve over the first decade of the new century.  The program included 467 health improvement objectives and 434 sub-objectives in 28 focus areas to be achieved by 2010.  One of those goals was for states to lower their prevalence of obesity to 15% of their residents.  News Flash: They All Failed!  In the year 2000 (in the year two thousand) not one state in our great land had a prevalence of obesity greater than 30%.  10 years later, 9 states share that auspicious honor, with Mississippi taking the cake (pun intended) at 36.8%.  Colorado is at the opposite end of the scale at 18.6%; even those granola-eating, tree-huggers couldn’t make weight. 

On a serious note, obesity is a serious problem.  Physical and mental issues aside, being overweight is expensive.  According to the CDC report, medical costs for the obese are an average $1,429 higher per year and medical costs associated with obesity cost our country a cool $147 billion.  The Director of the CDC was quoted saying: “We need intensive, comprehensive and ongoing efforts to address obesity. If we don’t more people will get sick and die from obesity-related conditions such as heart disease, stroke, type 2 diabetes and certain types of cancer, some of the leading causes of death.”  This is why I thought that on July 15 the FDA panel that reviewed Vivus’s Qnexa would, after cost-benefit analysis, recommend approval of the most effective development stage weight loss drug out there.  An elevated heart rate and disorientation are serious side effects, but dead Americans can’t be much better.  Perhaps Arena (ARNA) will have better luck at their panel review on September 16.

Commitment & My Half Ironman

“Pain is temporary, Pride is permanent”. I read that in a triathlon magazine a few months ago. After finishing my first Half Ironman (HIM), I couldn’t agree more.
When I turned to my wife in early February and told her I was going to do a Half Ironman, she just shook her head and told me I was nuts. Never one to back down from a challenge I did what any type “A” wall streeter would do, I hired a coach and started training. I had done a shorter tri a few years back so I figured it couldn’t be that hard, boy was i wrong. For 5 months I trained harder than I ever thought was possible. I was up at 5am every day to either swim, bike, run or lift weights. I used to walk into my office after a swim and stink of chlorine even after i showered. I carried my gym bag with me everywhere I went, sometimes sneaking in a run in the afternoon after having biked for 2 hours in the morning.
Most people really dont understand what is takes finish a HIM. Think about it, a 1.2 mile open water swim where there are no blue lines to guide you (my race was in Lake Geneva, but alot of these races are in the ocean), 56 mile bike ride and then a half marathon. It takes most amateurs 5 to 6 hours to finish. It took me a little over 6.
My coach (Dianna Ineman) was a constant source of encouragement. There were days my legs would scream after a hard bike ride and I just couldn’t imagine anything short of sitting on the couch let alone running 13 miles.
When I crossed the finish line I knew I had accomplished something special. Its a feeling that I’ve only had a few times in my life. I am already starting to think about my next race.
Pride is permanent….

The Stock Market Will Rally From Here

The boredom has set in. August has begun. Gold is over priced. Tech stocks look cheap. November will damage the democrats. Housing sales are stabilizing. General contractors are seeing their business pick up. BP didn’t go bankrupt in fact it is up 35% off the lows. The environment is not falling apart, at least this year. Financial reform is much like health care reform, a non event. Earning have been pretty good. The European union remained intact. The Greeks have actually gone back to work. The doomsayers have been proven wrong, and day traders keep looking for the big sell off that doesn’t come. We are on the verge, soon, of another leg up in the market.

Do I Have Enough Life Insurance

Do I have enough life insurance?  Also known as ‘pre-financing for the character spin offs’.

Definitely one of my top 10 questions. I like the top ten concept. It is a universal application designed by the all mighty. In fact, the original top 10, the commandments, has for me, held up pretty well.  It establishes certain absolutes that are required for relative judgment. My top 10 maybe different than someone else’s, but can be used for comparatives. So by understanding my top 10 and some one else’s top 10, I can understand how much we have in common, how similar our lives may be, what makes that person happy or sad. What is loved and what is despised. Top 10 is a life measurement tool. It is morally ambiguous in its application, absolute in its temporal prioritization, yet constantly subject to change. I have a top 10 favorite movies and a top 10 worst movies. I have a top 10 best moments of my life and a top 10 worst moments.  My top 10 lists are ever evolving. They are a metaphor for my likes and dislikes.

Age is the driving force of individual change. The priority of my top ten life questions is constantly changing even when there are no additions or deletions. As I turn 40 life insurance is hovering around the 3 to 4 level having been an 8 to 9 at 30, and previously not having made the list. If that question is on your list in your 20s, your movie production has some problems..

At 40 it feels like someone just turned off the fast forward on the screen and u can actually understand what’s going on, even if it is just for a moment. It’s a good time to decide whether you’re even watching the right movie. Until 40 , the whole movie is fast paced.

That “time is relative” stuff makes a lot more sense after 40. Before 40 you never worry about time, after 40 time is all you ever worry about.

Tech/Telecom Portfolio Recap: MA in the AM

The Tech/Telecom book was up 1.31% today and although it did underperform the major indices with the S&P 500 closing up 2.20% and the NASDAQ Composite closing up 1.8%, I liked the action considering MA and V make up over 14% of the portfolio.  MA and V were both beaten up today after the news that AT&T and Verizon are developing technology to turn your smart phone into a credit card.  MA is also out with earnings tomorrow morning so keep your eye on that name as it should be another volatile day.

The biggest winners in the book were INTC, AAPL, DELL, CREE, and GOOG.  INTC was solid all day long with other bellwethers like CSCO, IBM, and AAPL.  INTC rallied throughout the day before pulling in slightly and closing up 2.67% back above $21, a very important technical day for INTC.  As I mentioned earlier AAPL was strong right out of the gate and then traded range bound from 10:30 – 4.  AAPL had one minor blemish when it pulled in a point and looked to be breaking down around 1:30 but rallied right back and closed towards the highs of the day.  DELL and CREE were both strong closing up 2.79% and 3.94%, respectively.  Lastly, GOOG was rock solid for the majority of the day before pulling in a few points as we closed the day.

MA is due out before the bell and they’re looking for EPS of $3.33 and Revenue of $1.382 billion, let’s hope for solid numbers out of MA and a nice move higher tomorrow.  If they disappoint there is support at $197, $193, and $190.