Monday, March 8, 2010

State of the Market - 3/8/10

It was a slow, slow day today on Wall Street, with stocks chopping around in tight intraday trading ranges and going basically nowhere. The Nasdaq traded in about a 10 point range for most of the day and the S&P moved in about a five point range, all on low volume. Not very exciting indeed. Under the surface, however, there was some action in individual stocks that kept traders busy.

Technically, the story remains the same - we are very overbought and the market was moving slightly higher today on low, low volume. That is not a great recipe for buying success, so I think it pays to be careful here in terms of swing trading. A rest or a pullback makes a lot of sense. If we just rest, move sideways, and have some more days like today, it would be perfect. That's what I need to see in order to get aggressively long here - I am not going to chase other than for a day trade here and there.

It was a good day for me trading, but a very weird and sometimes stressful one. I was off work today so I was able to watch the market more than usual, and I did plan on exiting many of my long positions into any strength we saw today. As such, I sold SEED at $11.76 for a 13.5% gain and CFSG at $16.18 for a 7.1% gain. I also entered CPSL pre-market at $2.32 for a short-term trade and it popped nicely as well. So far, so good.

Then things got weird. Scottrade had major server problems this morning and from about 9:40 until around 10:30, no trades could be made. I couldn't even get logged into my account for a certain period of time. Calling in also didn't help, as most numbers were busy and overloaded, and when I did finally get through to talk to someone, they didn't have any answers for me. At that point, I was still in AMCF, USEG, and CPSL. I had a stop on USEG, so I wasn't worried on that one, but I tried to sell AMCF into strength around 9:45 and it just showed "pending approval". I couldn't cancel it, couldn't change it, and had no clue if it went through or not. It was eventually filled at $8.07, giving me a 10.75% gain, but I originally put the order in when it was around $8.30, so I lost a little profit there. USEG was stopped out as well at $6.07, giving me a small 2.9% loss.

So overall, it was a weird morning, but I guess I can't complain too much in that I was able to keep most of the profit I had entering the morning and that was my goal going into the week. It is a helpless feeling, however, seeing a stock move around and not being able to do anything about it. Hopefully, no trader has to experience that feeling too often again.

CPSL worked well for me today although I flubbed it up a bit through sheer carelessness. I decided to take profits in the afternoon around $2.65 and put the order in. I went away from my computer for an hour or so, figuring I was done on the day. I checked back in during the final hour and noticed I had one position showing - didn't make sense to me. Well, instead of selling my shares of CPSL, I bought more at $2.66, so my position had doubled without me realizing it. That could have been very bad because I did walk away and if it tanked I would have been left holding a big loss. As it is, I sold out of it all at $2.60, costing myself a little profit from what I would have earlier. It may still go higher from here, but the measured move off the flag pattern was around $0.40, so this seems like a good target.

I did enter one more short-term trade later in the day - ZOOM at $7.73. This was designed to be a day-trade and hopefully catch a pop off of an intraday breakdown, but it never happened. I was stopped out at $7.47 for a 3.5% loss. It popped back later in the session and tried to break out of a flag pattern, but I wasn't holding it for long if it broke its low at 1:45.

After the success I had today, I probably will now take a few days off, because as a trader, I know I tend to follow up a series of good trades with stupid ones, perhaps due to a little overconfidence. So I would rather step back and take a few days off than make some stupid trades (like my ZOOM trade for instance.) After the CPSL trade, I don't think I want to press my luck any further as well.

As the market is now, I think it is probably smart to do that anyways - I don't know how much further we can go without some sort of rest or pullback. It is certainly possible but I wouldn't say it is likely. I was tempted to short a few stocks today and see some decent setups (GG, LIHR, SAP, TCK, AMT, AMSC, LL, PWRD) but decided to pass for now. If we see more action like today, it will be extremely bullish as markets that don't give anything back are great to see. Even we get a little 2-4% pullback from here, I do believe it is buyable and that's what I'll be looking to do later this week or early next week. Take care and good luck Tuesday.

No comments: