Dorothy You're not in Kansas Anymore

I have no idea what the market will do in the next day or the next week. I mean, I have a better chance of winning at Blackjack in AC than I do in knowing what the market will do. I do know one thing though, it's going to get harder. Ask yourself some tough questions here as we embark on a new journey with volatility. Do you prefer fast, volatile markets or are you better off waiting for things to calm down? Are you trading today because you think "this is how the big money is made", or are you trading according to your plan on your terms? Do you feel nervous this morning, like you are struggling to ponder and read as much as possible about what will happen with the market today? Talk to yourself. It's important.

Let's start with some constructive charts. First in biotech land, as I try to come up with sectors less likely to get polluted by systemic volatility. ACRX had a nice reversal candle yesterday during a horrible market day. I'm calling AMRI, AUXL, CLDX, and OPTR undecided on direction and unaffected by yesterday's market. I will watch for a new direction in each. INFI and SNTA will be top short ideas today. THRX is a potential gap fill/20 day long candidate but will need intra-day relative strength for me to buy. IPXL is a best idea long.

Airlines will potentially offer some long opportunities today. AAMRQ put in the best candle yesterday, while DAL seems to have the best relative strength among the majors (UAL, LCC). ALK is interesting because it's small and seems to have been thrown out the window. I'll have an eye on that one for any bounce.

Natural gas was curiously strong yesterday. EQT, LNG, CHK, SWN, RRC, and PXD all have constructive charts. An important point is to be made here regarding which stocks you choose to trade. Every stock has a personality, as does every human. CHK is slow, thick, and steady and can be managed relatively easily. PXD is a violent beast that can reward you in minutes, or destroy you in seconds. Know which stocks you are comfortable with. I'll round out the energy commentary with coal and refiners. WLT is my favorite long in that sector and I will be watching CLF, BTU, and CNX as well. They had great relative strength yesterday. PSX held up fantastically yesterday, and is my favorite refiner for the day. Eyes on MPC and VLO as well.

OK enough talking, here are the creme de la creme longs from my pathetically biased eye. Best ones are bolded

OWW, NTWK, SUPN, UNIS, EDU, JCP, LOCK, MDRX, NCMI, VVUS, BCEI, TRIP, DISH, FLO, GM, MNKD, SFUN, TCK, WNR, ZTS, HFC, ONXX, OSIS, GRPN, HALO, HK, INFN, MCP, MDXG, P, PBI, SFY, SPRD, TNGO, TTWO, SGYP, SREV.

Now from the get down you filthy, horrible company short list. Best ones bolded.

AEM, FNSR, JNPR, KKD, ENDP, ROVI, RAX, VCLK, IQNT, TRLA, NTE, PTIE, AXLL, EXPE, AMRN, AVEO, EOX.

Best of luck to all!

Mistakes 5/22/13

1. RFP: Bought OR breakout, but no volume intra-day. Also, hard to enter after two wide range bars on daily.

2. RAX: Got long mid day anticipating recovery. WTF? Daily in massive downtrend and yesterday was day 1 of new breakdown. Paid 38.80 with yest. high at 39.46 and LOD of 37.60. Horrible risk/reward.

3. Z: Got long on OR break which was good. Got stopped though. Stubbornly re-entered on break back above 60 at which point the long argument was not there anymore. Turned a winner into a loser.

4. PIKE: Bought OR breakout in stock that was back above declining 8 day MA.

5. MGM: Bought a HOD breakout (after it had already broken out of OR) in one of the thickest stocks on the planet. Major no-no offering your money to HFT.

6. VCLK: Put 2nd stop too tight on this excellent short candidate and got taken out.

Cost of mistakes -$900.

Daily Prep 5/16/13

Well, off to the golf course at 12:30 today. Playing Royce Brook in Hillsborough, NJ. It's going to be 81 degrees today, our first 80 degree day of the season. Maybe the weather is getting better across the country and Deere can sell more tractors this quarter. I have cobwebs in my head this morning after watching "Savages" last night, a movie about 2 California weed dealers that might have been the worst movie of all time. It's weird when you watch bad TV it makes you dumb.

The News of The Day

I don't want to talk about Walmart, it's so unexciting. Cisco too, boring. Walmart was a dud and Cisco was good, so I'll call it a wash for the market. I won't be trading either.

1. BX: Reuters article today talking about how BX, KKR, et al are trading cheaply to traditional asset managers like BLK. This is the second article in two days about BX, on Tuesday a WSJ piece talked about how alternative asset maangers are moving beyond the buyout world for earnings. BX has a nice 7 day consolidation here and is resting on the 8 day moving average on the daily. I'll be watching this morning for a long.

2. TOL/LEN: Article on Bloomberg this morning talking about new housing bubble threat from Brooklyn to California. Not calling things a bubble yet, but pointing out that this year's price gains are unsustainable in the long term. Certain markets are more frothy than others. Menlo Park, CA and Brooklyn, NY are on fire while Chicago and Indianapolis are down. So, when you talk about real estate you really have speak in regional terms. You could call TOL a double top on the daily with a possible right shoulder forming on the weekly. LEN tells a different story though, as it looks ready to break to new highs. I'll monitor TOL for a short today, but I'm still respecting the 8 day MA.

The Trades of the Day

1. SLCA: Long. I mentioned this yesterday in "Charts of the Day", pointing out that I did not understand the weakness in this stock. It is very tied to domestic oil and gas exploration and recovery. I'm watching today for a long and ideally the stock will exhibit strength and willingness above 22 and the 50 day MA.

2. FDX: Long. I was involved in FDX yesterday as noted. A great setup here with a go pause go pattern for the last 2 days, looking for a follow on move from last week. Also a narrow range bar resting on the 8 and 100 day MAs.

5/15/13 Review

1. FDX: Long. Entered on 10:30 bar at 100.16 on re-entry into opening range. Got shaken out of 1/3 at breakeven, then exited at .45, .69, and .77. Cost of raising stop was $82.

2. AMZN: Short Entered on break below OR with 266.77 fill. Stopped on half above 10:25 entry bar almost immediately and closed other half in same area. Went against my gut here, just didn't feel right. One alternative solution would be to enter .01 cent below that 10:05 bar that took out the day high. That is probably a better way to play a stock that has a little bounce in it like AMZN did this a.m. Savings of pre-empting and stopping 2nd half of trade early were $70.

3. CIE: Long. Entered on 10:00 bar with 27.12 fill. Sensed trouble with the wick on that bar. Cut 2/3s immediately at 27.04. Last 1/3 stopped .05 cents below the entry bar. A bit of a force here, stock was choppy in the morning. I've been following this stock since its secondary on 5/8/13. Savings from stopping out early were $47.

4. EQT: Long. I just got way too aggressive with my stop here and really messed this trade up. Been watching this stock for a while. Entered on 9:55 bar and got 1/6 off higher, but raised stops to 76.65 and 76.49 on rest on was stopped out breakeven only to watch stock go vertical. Really need to review mentally why I am raising stops so aggressively. It's a balance that is sometimes hard to get right. Cost of aggressively raising stops was $488

5. ICON: Long. This was my best trade of the day, executed to plan. This was the small cap trade of the day on my blog this morning.

6. RVBD: Short. Short idea from my daily prep this a.m. I shorted very small around the open at 15.77. Super small trade that I covered in the 15.55 area. This was more experimenting with an alternative entry method (around the open) vs. what I typically do, which is to enter after 9:45. Something to consider for the future.

Daily Prep 5/15/13

I try not to talk about the market, unless it's just in intra-day terms like "if it does this, then...". With that being said, we are very over-bought. I will spare you the data and all my facts backing up this claim. After all, historically over-bought markets tend to get, you guessed it, more over-bought. I also never want to delude myself, by getting lucky with a "market call", that I have a clue about the direction of the market. I don't, never will, and that's not how I obtain an edge in my trading. About the smartest thing I could say about the market is that it's the middle of the month, May 15th. I have no basis whatsoever in that meaning anything, but on the 1st, the 15th, and the 30th of each month my eye is open for "weirdness". The market did get killed on April 15th, but that's enough for now with the voodoo.

I'd like to be a bit more organized with my prep and the blog in general, so I will try to start following a consistent format with each day's daily prep. What I will do in the future, as I did last night, is shoot some charts out on StockTwits the night before from my couch and then follow up with commentary in the next morning's prep. I will start with 3 categories: the news of the day, the trades of the day (1 small cap, one mid/large cap), and the charts of the day. Like Guy from "The Croods" and his monkey; I'm calling it, da' da' da', THE DAILY PREP.

The News of the Day

1. FDX: After FedEx announced that it anticipates delivering $1.65B of annualized profitability improvement by FY16, Oppenheimer believes that this news, along with a capacity cut and the company's recent win of a major Post Office contract, will improve investor sentiment towards the stock. The firm reiterates an Outperform rating on the shares. The chart follows a 3 bar pullback within a strong trend.

2. DE: Deere says global financial pressures, weather add caution to outlook Deere expects FY13 equipment sales to increase by about 5% for FY13 and by about 3% for Q3 compared with the same periods a year ago. "Deere's near-term forecast is being tempered by lingering economic concerns in many parts of the world, which are restraining business confidence and growth. In addition, cool, wet weather in North America has delayed crop planting, slowed construction activity and hurt sales of turf-care equipment." I won't put the DE chart below, but CF instead. I want to watch Ag sensitive names today (MOS, POT) to see if Deere's results have a negative impact on them. The CF is a nice long setup off the 8 day MA.

3. OCN: U.S. MBA mortgage market index sank 7.3% U.S. MBA mortgage market index sank 7.3% in data released earlier, accompanied by a 4.1% slide in the purchase index and an 8.1% plunge in the refinance index for the week ended May-10. A big jump in mortgage rates easily explained the drop in mortgage activity after the bond market decided that Fed tapering risks were higher than the still sluggish global economy. The average 30-year fixed rate surged 8 basis points to 3.67%, which is still significantly low by historical standards, but it has likely continued to rise this week as well. Zillow.com reported that average 30-year fixed rates for California, for example, backed up from lows near 3.34% the week prior to the 3.50% area for a conforming mortgage, which is equivalent to the national average currently. OCN and other mortgage equities look overdone after a 7 day rally and a decent reversal candle yesterday.

The Trades of the Day

ICON: Long Great earnings in April, nice high flag on daily chart. Do or die this week.

2. NOW: Long. Big positive earnings reaction on 4/25, but stock has yet to follow through. Sets up nicely of 8/20 day MAs and volume coming in the last few days.

Charts of the Day

1. SLCA: Why is the sand dude that's tied to oil recovery look so weak?

2. AMZN: Third time this stock has gone up 5 days in a row since 4/1. Last 2 times were good shorts.

3. VMW: Wants higher toward 80 but she's got a way of disappointing us. Watching.

Buena Suerte!

May 14, 2013

Today was frustrating for sure, but trading is frustrating in general I think. This is what the market does. It tries to wear you down, create psychological dissonance, and kick you out of the game. You have to bare down to control these emotions, and do your best not to succumb to them. I'm actually not surprised by my results today. I rarely have good days when the market goes straight up. It's just not my style. I like to gauge relative strength in the names I'm trading, so when the market is psychotically strong like today my relative strength lens is rendered useless. It would be easy for me to look back on the morning and think, ahhhh why did I buy that it was relatively weak compared to the market. I know better. Most stocks today probably looked relatively weak vs. that morning move higher in SPY.

OK, enough quasi-bitching. Let's take a look at my trades, see if I made any mistakes, and see what I missed.

1. RAX: Long. Entered on 10:05 bar. Took me out of half my position on 10:20 bar. Raised remaining 2 stops and got taken out of another 25%. Sold 1/2 of the remaining 25% at 42.74 and have 43.45 final target. Will likely end up breaking even on the trade. Possible future consideration would be not raising stops as stock goes in your favor. May have been too aggressive cutting RAX:

2. CROX: Short. This was a force. Was on my short list as reversal bar short candidate. Cost was 17.01 and I was stopped at 17.14 above yesterday high. There were two mistakes here. First, this was very OBVIOUSLY not a good day for shorting. Second, this stock had ZERO relative weakness intraday. Only positive was that it was a small position.

3. MMM: Long. This was also a bit of a force. A great looking daily chart for sure, but the stock had a slight gap down today and was choppy during the first half hour. Entered on 10:15 5 minute bar and was immediately stopped our of half. Stopped on another 25% at 11:10. The only good move I made was following my stop model.

This was a poor day for me. Honestly, I was not properly prepared the way I need to be. I did no homework last night, instead waiting for the morning. That always makes me anxious at the open. I also missed a couple of easy trades from my symbol reviews, ANGI and C most notably. The C strength early kind of shocked me and I was not prepared to chase it. I was totally unaggressive in trying to get into C when I should have been. I showed good composure in recognizing I was off and losing and getting up from the desk. I went to the gym. Lastly, I probably looked at too many symbols this morning and ended up trading MMM which is a name I don't normally traffic in. I should consider being more focused in my symbol reviews.

1. Cost of Raising Stops: RAX. -$180 2. Savings from Stop Model: MMM. $100

Daily Prep 5/14/13

1. C: Long. Looking for follow up to 5/8 trend bar. Tepper spoke about on CNBC this am.

2. CMI: Short. Looking for failure below 100 day as stock looks to have found resistance at trendline.

3. COST: Long. Nice 7 day consolidation. BOA/Merrill holding retail conference call at 10am today.

4. MMM: Long. Looking for post earnings follow up push.

5. RAX: Long. Looking for gap fill here.

6. CROX: Short. Relative weakness yesterday with reversal bar at highs.