Thursday, March 17, 2011

Update and watch list for tomorrow...

UPDATE


Although $AXK did not quite get up to $5.00 it did play out like I was describing in last night's post; so that if you were fast enough and had day trades; you could have shorted into the spike up to $4.50 and the covered near $3.60 - $3.70.

The only other trigger from last night's watch was $DK. $DK had a nice break of $13.00 (which I tweeted) and spiked $0.20 in seconds on good volume. I thought this was sure to be a big winner. I was even wishing I could have taken it. However, this trade highlights the importance of having day trades available even though the intention would have been to hold over night and the stop loss had looked far away; as the stock reversed and came right down to the stop out point @ LOD $12.75 right before the close of trading! Although I think it was clear that the break out had failed even earlier when the stock price took out the morning lows @ $12.84 around 1:30 pm so there was no need to wait for your stop to be hit.


I was doing a great job of sitting on my hands today when for some reason I felt I had to get long $FTK if it broke to new highs! The chart below shows the trades I made today in $FTK:


So now I am holding 100 shares of $FTK and 1 $FTK March $10.00 2011 Put Contract. Although this is not a perfect hedge; I know that I cannot lose more than $35.00ish plus commissions. What I will be hoping for is a higher open in $FTK so that I can sell the put and the hold the stock position for a spike in which I can then sell for an overall flat or even small profit. Any other scenario and I will just take both positions off at the same time for a $35.00 loss.

WATCH LIST

After dipping into extremely oversold levels yesterday; the McClellan Oscillator bounced today although the markets themselves did not move up much. This is an indication that stocks are likely to bounce for at least a day or two. I think we might even gap higher at the open tomorrow. In addition, $OIL bounced today after selling off for 7 days in a row. I think it too moves higher for the next day or two. With this in mind, I have two ideas for tomorrow:





I will definitely look to trade $UDRL if my account allows me as I think I will get a margin call if I liquidate my $FTK position tomorrow and reuse the funds to make a day trade. So in order not to risk this happening I will likely just close out my $FTK position and not trade for the rest of the day. $ZAGG looks like it wants to tank but from watching it today its important to wait for it to break the position first with good volume before entering a position.

Hope these ideas help you.

Good luck and good trading!

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