Archive for September 2008

Preparing My Mind

Sep 28th, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
I got kicked off the couch an hour ago as Desperate Housewives started. Women. Not a big fan of the show, so I started my Sunday Preparation. I've been working on a few things with my trading. My sense is that if I can conquer a few of my weaknesses I can get better. So I went into my bedroom, found some quiet, and started visualization exercises. One exercise that I'm working on is what I call comfortable. Sometimes after a market that offered so much opportunity like the middle of this month we traders continue to trade too aggressively. One of our best new traders, who has insisted on being called "The Red Dragon", had trouble Read more [...]

Earnings Season Pattern Emerges?

Sep 28th, 2008 | By | Category: Steven Spencer (Steve's) Blogs, Trading Theory
Each earnings season I look for discernible intraday patterns to emerge.  As earnings season begins in about two weeks I'm already on the lookout.  Two stocks reported numbers last week that may have given me a clue as to what to expect in the coming weeks. The first stock to report that I traded was Nike.  It gapped up several points on Thursday following the release of their numbers.  I decided to trade NKE as it provided a lot of opportunity last quarter after disappointing the Street.  My initial trade was a fade in front of the $64 level.  My thought process was that NKE isn't a high flyer and that it would meet some Read more [...]

Questions from a New Trader

Sep 27th, 2008 | By | Category: General Comments
We are at the office going over our trading on this Saturday. Steve, GMan, and I are reviewing some of the work of our new traders. It is a good sign for these new traders who acknowledge that they need some help and are working to get better. I know at the start of my trading career that I should have done more of stuff like this. One of our new traders sent me a few questions this morning and I responded. I thought his comments about some of his trading made perfect sense to him and other new traders. Unfortunately his conclusions were incorrect. Trading is a unique activity, and short-term trading is a niche. There are thousands Read more [...]

Road Map

Sep 26th, 2008 | By | Category: Mike Bellafiore's (Bella's) Blogs
As I write I am debating whether to trade RIMM or GS. GS is in play because of the news that the bailout may not happen. RIMM reported last night and showed unusual weakness. SMB traded RIMM in afterhours yesterday and chopped it up. So I have a feel for what to look for this AM from RIMM. But we have GS down a ton after such a strong trading day yesterday. Also, NKE held 64 yesterday and if I see a hold at this level I will start a long position. What to trade? One thing I cannot do is not choose. I cannot get distracted on the Open trying to choose which one will be best. I must choose. I can have one as a backup plan. Read more [...]

Fading Financials and Gold

Sep 22nd, 2008 | By | Category: General Comments
During the range bound market we experienced from 04-06 I learned how to fade stocks.  Today I used that technique to make some good money in MS and JPM.  As a trader you want as many arrows in your quiver as possible.  This is one skill you should develop to become a well rounded trader.  We can't short the financials until after 10/2 but we can find excellent risk/reward areas to get long for short term trades.  Admittedly it was tough to watch JPM, MS, and GS trade lower without the ability to participate.  But I don't work at the SEC so it's not my job to figure out policy for the best trading rules.  And as a trader Read more [...]

Making the Adjustment

Sep 21st, 2008 | By | Category: Steven Spencer (Steve's) Blogs, Trading Theory
One of the things that I spoke to the desk about this past week was being prepared to make the necessary adjustments in their trading as market conditions change. Last week presented the greatest intraday volatility in US equity markets in about a decade. Our very young desk took incredible advantage of the opportunities that were presented to them. I saw traders that were used to making $1,000-$3,000 in a day making 10 times that amount last week. But on Thursday after the market closed the Treasury and the Fed decided that a comprehensive bailout was necessary for US financial institutions. At the same time the SEC announced Read more [...]

Bottom in Place?

Sep 21st, 2008 | By | Category: Gilbert Mendez's (Gman's) Blogs
This last week was out of control. I wish there was a better way to describe it. The volatility seen in the financials, specifically GS and MS was just absolutely silly. I remember I jokingly said on our morning meeting last Monday that GS could go as low as $80 and MS to $10 (they were trading at $140 and $33 at the time). Those are ridiculous prices for these stocks. And boy was a I close with those. As both stocks were getting close to my long term buys they looked so weak that I didn't think about raising my bid. What a mistake that was. Now looking at the bigger picture I am going to make the bold statement that we have Read more [...]

Comfort Zone

Sep 21st, 2008 | By | Category: General Comments, Mike Bellafiore's (Bella's) Blogs
In this market you must get outside of your comfort zone. We preach this at this time to the traders on our prop desk. And anecdotally, Steve and I were at dinner the other night and one of the best day traders from another firm made this same point. You must get into the financials if you do not regularly trade them. You must try and trade the GS's of the world even with their volatility. You should be trading with more size and hold stocks longer than previously. One of our better new traders spent a great deal of his time last Sunday at the office with my partner, Steve Spencer. They reviewed his work from the previous Read more [...]