There’s always something to trade. You just have to be where the volume is. It can take one good stock to make your week, and one good week to make your month. 90% of life is showing up, and for those who showed up today, there was money to be made.

We had a repeat offender today, our good old buddy Origin Agritech, ticker SEED. Maybe there’s a hedge fund out there that needs to save their entire year by driving up this stock. Maybe there are some new algorithmic programs being tested out to see how far they can take a small cap stock for a ride. Whatever it is, when a stock moves 30% on volume that is more than the entire float, there is going to be some money in it. Forget that it’s the day before New Year’s Eve.

I suppose one advantage of the rise in algorithmic trading programs is that even on a day like today when a lot of traders are off their desks, the programs can still do as much volume as they want. The computers aren’t taking away skiing or sailing, nor are they too hung-over from partying all night to trade . If they want to drive a stock up, it doesn’t matter how many other traders are on vacation, they will be able to drive it.

If you needed yet another sign that the volatility is low, just look at today’s action after the Federal Reserve rate announcement. Yes, we knew that the rate was going to be steady. And yes we figured that the language in the announcement would be similar to previous ones (Fed plans to keep rates exceptionally low for extended period etc.)

But even on previous decisions in the past few months (or non-decisions more appropriately) we saw at least a little shakeup in the market. Maybe a short squeeze, or a few big sellers or buyers come in. Today, however, we barely made a new low, and just kind of sat there. No selloff, no short squeeze, nothing. Time to take a vacation? Not quite yet. Maybe next week.

The way I see it, even in this light volatility market, there still are opportunities in the most in-play stocks. You have to go where the volume is; you have to go to where the volatility is. Even if there is no market-wide or sector wide volatility, there’s always going to be an earnings announcement, a company giving some bad guidance, or some rumors out of Washington that some industry or company might take a hit or get a boost.

Just a few examples of those today were: Express Scripts (ESRX), Medco Health Solutions (MHS), XTO, and Exxon Mobil. There’s always going to be something on the move. If you are a skilled trader, you just might be able to capitalize on it. Keep your eyes and ears open, do your research, rip through news, and be ready to trade. That’s all we can do, and we’ll keep on doing it.

Best of luck with your trading, and don’t forget to follow us on Twitter.

Every morning I scan through several news sources and rip through charts and screeners to find the best intra-day trading opportunities. The best setups are usually in stocks that have decent sized gaps (anything more than 5%), and have some fresh news (earnings/guidance, upgrade/downgrade, etc.) Today, although I had a few stocks on my watch-list, I decided to focus on Kroger.

Even though Kroger missed on earnings and issued downside guidance, my bigger picture plan in the stock was actually to find places to get long, if I saw a good risk/reward setup, and saw confirmation from the tape. There were three reasons behind my strategy this morning.

1) KR was gapping down about 12%. Although their numbers were bad, this seemed like any awfully large gap down for a grocery store chain.

2) KR was opening near major long term support in the 19.50/20 area, where the stock had bottomed out in March.

3) Although they are not in the exact same business, I clearly recall two major drug stores gapping down on poor guidance recently, only to find support and bounce intra-day. One was Walgreen’s (WAG) last week, which Bella highlighted in his blog, and the other was CVS in early November. I was going to look for any sign of similar price action in KR, and play for the bounce.

Well, after opening at 20, and doing a ton of volume there, KR went down to the 19.50 support area but never stayed below.  This is where Bella covered his short and left for an early lunch. I figured now that the hard money was made, it was time to look for the easier money.  As you can see from the chart below, KR held back above that 19.50 support area, and then broke out above 19.75, where we had previously identified major selling. This is how an intra-day bounce forms in an in-play stock. Sellers try to push the stock down below a major support area, and when it fails to break down, and starts to catch some bids, there is going to be an upmove. It also didn’t hurt that an analyst came out and defended the stock as it already started bouncing. Just a little fuel to the fire which might have given some shorts another reason to start running for cover. Once the stock started trading above 20 again in the late morning, some rather aggressive buyers stepped in and were able to push KR up another half point. When the volume dried out, and the uptrend broke, I was able to exit my core position with a decent gain after holding for about 75 cents. Not a huge bounce by any means, but definitely one of the best moves on a relatively quiet day in the market.

This is a pattern I’ve seen occur several times and I’m sure will be repeated again. Stocks like Kroger, ones involved in real brick and mortar businesses, will gap down big on poor guidance in an overall bullish market. When some of the longs get washed out of the market, and the sellers then fail to push the stock any lower, I’m looking to play for a bounce. I may have never traded KR before today, and I may never trade it again, but one this day it was one of the most in-play stocks, and for intra-day traders, it offered some excellent trading opportunities.

Best of luck with your trading, and don’t forget to follow us on Twitter.

Patience is core skill for any trader, and for a momentum/scalp trader like myself, adding some more patience to my game has been a hard challenge to tackle. As I mentioned in my blog last week, one of the major adjustments I have made to my trading is that I am being far more selective with my  setups, and I am holding positions for longer periods of time. Instead of making dozens of trades in one stock throughout the day, I am searching for one or two good risk/reward plays across a basket of stocks and ETF’s, and making just one or two trades in each.

As I continue to follow the market and adjust my trading to new market conditions, I am finding that being patient is just as much about waiting for your entry point as it about waiting for your exit point. “No one ever went broke taking profits” is one of the more overused clichés in trading and investing. It might be true, but I can assure you that having a solid plan for each trade, one that matches a high probability setup with a good risk/reward ratio is far more important than simply always booking small profits. As you are trading and holding a position, you will often have to resist the urge to take your profits out of the market if it is not in accordance with your plan and your stock has not yet reached your planned target. If you are always booking small profits, you may find it difficult to make money in the long run, as your many small wins may simply not be enough to cover your losses.

A solid example of a setup many traders on our desk were able to capitalize on yesterday was AIG above 30.50. On Monday, after breaking down below 32, AIG made a feeble attempt to bounce off 30, only to fail several times in the 30.40 area before it went down another two points to 28. On Tuesday morning there were a handful of positive news stories out on AIG, and the stock was gapping up. After selling off right on the open, AIG bounced off of 29, made a powerful upmove towards 30.50, failed there the first time, but then broke above. I was long above 30.50. My target was 31.50. I held my core position to just below that price before I sold. Yes the stock went up another 30 cents, but it’s much more important to me that I was patient and disciplined, and stuck to the plan to hold AIG long for a point. The easy thing to do would be to dump the stock at 30.70 or 31 when it slowed down, take the 20 cents or half a point of profit, pat myself on the back, and go grab an early lunch. No one ever went broke taking profits right?

Well, based on the chart setup, the recent history of the stock, and based on the confirmation we received from reading the tape when the stock broke above 30.50, I decided that I was going to hold a core position to my target of 31.50, and that’s exactly what I and some of the other traders on the desk were able to do.

Another example was Tuesday’s setup in Amazon, which just happens to be one of the strongest stocks in the market. One of the better traders on our desk was able to catch about two points AMZN as it was making new all-time highs. This trader had a well prepared plan, understood the potential for the stock to move, had the patience to hold the stock for several points, and the discipline not to sell through some of the downticks and take his profits too early. Nice job!

When you have your fingers on the keys, and the stock is ticking up and down, it can be easy to overtrade and not hold positions long enough. Having patience, and being able to hold a position for a longer move stems from having a solid detailed plan, and having the discipline and determination to stick to that plan.

When you get into a good play, and the stock starts moving in your favor, add a little dose of patient thinking to your plan when the setup calls for it, and you may find yourself taking larger bites out of the market than you previously thought possible.

Best of luck with your trading, and don’t forget to follow us on Twitter!

Sometimes you are only as good as the stocks you are trading. While having the skills to mange risk and maneuver in and out of positions are of great value, stock selection is definitely one of the keys to success for any trader. As we approach the Thanksgiving holiday, and many traders get distracted by thoughts of turkey and wine, volume in the overall market tends to dry up. This is why it is even more important to be in the most in-play stocks. One stock in particular that was high on our radar this week was Origin Agritech, ticker SEED.

Over the weekend, the company received approval from the Chinese Ministry of Agriculture to produce a new type of genetically modified corn. Doesn’t sound too appetizing to me, but apparently they love the stuff in China, and on Monday the stock doubled.  As you can see from the chart below, SEED gapped up from $5 to $7, and was trading up to $8.50 on tremendous volume by 10:30am when it caught an upgrade from an analyst who gave it a very aggressive $15 price target. When a small-cap name like this gets on a lot of people’s radars, and some big funds start putting money behind it, they can really take the stock for a ride

A lot of the high-flyers that day traders are used to making tons of money in have tightened up significantly in the past few months as the volatility has died down. As you can see from the charts and from Steve’s blog earlier today, SEED has offered excellent risk/reward trades on both the long and the short side for the past three days.

In order to make money in a slower market, it is important to be in the most in-play stocks. All it might take is one stock like SEED to make your week or even your month, which is why preparing every morning, ripping through news and charts, and scanning your filters to find these plays is so important.

So hopefully some traders can take their SEED money and buy a nice turkey this Thanksgiving, and maybe even have a side of this new genetically modified Chinese corn to go with it. I think I am going to stick with the stuffing.

Happy Thanksgiving, and best of luck with your trading.  Don’t forget to follow us on Twitter.

As traders, it is our job to adapt to changing markets. No strategy or system works forever. And while there are certain trading fundamentals that will always be relevant (i.e.: discipline, patience, proper preparation), we always to need to be cultivating our edge and looking for new ways to make money. Below is a quick rundown of three shifts I am making in my general trading approach as I adapt to the current market:

1. Following more stocks:

I know this hasn’t been the easiest market to trade, but like in any market, opportunities are abound if you are well prepared and focus your energy in the right places. For the past several months, every day, several of the 50+ stocks I usually follow present at least one good trading opportunity, and in order to capitalize on them, I need to be constantly preparing to trade off of information I have collected in previous days/weeks. This is a bit of a diversion from how I would previously trade, where I might make dozens of trades in one stock or ETF, trying to milk it for all it was worth. Spreads are tighter, and moves are smaller, and I think it is paying off to try to be involved in several stocks during any given day as opposed to focusing on a single stock. The exception to this is if a stock is displaying  exploding volatility on  a major news story. Usually those plays will demand all of my attention.

2. Looking for fewer setups/trades in each stock:

In each of the stocks I am following, I am trying to limit my trading to just one or two levels/setups that I am going to trade each day. Whereas in a higher volatility market, it may be more profitable to scalp all day and make dozens of trades in one single stock (as you might expect several large moves or reversals), I am finding most stocks I follow will have only one or two good moves a day (if at all), and I need to be much pickier about the prices and setups I am looking for.

3. Longer holding periods for my trades:

Yeah, it’s nice to catch two points in 30 seconds, flip the position and catch a point the other way, but it’s just not happening like that right now. Stocks are moving less intra-day, and they are taking a longer time to make their moves, so the average holding periods for my trades has increased drastically. Sometimes in order to do this I have to filter out a lot of the noise that occurs in a stock as it trends its way in a certain direction. If I am in from a good price, and the trade is working out, why mess with it as it zig-zags toward my target.

This is just a very basic rundown of some of the adjustments I am attempting to make in my trading. So far I believe they are working pretty well. As a professional trader, I am always working on my skills, and looking for new edges and opportunities in the market.I am interested to hear from other traders out there about some of the adjustments they have made in the past few months or are currently making. Please feel free to leave a comment, and best of luck with you trading.

Trading the open is a high risk/ high reward game. The moves can be bigger and quicker, but if you are on the wrong side, the rip can really hurt. Whereas patience and conviction payoff on longer term trades, aggressiveness and flexibility are the skills that help short term traders capitalize on the volatility right on the open.

Yesterday AM, 11/19, represented one of the better opening setups I’ve seen in the past few sessions. After breaking to new multi-month highs earlier this week, the SPY’s have bounced several times off of 110.50 (1100 in the SnP futures). On this morning, we gapped down right to that level. One setup that has been working quite well in this bull run has been to buy gap-downs in the market when we hit support levels. Well, I’m sure that on this morning, many traders on the street had this strategy in mind, and when we failed to rally on the open off of 110.50, there were certainly more than a few people caught on the wrong side, which led to a hard down move in the market below  this major support level.

As I mentioned, trading the open requires mental agility, aggressiveness, and a more flexible strategy than many traders are accustomed too. You have to be willing to cut losses very quickly, and often flip a position in order to get on the right side, but as we saw this morning, the profits for the prepared trader can be very big, and very quick.

Best of luck with your trading!

Every time Bernanke and the Feds are set to make a rate announcement, we have a brief meeting within our firm to discussing how we are going to trade. Whereas last fall we saw some huge directional moves on rate decisions, on several of the recent Fed days we’ve experienced extremely choppy action. The market will appear to be breaking down, only to reverse and make a new high. Or the market will appear to be breaking to the upside, only to reverse course and close at the low.

Today once again proved to be one of those choppy Fed days. After 2:15pm when the announcement was made, the SPY made both a new intra-day low and a new intra-day high within about 30 minutes. When I see this kind of action in the market, instead of trying to pick direction, I just look for excellent risk/reward setups. When the SPY made a new high above 106.25, but failed to breakout to the upside, I thought there was a good risk/reward short in the market, specifically in the financial sector, which was showing relative weakness all day.

Sometimes we can get tossed around in a choppy market, but as flexible day traders often we can use the choppiness to our advantage. The key is to focus your energy on finding risk/reward trades, regardless of the trend of the market.

Best of luck with your trading! Don’t forget to follow us on Twitter.