Buy, sell, move on

BellaGeneral Comments8 Comments

Below is an argument from a trader on our desk not to hold stocks during this earnings season.  The trader suggests to get in and out and not expect much follow through with stocks to the upside.

Kind of a frustrating market day because the market is slowly grinding higher throughout the day but individual stocks don’t really make hods. It’s a narrow market. Nothing seems to hold higher after the first leg.

I’m not seeing any plays to hold all day…. unless it’s AAPL… All I see in one trade at a time. If a stock’s a long, you go long, sell into pop, then start all over by waiting for another entry later. If you hold too long, it seems like you always have to face a difficult fork in the road… roll the dice on 40c profit and risk 30-50% of it on a trailed stop that isn’t really that great, or let the stock breathe and prove it’s no longer strong/weak and risk the entire PnL

The stuff that’s really worth holding has that “oomph” factor where it can speed up… either a momentum stock, game changing news, high short float, or very emotional psychology. Last earnings quarter, that stuff was really good. You had GMCR, NFLX, FSLR, DNDN, DMND, SINA with nice moves.

I just tried to “move on quickly” today. I take my trade, I move on. Don’t care if it trades higher. If a stock has too much BS at a level, I don’t get obsessed about trying to get back in asap. The upside on stocks like KO, FRX, EDU, STT, etc — just not that great. They traded like common relative strength plays. None of them had the pre-market order flow to trade momentum. Not a single one of them is on the top-20 strong today. The volume multiple isn’t there, the gap % isn’t there, the daily chart isn’t there, and the fundamental stories aren’t there to get anyone excited.

FSLR was the play today, it just pulled in too much on the open and convinced me it was likely another gap-and-crap or let down day. The 1-minute and ticks looked unusually good at 10:15 am though.

I am probably trading too small lately. I guess I am just not in the mood to lose a lot in this market. Most of my plays today were taking the callouts of others and hoping they work. It’s times like this where  I wonder if I am relying too much on my opinion on whether something will be a good play. Should I get bigger because I believe in the play and it’s my idea, or get bigger just because I can, because .61 bought a little or .77 sold a little…even if it’s just a random play.

Do you agree with this trader that this market is not rewarding holding trading positions?


One Good Trade

no relevant positions

8 Comments on “Buy, sell, move on”

  1. Feels like this trader does not have a complete road map of what he’s going to do today…

  2. I actually do agree with this trader. So far, stocks that have reported earnings (that are in my risk tolerance) haven’t had follow through. There are the drive plays (JPM, JNJ, MAT) and there are the mid day pullback/consolidation plays (NFX, MAT etc). But going back through the charts of stocks that have reported earnings, very few of them have trended cleanly that I would classify as a trade2hold. It doesn’t necessarily have anything to do with a roadmap but its taking advantage of what the market offers you.

  3. I understand what do you mean by that. But a trader who thinks he can just follow callouts and hope they work is a mentally unprepared trader.

  4. Well, I wasn’t necessarily commenting on the actions of this trader but more on the market structure. I do think this trader has to work on his game & preparation.

  5. sorry but this is bs. i am the trader in question and I have as many ideas as anyone in the AM. if anything i am usually way too headstrong in trading my own ideas that i occasionally tune out the desk on the open. today was a call where i took an unusual amount of other traders’ callouts, that’s it.

  6. it’s always good to try to figure out whether certain patterns are more prevalent during a particular earnings season as this may provide you an additional edge in your trading. but be careful not to be the person making sweeping generalizations.

    in terms of trending i thought the best stock ystdy FSLR trended pretty well and ILMN has had the best price action today and has trended well. i tend to narrowly focus on stocks presenting the best price action so this probably skews my opinion compared to guys who are looking at 10-20 names each day….

  7. I am having success holding cores for several hours to days.  The key has been slow accumulation and willingness to hold until a true change in trend is seen.

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