The Thoughts of a Professional Trader (OVTI)

Here are my thoughts trading OVTI on the Open 7/6/2001.

1. Opening Drive Play. OVTI gaps down with fresh news. During our SMB AM Meeting Steve mentioned OVTI starting to move that he found from the SMB Scanner. This is a very cool new tool which we built for our desk that shows the stocks we want to consider before the Open. It shrinks your preparation time considerably.

We have a stock gapping down and then there is the above/below around the 32 level on the Open. Finally 32 holds the offer and the sellers appear in control. SHORT. Short and play for the downside momentum. Do the best you can holding on but lighten up when the downside momentum wanes. Remember on the Open we play the momentum and do not play for a swing trade on most occasions. Stocks do not trend in the first 15 minutes of the day. They move. But they do not trend.

2. Breaking News Play. From our Squawk we hear news about an analyst defending OVTI. There was too much buying on the bid at 25c and 20c. Now the news. I am lightening up to 1/3 of a core and watching to see the reaction to the breaking chirp. OVTI spikes. Short 80c, short some more 90c into the intraday resistance of 32. Stopped out 32.01, 32.06, 32.11. Good trade here. When a stock crumbles from a level and returns to that level quickly we short and play for the move back towards the low and perhaps even lower. This is an excellent technical trade.

3. Unusual Hold on the Bid. After the spike above 32, will OVTI hold at these higher levels? Did I just short too early and now OVTI will fail above the 32 after stopping out the smart shorts just below 32? What the heck is the buyer doing at 32? He will not drop. He is tested hard and the buyer(s) will not drop one penny. In this day of all things algos a buyer at the same price and repeating may foreshadow a large buy order to follow. Why wouldn’t he just drop and go buy OVTI lower?

Buy, buy as much as you can and responsibly exit if the level does not hold, and hold. This is a Trade2Hold. Do not sell at 32.30 when there is some intraday resistance on the offer. Let OVTI breathe. Play for the real move. Play for the bigger move. Sell when there is a Reason2Sell.

Mike Bellafiore