GOOG announced today that the Nexus 1, their new phone, would be carried on the Verizon network. RIMM started to trade lower. It was already on our radar as a short candidate below 66.50 and 66.20 based on its recent price action. We knew the next major support was not until 65 so it was game on for a short trade.<\/p>\n
Once news is released on a particular stock it is the job of the short-term trader to gauge the strength or weakness in the stock by reading the tape. By carefully examining how aggressively a stock is being bought and sold a trader will be able to form a hypothesis as to what price levels the stock will trade. Also, by reading the tape a trader can quickly recalculate in their mind, almost automatically, whether the risk\/reward is still favorable for an open position.<\/p>\n
When RIMM traded down to the important 65 support level I was hyper-focused on the Level II quote box on my platform. By absorbing all of the information that was being relayed to me via bids, offers, and prints I was able to determine it was time to cover my RIMM position. I watched as a huge number of bids got hit at the 65 level. This was most likely from those attempting to press RIMM further down through this key support level. After all of the bids were hit out at 65 RIMM dropped a WHOPPING seven cents to 64.93. Then in less than ten seconds the bid was above the 65 level again.<\/p>\n
Although I covered my short I was not 100% comfortable establishing a long position. I was waiting to see how quickly and how far RIMM would trade above 65 before establishing a long. After It traded up to 65.28 I started to watch the bids very closely. I was attempting to identify a large buyer above the 65 level. At 65.18 I spotted my buyer. Although the 65.18 bid was only showing a few hundred shares I watched as many thousands of shares printed at that price without the bid dropping. I bid for some stock at 65.20 and got long.<\/p>\n
RIMM traded up about 50 cents where I sold the final piece of my position. When RIMM started to trade lower I had a great level to re-establish my position at 65.18. This was not a price that was apparent from just looking at the chart.<\/p>\n","protected":false},"excerpt":{"rendered":"