Wednesday, April 11, 2007


Don't make trades when the markets are red?

Why not? Been told not to? Read a book that said to stay away?

Plenty of opportunities come up even on red market days, you just have to know where to find them.

High of day list / good average day range stocks making 52 week highs are the way to go. Muddy has said it over and over again in chat and in this blog, it works. Today the markets were red as you know-

Wanna see what came up in chat? I stopped counting at 35 alerts because well, I just stopped:)

Some of the highlights: Symbol / Alert price / HOD

CTLG .75 / .95 AVII 3.04 / 3.22 ASTIZ 2.50 / 2.75

AMKR 14.02 / 14.30 DESC 1.80 / 1.91 FWLT 63.48 / 64.49

BHIP 2.34 / 2.55 JASO 19.78 / 20.28 GLBL 19.97 / 20.33

AMRN 3.25 / 3.39 VOLC 18.40 / 19.35 RIGL 12.00 / 12.44

NEXC 12.10 / 12.93 AHM 20.10 / 21.91 VRAZ 6.80 / 7.20

VNUS 11.00 / 11.47 MDII 1.45 / 1.70 PGNE .34 / .57

LEND 9.60 / 10.35 NFI 5.08 / 5.38 ISON 1.45 / 2.20

POWL 34.90 / 35.67 JDO 1.69 / 1.87 PDLI 22.70 / 23.62

PARL 5.20 / 5.59 and so on.

Anatomy of a trade today:

Spot VOLC coming across the rolling HOD list at 18.30. Have traded it in the past, remembered it had a decent day range. Checked the news, nothing today for it. Volume seemed good, nice break north so I dove in with a .30 trailing stop.

As you can see it continued north for a nice run to a hod 19.35. In this trade I sold just before the hod for a nice profit. Notice at no time did I mention overall market conditions, ticks / trins, etc. Does it matter? Sure does. Do I follow the overall market conditions? Yes I do, along with Gold, Oil, S & P futures and I listen to CNBC all day long.

Point is this: Trade what is front of you, if a stock is running, it's running. I may tighten my stops a bit and take smaller profits when the markets are down / lite volume days, but that is about it.

If you don't trade on down days and it works for you then that is great. If your looking to expand your capabilities then give the HOD list / 52 week high method a try, you might like it.

OK, the "Pile on theory" or "Everybody into the pool":

I think on red market days this method is even more effective than on green market days and here is why. Less stocks are green, traders who don't short much are looking for green. The result is that less stocks are running so the ones that pop green, hit HOD's and or 52 week highs get the goods. Make sense? Do you think ISON would have run as far and hard today if the markets were green and stocks were popping all over? Just a little theory.


Anonymous said...

I agree with the "pile on theory".
Makes a lot of sense. Great blog


M.A.S said...

"kill the guy with the ball" lol