What is every trader thinking?
Wednesday, March 7, 2007 at 08:00PM What's on many traders' mind today may be the fact that we are about 35 pts from the recent low on Naz and about 150 pt from the recent low on Dow! And when are we going to test that low again? This may explain the lackluster follow through we are having today with the usual recent late day selling helping out the cause. Maybe the recent volatility including yesterdays impressive up day might have tired out a few traders or maybe we are just stabalizing which would be a good sign. The fact that many momentum traders are simply sitting on the sideline and many institutions are having a "wait and see" attitude is not helping to fuel this market higher. It's natural considering what we just went through, but it's still frustrating to traders wanting to get in and play. It very much feels like the only players trading this market are the short term flippers, short sellers, and those with a compulsive addiction to trading. Maybe it is inevitable that we will test the low again but untill somehow that perspective goes away, many market participants are just not going to commit lots or any of their capital back into this market. Is this market tough? Yes if you have a lot of positions or if you have to trade to meet a performance goal. We are currently taking the stance like majority of traders out there and sit on the sideline as much as we can.
Looking back...you can now see why we have not taken periods of good market environment for granted and why you need to take advantage of the days we had 10-15 charts up of plays on a daily basis. We have often stressed in the past that when the going is good, we have to go all out using all we have (time, capital and effort) to make as much gains as we can. If done right, it's possible to have made enough gains during the good market that the average investor/trader can afford to completely ignore this market now. We learn as we go along and it's no different whether you've been at it for months or years.
ABM, sure the EPS doubled yoy and they beat expectations, but it is not why we wanted to take a stab at it again this morning. We just thought the sell off yesterday provided an opportunity like last Q and the fact it behaved quite well during the meltown is also a good sign. We were able to easily get it under $27 early and it moved a good $1 before the markets took it as a guest downward. We were able to add and trade it upwards knowing full well we are not going to throw a 2-3% move in a day without some repositioning if the tide turned. We've kept our starter. We are not about to get foolish, it's a scratch and claw market for profits at this time.
SNCR, we bought a little of this one intraday thinking it has held reasonably well during the last little while. Of course, like 99% of the stocks out there, this stock too can not escape general market pessimism when the whole market poops. We are watching this one closely and if there's any sign of weakness we'd be bailing fast. Again, we are concentrating on stocks that have held up well and that are near highs following the corrective activity. You know the steadiness of a ABM compared to the volatile nature of SNCR as both have been on DJIM for months. Knowing this allows you see to see how much risk you can put out. Think before you act and make sure what you are buying is suitable to your style/risk at this point.
BZP, hopefully this is one of those 1% stocks that does not get tied to the general market pessimism. This one came out with news that they had some positive drill results that exceeded management's expectation. Very refreshing to DJIM land we think. Hopefully this is the news that gets it up on institutions' radar so it can gain some exposure down the road. Again, this is not a typical DJIM play so we'll have to assess it on a daily basis, but it is cheap with a story that might make the rounds.
Other than a couple of slow trades here and there, there's really not much going on out there.