On Business and Bias

First, a good lesson in business conduct from one of the most underrated films of all time, In the Company of Men:

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[youtube:http://www.youtube.com/watch?v=9cZsNK6-0ts 550 412]

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Next, another blogger recently wrote an article in The Washington Post analyzing how a given political bias can often hinder your portfolio returns.  I am not going to say his name, because he has never linked to iBC…ever (HINT: His name rhymes with Larry Mitholtz) : UPDATE: Pardon me, Mr. Ritholtz did, in fact, link to The Fly back in 2008

Now, with that idea in mind, let’s return to the headline of AOL buying out the politically left-leaning Huffington Post last week. I wrote this post alerting you to the fact that while AOL was in a steep downtrend, it was rapidly approaching a firm support area since the stock went public for a second time a few years ago. How the stock reacted to this sub $20 zone would be very telling.

Fast forward to the end of this week, and we can see on the daily chart below that AOL printed a classic dragonfly doji candle on Thursday, with bullish confirmation on Friday. After a steep downtrend, a dragonfly doji often signals an imminent reversal in trend, much like the hammer candlestick. With Friday’s upside confirmation, AOL represents a textbook long swing entry here. Any political bias against the left-leaning rag may, ironically, impede your capital from growing.

Disclosure: I have no position in AOL.

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Plenty of excellent sites out there include more macro commentary in their links, namely Downtown Josh Brown and Abnormal Returns. I thought I’d share a “Traders Only” collection. Here are the traders that I am reading today (click on links):

• “The Goat,” @gtotoy, with his trademark SPY read of the day
• Joey, aka @DownTownTrader, with another great piece at his new blog location
• @traderstewie with a video watchlist
• @DerekHernquist with more insightful analysis on trading philosophy
• @ChicagoSean on why he trades options
• @daytrend, Vic’s intraday market stats
• @vjland looking at shorting AAPL

There are plenty of other key sources that I check everyday, so be sure to look on the right hand side of your screen for my Blogroll.

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[youtube:http://www.youtube.com/watch?v=rq4c-y6vLM8]

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When the market acts in a seemingly random manner, with intraday whipsaws and an overall lack of high probability entries, looking at multiple timeframes can often help to clear the picture up. You may recall that during last summer’s chop, we had a competing head and shoulders topping pattern possibility on the weekly chart, versus what ultimately proved to be a true head and shoulders bottoming formation on the daily.

Shrinking our timeframes in this current market, we can see a clear head and shoulders bottom candidate on the 5 minute SPY chart, versus a head and should top possibility on the 30 minute chart. Until one of these scenarios proves true, expect more whippy market action.

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Finding “pin action” plays as a trader can often be a rushed, stressful, and inefficient process. You may see a battery technology firm beat earnings and trade up over 13% to next day, as RaginCajun noted in a post yesterday. When you see this happening in real-time, most traders immediately want to find names trading in sympathy with the big mover, preferably before they are off the races. Of course, if this happens during the trading session, you might think you know where to look, but every second that you furiously click through financial sites for related firms you know that you are falling behind the curve.

Enter: The PPT keyword search function. In literally less than thirty seconds, you can begin your research in The PPT Tools first and foremost with a keyword, and then filter all of the other parameters that the algorithm offers through only those firms who match that keyword. As part of our mission statement inside 12631, a Trading Group only available to existing members of The PPT, RaginCajun and I are committed to continuing education about all aspects of The PPT service, so as to make sure you are reaping the full benefit of your subscription. Below, you will find a two-part video series about this keyword search function that I made for members of 12631 last evening, serving as an example of the type of regular continuing education that we provide.

To learn more about The PPT, please click here for details.

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[youtube:http://www.youtube.com/watch?v=UL1CvEHN9OY] __________
[youtube:http://www.youtube.com/watch?v=rRk1RIUPuR8]

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Plenty of excellent sites out there include more macro commentary in their links, namely Downtown Josh Brown and Abnormal Returns. I thought I’d share a “Traders Only” collection. Here are the traders that I am reading today (click on links):

• “The Goat,” @gtotoy, with his trademark SPY read of the day
• @ZMoose12 with an excellent case study
• @DerekHernquist on knowing your stock “type”
• @ChicagoSean on finding your edge as a trader
• Mark Minervini’s latest market commentary
• @daytrend, Vic’s intraday market stats
• @vjland looking at GS on multiple levels

There are plenty of other key sources that I check everyday, so be sure to look on the right hand side of your screen for my Blogroll.

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