The Fly versus Mortals

A video of traders giving The Fly investing advice

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Leaders in trouble:  NFLX (short pick), LFT, BBBB, JOSB

Leaders showing strength:  GMCR (earnings star), ACM (earnings star)

The Vince Carter:  THOR

Day-tradable:

• Solars:  Play the intraday reversal on STP, SPWRA, use FSLR for direction

• Tech:  Play the intraday reversal on semis
• Short aggressive on high volume reversal:  ARST, JJSF (or whatever volume on this), PNRA (showed weakness Friday),
• Energy:  Play intraday reversal on HK, GMXR, PDE

Under your radar:  NRGP (detected unusual activity), LINC (crazy earnings. Looks better than LOPE, and will eclipse STRA in price performance.  Great earnings: http://www.reuters.com/article/marketsNews/idINBNG43437220090506?rpc=44 )

It looks like on of those “build up your shorts” kind of week.  In the event of a correction, I suggest you screen for 70% from 52-high with high hybrid-weekly.  That should populate a list of trash stocks that moved up with the overall market, and if you’re heavy long, then short these.

Two things to consider from last week:
–  Nasdaq up for 8 weeks straight, with last week at one of it’s BEST volume weeks yet
– However, leadership stocks were lagging AND microcaps were leading.  It’s okay to have BOTH move up, but when laggards lead while leaders retrace, then you know the “dumb” money is being sucked in.  I’m going classic here since VIX has been breaking down in an obscure fashion.

Picture above is a picture I took on the East side of the island.  After 6pm, the beach is empty.  Perfect for landscape photography.

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Market ends week up 4%.  Only 370% more to hit the 40,000 mark.  Why not?  Haha.  You realize, I am kidding right?  I think what’s been bothering me lately is the thought that the VIX looks it will be heading to the 20s.  Hmmmm.  I’m not too sure about that.  We did hit a medium term short-sale trigger point (VIX <34) that I’ve been watching, so I did beging to scale in.  Nothing great, just across a few sectors… fertz (TNH), online retail (OSTK), and re-entered airlines (ZNH). 

Still holding the bear-killing coffee stock… GMCR.  We hit my short term 80 target today, and I’m going to raise it to 82.  After 82 I will scale out, with next sell >85 or <78.  I think people will start thinking “triple digits” on GMCR and that’s when the profit-taking starts.  Meanwhile, GMCR’s little brother, PEET looks like it’s trying to break out of 30.  If it cannot within the next few days, I will short PEET as a hedge to GMCR longs.  Just a little idea for yah. 

 

 

New targets:

SFLY = 14
FLWS = 4

Have a good weekend.  Special shout-out to The PPT Traders for slapping the market up side the head, Rafer Alston style!

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Lot of people playing around with cheap ugly beat-up nasty stocks lately.  We call these “casino-stocks” and you better treat them like that.  A lot of the iBC entourage have been hitting home runs in some of these plays, but just remember they are ahead of the game of most traders, and so I can say with confidence they know how to get in and out of these plays with precision.  This is just a note for those who are NEW to playing these super fast moving micro-caps.

• Position Size = small  …you see a stock rise 30%, then another 20%, you are now losing control so you jump in.  Okay, fine we’ll play with momentum strategies.  However, always remember just as fast a stock moves up, they will likely move down just as fast.  You do not want to go more than 1/2 of what you’re used to investing in normal sized cap stocks. 
• Timing= quick, very quick, more quick than you are used to …Remember, momentum traders build position as momentum increases.  That means, no “hindsight” trading, just keep building position at a comfortable pace.  Volume will come in “waves” in these junk-stock-squeezes.  Finding an exit point is even more critical.  Some of these stocks can be up 15% intraday, then close down -10%.  Sheesh.
• Effectiveness= low  … playing fast short squeezes and momentum on micro-caps (or worse, penny stocks… NASTY) is certainly a type of trade, but their occurrence is very rare and thus is not a strategy you want to specialize in, especially if you’re new to trading.  Find balance in your portfolio, like using only 1/5 or 1/10 for higher risk plays… for example, Alphadawg doesn’t play any of these stocks and yet he is destroying the S&P with normal plays.  Although I am totally for finding rare short-squeezes in beat down sectors, I am highly against penny-stocks, I loathe them with a passion.  I find people who buy tiny-cap stocks under a buck are easily manipulated, are in for the cheap and quick thrill, and have sad sex lives.  Please don’t ask any of us about a penny-stock.
• How to Play = putting all the above together, to sum up these trades, you have to be very patient in your entry point and quick in your exits.  Keep position size relatively low and EXPECT to lose on them.  I like going into a high risk trade with that low expectation because it keeps your emotions in control, for example, when I play options on earnings plays I write the whole thing as a loss before the market opens.  Remember if you are young, then the most effective way to be a trader is to stay in the game so don’t lose that competitive advantage you have over other traders. 

Nevertheless, I am not against people swinging for home-runs every now and then.  Right now we have some epic squeezes going on, but please please please know you’re exit strategy.  Don’t just jump in because someone else did.   It’s all about experience here.  I think you watch guys on iBC like CA, RC and Danny swing for stocks like CAR, XTXI, FTK and it’s spectacular.  But they know how to play with the fire without getting burned. 

Congrats to all who have been banking coin on these plays (there’s a number of you on The PPT), just keep things in perspective.  All these stocks will be hit, and they will be hit hard.  Until then, keep milking it.

… just a friendly reminder from your iBC neighborhood watch.

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Congrats to today’s best calls and trades on The PPT…

XTXI ownage by @jnuts. Stock up 26% today, and 125% in 3 days.  Wow, jnuts you really are nuts.

Players:
XTXI +26% today @Mets57 +47% realized <24 hours.
XTXI @nation81
XTXI @jnuts still holding

Honorable mention:
CAR +47% today @ChartAddict [Players:  gtg414g +45%, TraderJoe] FTEK +13.45% today @Fly [Players:  howie2092, jcvtwo, twoez]

… I can’t keep up with you guys! Go go go.

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 What is going on in the market today?  I thought the Bulls lost to the Celtics already.  Market is on fire.

Is today’s tape fueled by the bulls?  Yes, but mostly no.  To me it feels like another extension on the rally due to weak players:

1) weak shorts covering along the tail of the rally.  I call them rats.

2) foolish longs jumping on buying anything “just because”

… usually this combo leads to a turning point on the tape.  Probably the worst thing about this extended rally above Dow 8,000 is that it has been given that extra push by penny-looking stocks and beat down commodities.  If you’re long, do so for a trade, but be quick to take most profits.  If you are short… well, I just hope you are averaging in.  Shorts need to “buy-time” by averaging in in smaller increments.

In a real bull rally, you want leaders moving the tape.   Here is what is troubling for me today.  Look at the party going on in some ugly stocks:

CROX +32%

JASO +14%

YGE +13%

FTK +21%

And finally, the VIX is virtually flat!  I had VIX <34.50 as my short the market entry point, but this 35 spot is stubborn.  I’m not really sure how much more the bulls can take this thing higher so I will split my entry points to two areas.  One under 34.50, and the other at 33.80. 

Wedging into a “big move.”  The VIX ETN is making the VIX harder to read.  Try to adjust to it.

I’ll be tweeting the Lakers Rockets game today. I predict Odom goes crazy.

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