Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Zeev: 'tis a wonderful game we play...the most exciting, intellectually stimulating endeavor I've come across. Well, that's not quite true. There's the Red Sox. And there's sex. Sex of course comes in a distant third. You might take a peek at ACET, the daily. I'll not chase it, but perhaps it'll pullback allowing entry. I stop by your thread but spend most of my trading day in my trading room on Paltalk; rather intimate with three of us. Gotta go meet the Sandman. I've enjoyed talking with you...Lee
Hi Zeev: I am highly emamored of your style: that you have three(!) styles makes my heart ploppitate and makes me envious and you my hero. Golly, it's all I can do to handle my one style, to wit: daytrade only, seeking, peeking for the bull/bear flag, the pennant, the occasional bear/bull trap [especially with the QQQ's as they aren't smittent or bitten by analysts up/down/sidways/upside "grades" and silly targets.] No earnings surprises, no "warnings" with the QQQ's; no CEO's running to Rio; no accounting "irregulaties," just pure trading off the chart.... and fully in cash by 4:00 'cause bad stuff happens overnight, [you should have an 8th row center seat to my dreams when I use to carryover.] It'd give you nighmares and send you to a shrink.
[OT] DAYTRADING: The Highs and the Woes 11/16/02
Miss Tushbumper called last night. Distraught, she told me that Doc Kronkite was in a “ terrible state.”
“New Jersey?” I asked.
“No, no,” she cried. “An emotional state.”
“Oh,” I said.
“He badly needs your help. I think he’s in crisis,” she told me.
“Again in crisis?” I said.
“Yes,” she replied.
I’m a sucker, a sap, for damsels in distress. I told her I’d help.
“You are a wonderful, compassionate human being,” she cooed, in that whiskey-throated voice that I made my heart pound and my blood flow south.
I couldn’t disagree with her assessment.
“I shall be at your office. I’ll do my best for the doc.”
I heard a grateful sob just before disconnecting.
I walked into doc’s reception room this morning, early for my scheduled appointment. Miss Tushbumper rushed over, threw her arms around me, pulled me close. I melted.
Grabbing my arm she dragged me into the doc’s office. He was lying on his lumpy leather couch, head in hands, sobbing harder than a Red Sox fan after a loss to the N.Y. Yankees.
“Doc,” I began, “Talk on me.”
“I’ll never be a day-trader,” he moaned. “I shorted all week and lost on eleven consecutive trades.”
“Mmm. I’ll have to give you a test to see what you’re doing wrong,” I said authoritatively.
“A test?” he cried. “I don’t do well on tests.”
“No problem doc. This isn’t a pass-fail test. Just a way for me to identify the problem so I can help you. Kinda like the ink-blot tests you give me, or the free-association tests.”
He shrugged, said “OK.”
“Grab your pad, sharpen your Eberhard Faber #2.”
He did as I instructed.
“Ok, question number one: What are your favorite stocks?”
“That’s an easy one,” he said smiling. AMZN, DELL, PMCS, NVDA and IBM.”
“Wrong. A trader, especially a day-trader has no favorite stocks. Ever.”
“Question Two: You check around and are told that IBM is a great company. It gaps opens at 79. Do you buy it?”
“Of course I buy it,” he shouted.
“Wrong,” I said.
“But Meldelbaum-the-fund manager told me to always stick with good companies, to trade the strong companies,” doc insisted.
And how is Mendelbaum doing? I asked, knowing that his fund was down 70% in the past two years.
“Well, he’s living in Rio now. With his secretary.”
“There is the company and there is the company stock,”
I said. “I trade the stock, never the company. I suggest you do the same.
“Question Three: You buy a stock at 20.50. An hour later the stock is at 18.50. How many shares do you buy to average down?”
“Easy. I double my position, cutting my cost basis in half,” he said grinning.
“Wrong.” I said.
“Right,” he snapped.
“Wrong.”
“Right.”
Then he threw the Eberhard #2 at me. I pulled the missle out of my forehead, wiped the blood from my eyes.
“Wrong,” I hollered. A stock down two points is a trade gone wrong. Never average down, always average up.”
“Up? Why up?” he asked, a puzzled look on his countenance. “That just increases my average cost.”
“Exactly. It also tells you that you play is working, that your trade is going right, not wrong.”
“Enough already with the wrong. Another word you should choose.”
“Question Four: You buy 3,000 shares of LGTO at 5.12 off the 5 minute chart. How long do you hold it before kicking it out?”
“Two hours. Definitely two hours. Definitely,” he said, sounding an awful lot like Dustin Hoffman’s Ray in ‘Rainman.’
“Wrong. A stock bought off a 5-minute chart should be sold in 10-15 minutes at the latest. A stock bought off a 15-minute chart should be given more time. The shorter the time frame, the shorter the stock should be held. FDRY, last Wednesday, on the 15 ran from 7.22 to 7.61 in 30 minutes. An entry at 7.25, kicked out at 7.55 is 30 points. That’s a $900 gain…a nice day-trade.
“Question Five: We are in a new bull-market? Yes or no?”
“Yes, absolutely yes,” screamed the doc.
“Wrong. To a day trader bull-markets and bear markets have no relevance; they mean nothing. You flunk the test doc.”
Doc began sobbing, wailing. Miss Tushbumper scurried in, sporting a worried look. She put her arms are the doc, kissed his cheek, plopped a Prozac, followed by a Pez in his mouth.
“It’s ok,” I told them. “All day-traders make mistakes when first they sally forth. We shall prevail.”
Two smiles appeared. Miss Tushbumper walked me out. Once again she bear hugged me. Oh the rapture, oh the joy.
“You’ll help him? At next weeks’ session?”
I smiled. “Certainly,” I assured her. “We have much work to do of course. But for you, anything.”
Lee Kramer
Copyright 11/16/02
[OT] DAYTRADING: The Highs and the Woes
You don’t get to the top of the day-trading game overnight. It takes years of intense study and a lot of headaches, insomnia and the occasional case of locked-bowels. But I did it, and I’m gonna tell you how you can do it. It involves some pain.
My story starts a few years ago when I told Suzy my Grand Plan; I would quit my day job, the one that paid the mortgage, the orthodontist, the insurance and all the other bills.
Suzy attentively listened to my Grand Plan to stay at home all day and day-trade online. Then she whipped a heavy cast-iron pot at my head. And connected.
“But honey,” I cried, holding my throbbing noggin and ignoring the blood that flowed and ruined my favorite shirt, “Everybody’s doing it; trading at home and getting rich. Don’t you want us to be rich?”
I ducked as another pot whizzed by my ear.
“But sweetheart,” I wailed, “Don’t you want me to be home with you all day?”
Suzy gave me the look; the one she usually saves for the village-idiot, turned and left the kitchen, leaving me reaching for a towel, a handful of aspirin and the determination to begin my new career as a daytrader. “I’ll show her,” I told myself.
I bought a top of the line computer, cost $3,500. I contracted with MSN for three years of internet access, cost $720. I ordered fifteen books that promised me how to become a great daytrader, cost $720. I had everything I needed. I was ready.
Wrong.
After reading and extensively underlining my new books and listening to all the experts on CNBC for a week I knew I was ready.
I got up at 5:00 the next morning, turned on my computer, clicked onto CNBC, listened and took notes.
I waited and watched, because I’d read that patience and discipline were very important characteristics of a good day-trader. Then I heard Maria excitedly announce in a pre-market report from the floor, the actual floor of the N.Y. Stock exchange! that she’d heard from a source that Orbital Sciences was about to be taken over, that “they” were buying Orbital. I knew who “they” were; the insiders, the people in-the-know.
I did my research, because I’d read that it’s very important to do your own research. I learned that Orbital Sciences was losing money, a lot of money, had a negative ROE and paid no dividend. Mmm, this didn’t look so good. But darn, they were about to be bought out! That was enough for me, because I’d read that it was very important for a day-trader to be decisive.
I saw that ORB, the symbol for Orbital Sciences, had closed the day before at $33. I couldn’t wait for the market to open.
I clicked onto my on-line broker and entered an order to buy 1,000 shares of ORB “at the market.” My first trade. I was a little nervous.
ORB opened two points higher! On huge volume. It was gonna happen, I could feel it.
My fill came back at $35. A steal. From my reading I knew it was very important not to be greedy. So I’d sell when ORB hit $39. I did the math; let’s see, 1,000 shares at four points was $4,000, in a day!
ORB moved up smartly to $36 in the first five minutes of trading. I was already up $1,000. Soon it was $37 and was ahead a cool $2,000.
Suzy walked in, caught me rubbing my hands together as I was jumping up and down. I’d read that it was very important to be calm, keep your emotions under tight control. I sat down. I wanted to tell Suzy how much money I was making, but when she gave me the look, I turned back to my computer.
ORB was now $36. No problem, just a little profit-taking. I’d read that it was very important to know that profit-taking was normal.
Then ORB dropped to $35, the price I’d paid for it. Two minutes later is was $34, then $33. Mmm.
By 10:00 ORB was sinking faster than the Titanic after it kissed the iceberg. I saw ORB at 32, then 31.50, and then 31.
Don’t panic I told myself. I’d read that it was very important not to panic. So I wiped my sweaty palms on my trading shirt, took three TUMS, four aspirin and hit myself on the head with a heavy pot. It felt good.
Wrapping a towel around my head so the blood wouldn’t ruin my trading shirt, I told myself not to panic, to get a grip on myself. I’d read that it was very important to talk to yourself.
I checked ORB. It was 29 ½. Where was Maria? Maybe I should buy another 1,000 shares here. I’d read that good traders often “bought the dip.” ORB had certainly dipped. I bought another 1,000 shares and got it at $29. This cut my average price in half to $32. Smart move I told myself.
Suzy walked in. Saw the bloody towel wrapped around my head. “Bumped my head.” I lied.
“Doing any trading?” she asked.
“A little, just dabbling, getting my feet wet.” I lied some more.
“How’s it going?” Suzy asked.
“Great. I’m trading like a pro. Gonna be a great day, you’ll see.” I said.
“Mmm” she said, giving me the look and walking out.
I checked ORB. It was still $29. The insiders must be buying more.
I checked CNBC. Maria was on the floor talking. DELL, she informed us, was being upgraded from a strong buy to a very strong buy. INTC, she said, was being upgraded from a buy to a market outperform. She was excited about AMZN, YHOO and PCLN. But not a word about my ORB.
Ten minutes later I dumped my ORB at 25. I’d read that it was very important to sell a stock that was not performing. I wasn’t panicking. But as I wiped the sweat from my forehead and reached for my Prozac I made the wise decision to put my money to work elsewhere. But where? I remembered Maria’s excitement about AMZN, YHOO and PCLN. She seemed most excited, breathless even, when talking about PCLN. I put it all into PCLN at $150.
I knew that it’s not wise to switch horses in the middle of the stream. But the horse I was on, ORB, was drowning! By switching into PCLN I’d make it all back, and a lot more.
Piece-a-cake.
Lee Kramer
Copyright 4/10/98
10/26/02
DAYTRADING: The Highs and the Woes
I was in crisis. Usually when I’m in crisis I call doc Kronkite, my shrink. He calms me down. He’s a specialist you know.
But the nexus of this crisis was trading related. I wavered, waffled and wobbled before picking up the phone at 3:00 a.m.
The doc was probably ensconced in the midst of a dream. He is a Freudian analyst, [I know this because he has a photo of the bearded fellow, as many shrinks do, on his office wall.] Dreams are very important to him. As he often reminds me, “All can be found, all can be solved, by interpreting dreams. Dream boobeleh, dream. And don’t forget to remember your dreams.”
“I will doc, I will,” I always assure him.
But as my hand hovered over the phone I was struck with an inspiration. Dortmunder, my trading partner, could solve my crisis. But would the little guy deem to help?
I tip-toed quietly into his bedroom. He was deep asleep. I tapped him gently on the shoulder. Nothing. I tapped again. Still nothing. So I did what one must when in crisis. I hollered “Wake up Dorty, wake up. I’m in CRISIS!!!”
He opened an eye, looked at me, said “Sod you,” in his clipped British accent, “Perhaps you observed that I was sleeping?” whereupon he closed his eye and ignored me.
I hollered again. He sat up.
“Nixon had his six crises. You have six crises per week. Go see Kronkite, directly,” he intoned.
“But I don’t want Kronkite. I want you. I need you. You are brilliant! It’s about the market, about trading, and you are a trading connoisseur,” I said in my best British accent. I had him.
He snorted. “You shant move me with your nonsense.
Mmm. So I tried bribery. “Dortmunder, I shall warm up a plate of raspberry scones, a pot of your favorite tea flown in at my cost from Britain. And I’ve purchased a new bumbershoot for you.” [I keep several in hiding for such occasions.]
He harrumphed, but shrugged into his bathrobe; the one with his family coat-of-arms in prominent display.
He followed me in to the kitchen. I prepared the scones, the tea and handed him the $3.95 bumbershoot. He looked at it, sneered, and tossed it into the waste basket.
He began working on his scones while reading the London Times.
I paced.
He ate more scones, maddingly slowly.
I paced some more.
When done he said “Describe if you must, the salient feature of your latest crisis.”
“I fear that I’ve missed the train,” I replied, wringing my hands.
“The train? Patience my dear chap, another train will be along shortly,” he said.
“No. I mean that I’ve missed the New Bull Market. Stocks are flying;
I’m still sitting on my cash,” I cried. “I missed YHOO, I missed AMZN, I missed BLUD, COH, EMC and LF. Woe is me.”
“Indeed.”
”So what should I do? Help me,” I beseeched the little guy.
“You are a day-trader, are you not?” he asked.
“Sure.” I said.
“Well, do you think the market will rise faster than Jack’s Beanstalk?”
“Yes, of course,” I said.
“No, it will not,” he said.
“Will too,” I screamed.
“It will not,” he replied. “Look at your charts. Sure, those stocks you mentioned ran hard and fast. You missed your trains, as you put it rather poorly. Wait for the consolidations: the bull flags, the pennants, the pullbacks to the 10 and 20 period moving averages. Wait. And short the weak charts. There are trading opportunities every day. Find them and trade.”
“Trade?”
“Quite. Trade. And with your profits acquire for me a proper bumbershoot.”
“Yes, yes, of course,” I said. ”What should I trade on Monday?” I asked.
“We shall wait until Monday. I will assist you,” he said, leaving table and heading for his bedroom.
“Dortmunder,” I said, “You are a genius. I am no longer in crisis.”
He looked over his shoulder. Mumbled something. I think I heard “Bully, Bully.”
Lee Kramer
Copyright 10/26/02
DAYTRADING: The Highs and the Woes
I was in crisis. Usually when I’m in crisis I call doc Kronkite, my shrink. He calms me down. He’s a specialist you know.
But the nexus of this crisis was trading related. I wavered, waffled and wobbled before picking up the phone at 3:00 a.m.
The doc was probably ensconced in the midst of a dream. He is a Freudian analyst, [I know this because he has a photo of the bearded fellow, as many shrinks do, on his office wall.] Dreams are very important to him. As he often reminds me, “All can be found, all can be solved, by interpreting dreams. Dream boobeleh, dream. And don’t forget to remember your dreams.”
“I will doc, I will,” I always assure him.
But as my hand hovered over the phone I was struck with an inspiration. Dortmunder, my trading partner, could solve my crisis. But would the little guy deem to help?
I tip-toed quietly into his bedroom. He was deep asleep. I tapped him gently on the shoulder. Nothing. I tapped again. Still nothing. So I did what one must when in crisis. I hollered “Wake up Dorty, wake up. I’m in CRISIS!!!”
He opened an eye, looked at me, said “Sod you,” in his clipped British accent, “Perhaps you observed that I was sleeping?” whereupon he closed his eye and ignored me.
I hollered again. He sat up.
“Nixon had his six crises. You have six crises per week. Go see Kronkite, directly,” he intoned.
“But I don’t want Kronkite. I want you. I need you. You are brilliant! It’s about the market, about trading, and you are a trading connoisseur,” I said in my best British accent. I had him.
He snorted. “You shant move me with your nonsense.
Mmm. So I tried bribery. “Dortmunder, I shall warm up a plate of raspberry scones, a pot of your favorite tea flown in at my cost from Britain. And I’ve purchased a new bumbershoot for you.” [I keep several in hiding for such occasions.]
He harrumphed, but shrugged into his bathrobe; the one with his family coat-of-arms in prominent display.
He followed me in to the kitchen. I prepared the scones, the tea and handed him the $3.95 bumbershoot. He looked at it, sneered, and tossed it into the waste basket.
He began working on his scones while reading the London Times.
I paced.
He ate more scones, maddingly slowly.
I paced some more.
When done he said “Describe if you must, the salient feature of your latest crisis.”
“I fear that I’ve missed the train,” I replied, wringing my hands.
“The train? Patience my dear chap, another train will be along shortly,” he said.
“No. I mean that I’ve missed the New Bull Market. Stocks are flying;
I’m still sitting on my cash,” I cried. “I missed YHOO, I missed AMZN, I missed BLUD, COH, EMC and LF. Woe is me.”
“Indeed.”
”So what should I do? Help me,” I beseeched the little guy.
“You are a day-trader, are you not?” he asked.
“Sure.” I said.
“Well, do you think the market will rise faster than Jack’s Beanstalk?”
“Yes, of course,” I said.
“No, it will not,” he said.
“Will too,” I screamed.
“It will not,” he replied. “Look at your charts. Sure, those stocks you mentioned ran hard and fast. You missed your trains, as you put it rather poorly. Wait for the consolidations: the bull flags, the pennants, the pullbacks to the 10 and 20 period moving averages. Wait. And short the weak charts. There are trading opportunities every day. Find them and trade.”
“Trade?”
“Quite. Trade. And with your profits acquire for me a proper bumbershoot.”
“Yes, yes, of course,” I said. ”What should I trade on Monday?” I asked.
“We shall wait until Monday. I will assist you,” he said, leaving table and heading for his bedroom.
“Dortmunder,” I said, “You are a genius. I am no longer in crisis.”
He looked over his shoulder. Mumbled something. I think I heard “Bully, Bully.”
Lee Kramer
Copyright 10/26/02
Trader XX: Like a baseball player who gets in a
"groove" and hits anything, so too I am in a groove. Hitting trades at an 80% clip.It will end of course. But until it does I'll trade in larger lots. When the groove departs, the lot size will diminish/
Cap't. Tomato, a rather large, black lab is Very Smaart. When she wants out she walks to the door and pokes her Rather Large paw at the door, hard. This gets our attention. I scramble to the door and let her out. When the Tomato wants in she does the same. If I am slow is responding, she barks...Rather loudly. I am doorman to a dog. Terrific.
She likes to eat at 5:00 p.m. I may be lying on the couch, watching a movie, occasionally napping after a long day of trading: I'm a day-trader, a surviving day-trader.
At 4:55-5:00 the Tomato trots over to the couch. If I'm napping she shakes me with a paw, waking me up. If I'm watching a movie she shakes me with a paw. Tomato has me well trained.
When it's time to go to bed the Tomato stands near the door to the bedroom. Yes, she sleeps on a couch in our bedroom. She stands, head cocked in our direction while we're watching "West Wing" or "The Sopranos" or a movie. I get up from the couch, schlepp to the bedroom door, open it. She trots in.
My doorman to a dog is solidified.
But enough. I think you get the picture. And a pretty picture it is not.
Lee
Jenna: I agree in toto with your post 'Techs are not bargains,' especially your contention, "Why buy a dress that is worth $10 for $40 to $50? You wait until the $10 dress is priced at $5, then you might consider buying". As a frequent Filene's Basement shopper I always wait for those dresses to come down to $5, or even $3 or $4. That's how I buy my dresses.
Clang: No, I'm not too busy watching my beloved Red Sox to post. But I AM preparing myself psychologically for the upcoming contest with the very good Oakland A's...normally I wouldn't do this, but my shrink, doc Kronkite, after extensive thought, a few ink-blot tests and some free-association ("Don't worry, it wont cost much" he assured me) concluded that I do this. And I always do what doc Kronkite, shrink to the traders, suggsts. He's a specialist you know.
Hi Jenna: I'd not be too concerned about the "January" effect. For intra-day trades it means little. For swing trades it may make sense to focus on those charts in a solid up-trend; where the price is above the rising 10 and 20 day m/s's...and to short those in pronounced downtrends with the price below the declining 10 and 20 day m/a's.
Hang tough, we all have losing days. Try not to recoup it all at once....forget it and do as you've been doing.
Thanks Nicki...But I'd not wait for just Oct 31 and Halloween. Malls are notoriously easy targets. Not only could many people be hurt, but if a few (dozen?) were "hit" it would further slow down economic activity.
Nice trade. I'm losing at the moment...but I'll wait a bit.
I shorted the QQQ's a bit before you bot them. One of us will do ok, perhaps both os us.
Nice QQQ short. I'm impressed.
I sent you a private message but my computer went donw. Did you receive it? Lee kramer
Do you post your QQQ trades when you put them on? I'm a moderator in a trading room and I post my trades at the momednt I place or recommend them to our 100 or so members. What I'm saying is...I'll show you mine if you show me yours. In any eventI think you're doing a nice job. Lee Kramer
Good advice Jenna. Unless you're an experienced, aggressive trader it might be wise to watch for a while. It is not necessary to trade.
I've been trading the QQQ's for a long time. With the QQQ's you get no earnings surprises (up or down; no analyst upgrades, downgrades, sidegrades...no silly tatgets; No "bad" news typically posted by companies after the bell or after 4:00 on Friday; no CEO's absconding with company funds and a secretary or two to RIO; no "accounting irregularities" with multi-point down gaps; no FBI breaking down the doors.
But one quick thought; I take initial wonder at the notion of wating for 90 minutes after the open. I generally wait for the first 20-30 minutes (or more if necessary) to detect a discernible trend, up or down.
I just came upon your site, will read your philosophy carefully and, if I can offer an occasaional post of value...I'll certainly do so.
An aside; I'm a daytrader and a moderator in a well known trading room.
DAYTRADING: The Highs and the Woes 8/18/01
I was eager, eager to get to doc Kronkite's office this morning. The doc is my shrink and he's been treating me for nigh onto a decade. He treats day-traders exclusively now. He calls himself the King of all Shrinkdom, since he cut out a nice little niche for himself and thinks he's like a sheep-dog who tenderly but carefully tends his flock. He is the only shrink who treats day-traders in these continguous forty-eight states. He writes about day-traders, he's in great demand on the lecture circuit, he's a regular on Larry King. Other shirnks, fed up and not knowing what to do with day-traders and their uniquely crazy problems, regularly refer to him.
The doc is getting famous. In case you haven't seen him he looks an awful lot like Mel Brooks, wild hair and all.
He's got a couple of drawbacks, but then who hasn't. When excited, his voice rises to a high-pitched whine and he sounds an awful lot like Barney Fife. And he's a major-league malapropist, an all all-star MVP of language manglers. And he has a slight quirk; when you say something in therapy that he doesn't like he whips a newly sharpened Eberhard Faber #3 pencil at you. His accuracy is legend, and as you wince in pain while you pry the Eberard #3 from your arm he assures you it's simply part of his therapeutic method.
But he's a specialist. And, I must report in all honesty, he is solely responsible for turning me into a decent day-trader.
And he's got a great looking receptionist, Miss Thelma Tushbumper; his girl Friday and the object of my occasional nocturnal fantasies.
As I bounced into his reception room this morning and planted a wet one on Miss Tushbumper's milky white cheek and hugged her hard, feeling her cantaloupes press against me (this is our little ritual, something she allows with bon homie) my balloon was quickly deflated when Miss Tushbumper informed me that it was almost time for my session.
Miss Tushbumper, seeing my obvious distress, pulled me tightly again to her cantaloupes. This helped. A lot.
But the buzzer sounded and Miss Tushbumper pried my arms from her curvacious body and said, "Doctor will see you now."
I slouched into the doc's office. He was sitting behind his massive oak-desk sharpening his Eberhard "3's.
"Assume the position!" he bellowed and I eased my weary body onto his lumpy leather couch.
"Tell me about your week daytrading, leave nothing out," he demanded.
"Gee doc, do I have to?"I cried.
I heard the whizz, then pulled the Eberhard #3 out of my bicep.
Silence. Another shrink ploy. He'd wait me out, so I spoke.
"Well doc. I had a great week. They were up Monday and I bought some STAPLES at 15 1/4 and kicked it out the same day at 15 7/8. Then I shorted QUALCOM at 66 1/2 and covered at 65. Bought 500 CVH at 22.90 and kicked it out at 23 1/4. I made five more trades, all profitable. Pretty good, huh doc?"
"Mmm" he mumbled.
"Then on Tuesday I really got hot. I picked up 1,000 shares of ATAC at 11 and kicked 'em out at 11.40. Shorted 200 shares of CCMP at 75, covered 'em at 73 1/4. Pretty good, huh doc?"
"Mmm. I suppose you continued your successes on Wednesday," the doc stated. I detected a bit of skepticism in his voice
"Actually doc, I made 10 trades on Wednesday, but ended up even. Went the wrong way three times on NVDA. Hey doc, it happens. NVDA is a tough stock to trade."
"Mmm."
"But Thursday doc, I was magnificent. They opened down hard, but after an hour and a half there was no follow through to the downside. That was the tell, and I spotted it like the pro I am. I loaded up on the QQQ's. I banged out profit after profit in PQE, NATI, MRVL and a few others. Made enough to pay for sessions with you for a whole year. and not only that, I knew they were gonna fly again on Friday, so I held 'em all overnight, something I never do, 'cause I'm always in cash by 4:00 every day when the market closes.
"Mmm. So tell me how much you made Friday," said the doc. I did not like the small smile that began to spread on his face.
"Friday? Gee doc, I can't seem to remember what happened on Friday."
I heard the whizz again and wrenched the Eberhard #3 out of my forearm.
"Yout don't remember Friday? A day ago and you don't remember?"
"Oh yeah, Friday. I don't wanna talk about Friday doc," I said.
"Mmm. You maybe took a few small losses on Friday?" the doc prompted.
"I got murdered doc. I was so sure, so cocky. I lost everything I made on Thursday. And Wednesday too."
"Mmm."
"Ok doc, and Tuesday and Monday as well. I am truly humbled and I vow never to let it happen again." I said.
"You are suffering from the' Make a few profitable trades and get cocky' syndrome. But it's good you came to me because I can cure you. Our time is up. See Miss Tushbumper on the way out. Make appoinments, lots appointments."
See Miss cantaloupe, er, Miss Tushbumper? I flew for the door, and heard the whizz then the thunk as an Eberhard #3 missed my ear and buried itself in the wall.
Lee Kramer
I think you're playing it right John. This is a tough, tough market...when I trade it's hit and run when I can grab a short profit. I think you're right about the economy, and the Fed is almost out of interet-rate cutting bullets...but, as a trader I watch the charts, trade the charts and try not to listen to the economic "noise," good and bad. Be well.
DAYTRADING: The Highs and the Woes 8/18/01
I was eager, eager to get to doc Kronkite's office this morning. The doc is my shrink and he's been treating me for nigh onto a decade. He treats day-traders exclusively now. He calls himself the King of all Shrinkdom, since he cut out a nice little niche for himself and thinks he's like a sheep-dog who tenderly but carefully tends his flock. He is the only shrink who treats day-traders in these continguous forty-eight states. He writes about day-traders, he's in great demand on the lecture circuit, he's a regular on Larry King. Other shirnks, fed up and not knowing what to do with day-traders and their uniquely crazy problems, regularly refer to him.
The doc is getting famous. In case you haven't seen him he looks an awful lot like Mel Brooks, wild hair and all.
He's got a couple of drawbacks, but then who hasn't. When excited, his voice rises to a high-pitched whine and he sounds an awful lot like Barney Fife. And he's a major-league malapropist, an all all-star MVP og language manglers. And he has a slight quirk; when you say something in therapy that he doesn't like he whips a newly sharpened Eberhard Faber #3 pencil at you. His accuracy is legend, and as you wince in pain while you pry the Eberard #3 from your arm he assures you it's simply part of his therapeutic method.
But he's a specialist. And, I must report in all honesty, he is solely responsible for turning me into a decent day-trader.
And he's got a great looking receptionist, Miss Thelma Tushbumper; his girl Friday and the object of my occasional nocturnal fantasies.
As I bounced into his reception room this morning and planted a wet one on Miss Tushbumper's milky white cheek and hugged her hard, feeling her cantaloupes press against me (this is our little ritual, something she allows with bon homie) my balloon was quickly deflated when Miss Tushbumper informed me that it was almost time for my session.
Miss Tushbumper, seeing my obvious distress, pulled me tightly again to her cantaloupes. This helped. a lot.
But the buzzer sounded and Miss Tushbumper pried my arms from her curvacious body and said, "Doctor will see you now."
I slouched into the doc's office. He was sitting behind his massive oak-desk sharpening his Eberhard "3's.
"Assume the position!" he bellowed and I eased my weary body onto his lumpy leather couch.
"Tell me about your week daytrading, leave nothing out," he demanded.
"Gee doc, do I have to?"I cried.
I heard the whizz, then pulled the Eberhard #3 out of my bicep.
Silence. Another shrink ploy. He'd wait me out, so I spoke.
"Well doc. I had a great week. They were up Monday and I bought some STAPLES at 15 1/4 and kicked it out the same day at 15 7/8. Then I shorted QUALCOM at 66 1/2 and covered at 65. Bought 500 CVH at 22.90 and kicked it out at 23 1/4. I made five more trades, all profitable. Pretty good, huh doc?"
"Mmm" he mumbled.
"Then on Tuesday I really got hot. I picked up 1,000 shares of ATAC at 11 and kicked 'em out at 11.40. Shorted 200 shares of CCMP at 75, covered 'em at 73 1/4. Pretty good, huh doc?"
"Mmm. I suppose you continued your successes on Wednesday," the doc stated. I detected a bit of skepticism in his voice
"Actually doc, I made 10 trades on Wednesday, but ended up even. Went the wrong way three times on NVDA. Hey doc, it happens. NVDA is a tough stock to trade."
"Mmm."
"But Thursday doc, I was magnificent. They opened down hard, but after an hour and a half there was no follow through to the downside. That was the tell, and I spotted it like the pro I am. I loaded up on the QQQ's. I banged out profit after profit in PQE, NATI, MRVL and a few others. Made enough to pay for sessions with you for a whole year. and not only that, I knew they were gonna fly again on Friday, so I held 'em all overnight, something I never do, 'cause I'm always in cash by 4:00 every day when the market closes.
"Mmm. So tell me how much you made Friday," said the doc. I did not like the small smile that began to spread on his face.
"Friday? Gee doc, I can't seem to remember what happened on Friday."
I heard the whizz again and wrenched the Eberhard #3 out of my forearm.
"Yout don't remember Friday? A day ago and you don't remember?"
"Oh yeah, Friday. I don't wanna talk about Friday doc," I said.
"Mmm. You maybe took a few small losses on Friday?" the doc prompted.
"I got murdered doc. I was so sure, so cocky. I lost everything I made on Thursday. And Wednesday too."
"Mmm."
"Ok doc, and Tuesday and Monday as well. I am truly humbled and I vow never to let it happen again." I said.
"You are suffering from the' Make a few profitable trades and get cocky' syndrome. But it's good you came to me because I can cure you. Our time is up. See Miss Tushbumper on the way out. Make appoinments, lots appointments."
See Miss cantaloupe, er, Miss Tushbumper? I flew for the door, and heard the whizz then thethunk as an Eberhard #3 missed my ear and buried itself in the wall.
Lee Krame
Hi John..Yes, Jenna will be posting here. Haven't heard from you in a while. Hope all is well with you. Lee.
DAYTRADING: The Highs and the Woes
I made it to doc Kronkite's in record time. I was in crisis.
Doc Kronkite is my shrink. He looks like a short Mel Brooks and a tall Barney Fife. But he treats day-traders and their problems. He's been treating me for nine years.
I walked into the reception room, saw the curvaceous, voluptuous and comely Miss Tushbumper who served as doc's er, receptionist. As is our ritual I kissed her milky white cheeks and she slapped me hard while smiling.
I flew into doc's office. He was seated behind his massive oak desk clipping coupons.
"Gee doc," I said "I didn't know you clipped bond-coupons."
He threw an Eberhard Faber #3 pencil at me. As I was pulling it out of my arm he said "Not bond coupons you idiot, Walmart coupons. On the couch lie down already. Assume the position."
As I eased my weary body on his lumpy couch I said "Doc, I think I'm in crisis, you gotta help me."
"Crisis, schmisis. Your're cuckoo is what. Talk on me."
"See doc, I'm looking for a system, something that will tell me which stocks to buy and which stocks to short."
"Mmm" he said, stroking his Freudian-like beard and reaching for a pencil. I ducked. He snorted, said "Continue."
"I read Barrons cover to cover every Saturday. No help. I subscribe to Fortune magazine, Money, the Institutional Investor and dozens of others. Nothing. I get hundreds of upgrades and downgrades that all the brokerage houses issue every day. Got murdered with those. I watch "Wall St. Week" and take notes, read the Wall St.
Journal every day. Nothing. I read Invetor's Business Daily. It's very good doc, helps me spot good stocks.
"Mmm. IBD is good, I read it too and find good stocks. But good fundamentals, while helpful over time, aren't much help when day-trading."
"Then I spent thousands on software that promised to find me five stocks a day guaranteed to move like rockets. A disaster. Then I bought stocks with low price-earnings ratios doc, but they kept dropping too.
"Doc, you gotta help me. I'm in crisis and losing money hand over teakettle."
"Mmm," he said, then pulled a thick tome from his shelf, flipped the pages for a while and said "Ah hah! I've got it."
"Doc," I cried "what have you got?"
"The answer you dunderhead, the answer to your problem. I'm a specialist you know."
"I know doc. So what's the answer?"
"You are suffering from the "Holy Grail Syndrome."
"The Holy Grail Syndrome? Whats that?
"It's what guys like you are always looking for; the system, the way to beat the street; the way to make money without really working at it. But it's good you came to me. I can cure you of this."
"You can doc? That's wonderful. How? Tell me doc, tell me. I'm all pins and noodles."
"The cure goes back a ways, back to the 1920's. Sy Gezundt invented it. It's a method he developed that selects stocks that go up, far more often than they decline."
"Doc, you're a genius. Tell me how it works."
Doc grabbed another Enberhard #3 pencil, whipped it at me. Again in the arm. But I didn't care. I was about to learn all about the Holy Grail."
"Have you ever played poker?" asked the doc.
"Poker, schmoker," I cried. "The Holy Grail syndrome cure, tell me!" I hollered.
As he reached for another Eberhard #3 I said, "No doc, I'll be quiet, I'll listen to your silver words."
"Have you ever played poker?" he said again.
"Of course doc. Played a lot of poker during my formative years."
"Were you successful?" doc asked.
"I was the best poker player around doc. I had a poker face and became good at spotting tells."
"Tells?" asked the doc, "What means tells?"
"A tell doc is what many poker players do that tips off when they're holding a good hand; some look at their cards, see a nice hand and smirk or smile. That's an obvious tell and they don't even know they're doing it. Some, when they have a good hand count their chips, subconsciously preparing to bet heavy. Some pull their ear lobes, some rub their hands. Others suddenly break out in a sweat or get itchy. A common tell is a player who stacks his chips in neat little piles. Spot a tell and you've spotted a strong hand. Yeah doc, I did alright playing poker."
"Good," said the doc. "There's hope yet for you. Forget Barron's, analysts, and all that other nonsense. Think poker."
"Ok doc, I'm thinking poker. So?"
"So you're sitting around a poker table. Game is 5-card Stud. After the third card you've got a pair of three's, one in the hole, one showing. Guy across from you is sitting with a pair of jacks up. You've already got $20 in the pot, $20 invested. Guy with the jacks bets $3. What's your play?"
"I fold doc."
"Why?" he asked.
"I never chase a hand better than mine. Sure, once in a while I'll catch and he won't, but the probabilities are heavily against me."
"Good. Do the same in the market. Work the probabilities. Wait until you have a good "hand", have a good play. Work the strongest sector. If the pharmaceuticals are strong, look for a pharmaceutical. Find one that's in an solid uptrend; the 10 and 20 day moving averages should be rising, the stock should be above the rising trendlines, the stock should not be overbought. The ADX, the MACD and the stochastics should be confirming."
"And that'll do it doc? That'll give me a guaranteed profit?"
He whipped another Eberhard #3 and got me in the other arm.
"No you idiot. There are no guarantees. You play the probabilities when they're in your favor. Over time you'll do well. And always enter a stop order."
"A stop order?"
He reached for another sharp pencil but put it down.
"Yes, a stop order to limit your loss if the trade goes wrong."
"Doc," I cried jumping up off the lumpy couch "You're a genius!"
He looked at me, reached for a pencil. I beat it out the door, grabbled Miss Tushbumper, kissed her hard on the lips. She smacked me of course, our ritual, but my smile remained.
"Tell the doc I'll see him next week," I shouted over my shoulder. "And you too of course."
I pulled her Eberhard #3 from the back of my neck as I flew out the door.
Lee Kramer
Merrill Lynch "up's" the chip sector. This should not be ignored as Merrill is the King-Kong/Godzilla of the retail wire-houses. All their brokers will be hitting the phones this morning, calling clients, saying "Let's sell this stock, it hasn't performed...and buy this chip stock...lemme read you a blurb that our crack research team just put on the wire." A sale, a buy...two commissions per client. That's the retail game.
"Hold through earnings...is gambling." I'm constantly reminded of NY John and the study he did, must have been a couple of years ago when the markets were still in a strong up-trend. If I recall correctly, he concluded that approximately 67% of stocks that had nice anticipatory upswings prior to earnings reached their rally highs the MORNING after earnings were released. Now that we're in down and/or directionless or trading range markets...it seems even more prudent to exit earnings plays that have given us the anticipatory-upswing; perhaps to even exit prior to earnings release. Keep a small portion of the position if you think the earnings will nicely exceed estimates? Sure.
I must say that you have been steadfast in following and trading Earnings Plays over the years; that you are truly the Queen Lady of Wall St. for anticipatory up/downswing Earnings Plays; you have cut out a nice niche for yourself that the Steet knows nothing of. I must confess that I have pooh-poohed this strategy for the most part, to my loss. I shall endeavor to do better in future, indeed I shall.
SI Messages
Inbox (860) / Folders Bookmarks
Subjects / People Hot Subjects
Hot / New Subjects Preferences
Options / Profile
my portfolio - [New]
DAYTRADING: The Highs and the Woes
I was in the basement of a church, standing in front of a dozen people who were sitting around a large table. I was
pretty nervous. Most of them were drinking coffee, many were smoking.
"Hi" I began, "My name is Lee and I'm a...I'm a...I'M A DAYTRADER." There, I'd said it.
“Hi Lee” they said.
"I'm here" I continued "because nothing else has worked, not even seeing my shrink Doc Kronkite every Saturday. I think I hit rock bottom yesterday. This is my first time here and I'm kinda nervous." I saw lots of sympathetic, nodding faces.
Encouraged, I continued. "I've been a day-trader for several years. I kept telling myself that I didn't have a problem, that I could handle it, stop anytime. I thought my wife and kids didn't know. But of course they did." More knowing nods from around the table.
“Actually, I did handle it pretty well at first. One trade a day, maybe two. Then it was three and four and pretty soon I really got a taste for it. I'd sneak away from my grandson's Little League game in the third inning, run home, make a few trades and get back in time to catch the last inning.
“I’d tell Suzy while we were eating breakfast that I wasn’t really hungry, that I had some work to finish up. Then I’d run to my upstairs office, lock the door and pull out my laptop that I hid in a desk draw. I’d boot up, logon and start trading. With the click of a few buttons I could be in and out of a stock in minutes, seconds. I needed it, couldn’t get through the day without it. And weekends! Weekends when the markets were closed were torture!” Heads were bobbing up and down around the table. They knew.
“Heck, just yesterday I bought 200 shares of COHR at 34 ½ and kicked ‘em out at 36 a few minutes later. Bought ‘em back at 36, sold ‘em at 39. I bought the ICGE gap opening, 400 shares, and took a point and a half. CYMI was making a nice bull-flag on the 5-minute candlestick chart and I had to buy a couple hundred. I blew it out at 25 1/4 for a nice gain. Crazy huh?
“Then I’d go downstairs for a cup of coffee with Suzy. “Got an awful lot of work done” I’d say. We’d talk about the kids, the grandchildren, the dogs, the upcoming weekend (ugh!). I couldn’t wait to get back to “work.”
“Gotta go” I told Suzy, gotta finish up my column.
“Don’t work too hard” she said.
“I’ve heard that the first step toward recovery is admitting that you have a problem. Well, I guess I have a problem.”
Every head nodded solemnly, except for one fellow who was smoking a pipe. “I’m pretty good with numbers” he said. “And without being too precise it sounds like you made a good deal of money yesterday.”
“I did?”
“Yes, you did. Twenty four houndred and thirty seven dollars. Heck, when I was trading I never had a $2,000 day.”
I flashed back to the first meeting I had with my shrink, the never pedantic and former Barney Fife stand-in, Doc Kronkite. Doc Kronkite eventually helped me become a good day-trader. ‘Course, he never thought I’d run amok and end up in the basement of a church.
Suzy and I had a hell of a fight the night before my first appointment with Kronkite. “I don’t wanna see a shrink” I hollered.
“Oh?” she said softly, “and why is that?”
“’Cause there’s no way a shrink can turn me into a good day-trader, that’s why. I’m not going, and that’s final!”
“If you want to make nick nick with me tonight you’ll go see Doc Kronkite. He’s a specialist you know.”
Damn, she was good.
I got to Doc Kronkite’s office the next morning at 7:00 a.m. sharp and was met by a whiskey-voiced, long-legged, red-headed receptionist named Thelma Tushbumper. As I walked in I saw Doc Kronkite standing behind his desk, gesticulating wildly and talking to no one. He looked an awful lot like Mel Brooks.
He pointed to a couch. “On the couch boobeleh, on the couch lie down already” he said.
I wondered what a boobeleh was as I eased onto his lumpy couch.
“So” he said, “It’s good you’ve come to me with your problems. I’ll fix you right up. A phobia you got maybe? I do phobias. I’m a specialist you know. Maybe we’ll do some free association. Won’t cost much.”
“No doc, no phobias. See, the problem is I can’t sleep at night because of my addiction to day-trading. I think I might be a day-tradeaholic doc” I said.
“An expert in insomnia is what I am. I cured that Albert Epstein fellow when he went years without sleep while he was trying to invent regularity.”
“Your mean relativity, don’t you doc?”
“Exactly, that’s what I said, regularity.”
Mmm. Seems the doc was a major-league malapropist.
“I cured Dick Nixon, Jean Dixon, Raymond Massey, Shirlie Bassie, Larry King, Marty Pring, Jimmy Ling, the percussion section of the New York Milharphonic and four-fifths of the Jackson Five. Michael kept walking backward on me. A real challenge that one. I did an entire chapter on insomnia in my best seller, ‘The Truss: Friend or Foe’, a bargain at only $49.95. You read it of course.”
“Gee doc, I was meaning to, really.”
“Anyway, the cure for insomnia is simple” he said. “Whenever I suffer from insomnia I turn on the TV until I find Alan Greenspan, Bob Dole, Connie Chung, Dennis Fung or Charlton Heston trying to sell me an AK-47. If this doesn’t work I plop in a tape of Mary Matilin, an all-pro sleep inducer that one. Have you ever seen her lips move? A great ventriquilist she’d make.”
“But Doc, my problem is that I’m a DAYTRADER. Do you know what people think about daytraders? We’re laughed at, scorned, treated like lepers. It’s not easy being a daytrader doc. Can you cure me doc?”
“Of course I can cure you. I’m a specialist you know. How much money did you lose last year daytrading?” he asked.
“Actually doc, I didn’t lose. I made.”
“How much?” he asked.
I told him.
“Mmmm. One of my patients, Mendelbaun the Fund Manager handles my portfolio. He’s a specialist you know. Loaded me up with internet stocks when they were flying. When they started to drop he bought more for me, said something about dollar-cost averaging. I’m getting killed in those stocks.”
“Gee doc, that’s too bad. But do you think we could talk about my problem. Can you cure my of my daytrading tendencies?”
“Of course boobeleh. Make a bunch of appointments on your way out with Miss Tushbumper. Lots work we have to do with you. Have you ever been hyptonized?” he asked.
“You mean hypnotized don’t you doc?”
“Exactly. Next week we start you on hyptonization. Always works. Don’t worry, we’ll cure your terrible daytrading problem. A classic case is what you are. A whole chapter I might devote to you in my next book, ‘Growing Tin in Your Back Yard.’ You really made that much money daytrading?”
“Yes doc” I said.
“No matter. I’ll fix you up good. Next week, 7:00 a.m. sharp.”
“Thanks doc.”
Lee Kramer
How can analysts recommend QCOM when the chart is deteriorating? There are several possibilities; They don't look at the chart. They don't know what a chart is. If they do know what a chart is they think charting and technical analysis is several notches below tea-leaf reading and the tossing of chicken bones. Many (most?) analysts have been trained to believe that [fundamental] analysis will tell all. It won't. Analysts have an ingrained, deep-seated hatred of technical analysts, kinda like the Hatfield-McCoy tiff. Analysts may have a rogue gene...in fact it may be passed on from generation to generation. If an analyst has a mother or father who was an analyst, well, the poor boy doesn't have a chance. And his progeny will be similarly afflicted. But great strides are being made in bio-tech research and there may be hope for the future. Ignore most if not all analysts, they know not what they do and rarely utter a word or pen a line that will benefit a trader.
DAYTRADING: The Highs and the Woes
I just returned from my weekly session with my shrink, the garrulous but never sanctimonious Doc Kronkite.
I must report that the session did not go well. The Doc spent most of my time railing about Mendelbaum the fund manager who put him into stocks that dropped faster than apples heading toward Newton's noggin...LUCENT, NVDA,PCLN,VRTS and NTAP and which led to the Doc getting a margin call.
The doc wanted to know why I was a daytrader. Worse, he wanted me to show him how to daytrade. A daunting task, but I sallied forth.
"See doc" I began "I used to be a believer, like you. I bought stocks when Harvey my broker called to tell me that some company was just "upgraded" to a Very Strong Buy by an analyst who toiled tirelessly at a prestigious brokerage house.
"Where'd it close yesterday?" I'd ask Harvey.
"$75" he'd say.
"Where is it now?"
"$78 and looking strong" he'd say, "and they're looking for it to hit 125" as he began to write up a buy ticket.
"Buy it! Buy 300 shares immediately, at the market." I'd holler into the phone.
"Harvey would call back ten minutes later telling me that I'd bought 300 shares at 79 1/2."
"Seventy-nine and a half?" I'd say.
"Powerful buying by the institutions. No telling how high this baby's gonna go" Harvey said.
The stock would close at 80, maybe 81 and I began to do a little math. Three-hundred shares, up 1 1/2, I was ahead $450. Then I began to extrapolate. Let's see...125 minus 79 1/2 was 44 1/2 points. Times 300 shares...I was looking at a $13,500 profit.
Next day the stock would open at 82, run to 84 in the first half hour then back off and close at 81. The following day it would close at 79. Then 78...76...74."
"I’d call Harvey in a panic. What's wrong with my stock Harvey?"
"Nothing's wrong. Just a little profit taking. Why don't you buy another 300 shares down here, we call it "buying the dip", cut your average cost down to 76. I just got off the phone with the analyst and he's more bullish than ever. Says they’re gonna come in with great numbers for the quarter."
"Buy me 300 more Harvey. At the market!" I'd holler.
"So what happened?" asked doc Kronkite
"A nice tax loss I got when I dumped my 600 shares at 65."
“Oy, no wonder you’re in analysis.” Said the doc.
“But I was lucky” I told him. “Because a week after I sold, the company reported great numbers for the quarter and the stock dropped another ten points in two days.”
“But how can that be? Shouldn’t the stock go up?” cried the doc.
“That’s what I used to think. Then I met Dortmunder and he straightened me right out.”
“What’s a Dortmunder?”
“Dortmunder’s my trading partner doc. Sharp little guy. Wears three piece Saville Row suits, talks in a clipped British accent. A hell of a trader doc.” I didn’t tell the doc that Dortmunder was a chimp with an IQ of 189. Maybe next week.
“So you two trade together?” he asked.
“Sure doc. We sit at desks facing each other. He’s got his Dell and I’ve got my laptop. And we trade all day long.”
“And this works? “
“It does now. But we had some problems at first.”
“Problems? Talk on me about problems. I’m a specialist you know.”
“I know doc. See, a while back I’d do my research, my due-diligence as we call it, hours before the market opened. One morning I told Dortmunder that I was gonna buy some AMZN at the opening.”
“AMAZON? Indeed. Tell me why” Dortmunder asked.
“So I told him about what a great internet play it was, how sales were expanding and that they were on track for a huge Christmas season.”
“And did this Dortmunder agree with your assessment?” asked the doc.
“Not exactly doc. He threw a banana at me.”
“A banana?”
“Yes doc, the little guy has a fondness for bananas. Eats ‘em all day while he trades. Then he asked me why I felt I had to buy AMAZON at the opening. So I told him.”
“What did he say?”
“He said that AMAZON was likely to gap up on the opening, and that I should short it. I was mortified doc. I’d never shorted anything in my life. If you want to know the truth doc, I was kinda scared at the thought of shorting a stock.”
“So what happened?”
“Well, the little guy told me to pull up the AMAZON chart, which I did. Then he said “see that, that’s a double doji. See that? That’s an inverted hammer. See that? That’s the 200-period moving average on the 15-minute chart which will likely blunt AMAZON’s move after the opening gap. We shall wait for a three bar reversal and then we shall short AMAZON. We are about to enter battle. Follow me.”
“This is how he talks?” asked the doc.
“Yes, but with a clipped British accent.”
“What happened?”
“Well doc, the market opened strong. The NASDAQ was up 50 points in the first ten minutes. The techs and the internets were flying. AMAZON gapped up two points on the opening to 54 and soon was trading at 55 ½. Dortmunder told me to get ready.”
“Were you ready?”
“I gotta tell you doc, I was shaking. I’d never done anything like this before. Then Dortmunder said “SHORT TWO HUNDRED. NOW!” and I hit the sell button. Ten seconds later my fill came back at 55 5/8.”
“How did you feel? Being short I mean?”
“Well doc I was scared but kind of excited too. Maybe because Dortmunder seemed to know what he was doing. Then Dortmunder asked where I placed my stop.”
“Stop? What stop? If the stock is going down why do I need a stop?” I cried. Dortmunder threw another banana at me and said very quietly “One always carries a plan of retreat when one enters battle.”
“But where? Where do I put my stop? I wailed.
“You may place your stop where I placed mine. At 57 1/8. Do it. NOW.”
I took a quick peek at the screen as I was entering my stop, saw that AMAZON was at 56 1/8. I was losing half a point already. “Maybe we should cover here, take the loss?” I asked Dortmunder.
“We have only just begun to fight” he said, sounding an awful lot like Winston Churchill.
“Did you get stopped out? What happened?” the doc cried.
“Well, AMAZON traded between 56 and 56 ½ for ten minutes or so then started to slip. 55 ¾, 55 ½, 55 3/8 then to 55.”
“We shall lower our stops now to 56 ¼.” Dortmunder said. I lowered my stop. When I’d finished I looked up. Dortmunder was smiling. “Get ready” he said.
“Ready for what?”
“We shall cover when AMAZON fills the gap. And then we shall reverse position and go long.”
“I gotta tell you doc, my head was spinning. Go short, go long. This was simply too much for me. What about earnings? What about revenues? What about the analysts upgrades and target prices? I asked Dortmunder.
He looked at me like I was a monkey and said “Poppycock.”
Now AMAZON was trading just above 52. Dortmunder said “It has filled the opening gap. Buy 400 at the market.”
“Did you?” asked the doc.
“I did doc. Covered the 200 short for 4 plus, went long 200 and kicked ‘em out half an hour later for another 2.”
“How did you feel?” he asked.
“Doc, it was great. Almost better than sex” I said.
“No!”
“Yes!”
“But what’s a doji? And what’s a gap?” he asked.
“Not now doc, our hour is up. See you next week.”
Lee Kramer
A brief macro take on the COMPX: After an intra-week low for the week of April 15th...the COMPX ran up nicely to intra-week 2215. Since then, the COMPX has been in a clearly defined trading range...with 2,005 on the lower end of thr range and 2215 the upper end. Last Friday the COMPX closed at 2198, near the upper end of the tradoing range. It would be prudent to wait for the range to break up and out, or down. Meantime, we have a nice trading market. Lee
Tetres: Thanks for the SEC post. Sure, it's true and has been for decades. ..and one of the reasons that fundamentaal analysis should be taken with a ton of salt...and why too I am a short-term trader. Lee.
I've been using the Qcharts 4.1 beta version for the past month or so...with but a couple of exceptions they've been reliable. I suggest you download and try 'em....you might be pleased. I too had terrible problems with the other versions.
Shoot: I'll offer one suggestion; avoid the strikes that are pretty far away because they don't cost much. In-the-money or near in-the-money, (unless you're looking for a long-term major decline)will cost more, but they'll also tend to move point for point with the stock. I also think that writing covered calls is a smashingly good strategy if you have the
discipline to take 10-15% per month.
DAYTRADING: The Highs and the Woes
I got to Doc Kronkite’s office right on time. Miss Tushbumper, the doc’s comely receptionist had a nice smile for me and accepted my now regular kiss on her milky white cheek.
“Doctor wants you in immediately,” she cooed.
I walked into the doc’s office. He was smiling broadly.
“Gee doc,” I said. “You seem happy.”
“Happy? Happy? I’m beyond happy.”
“That’s terrific doc, did your stocks go up?” I asked.
“Stocks, schmoks,” he replied. “I’m about to embark on a new career.”
“New career?” I cried in alarm. “ But I need you doc.”
“Not to worry. My new career will not interfere with my analysis of you crazy traders and all your emotional problems.”
“That’s great news doc. You had me worried there for a moment. Say, what is this new career?” I asked.
“Show business” he chortled, the grin wider now. “I’m going into show business.”
“Really?”
“There’s no business like show business; like no business I know.
“Seems I’ve heard that line before doc.” I said.
“Sure you did. Ethel Mermaid sang it. A show-stopper that song.”
“Anyway, I’m going on the road for a while. Gonna sing a few songs from
‘Guys and Dolls.’ You’ve heard of it maybe?”
“Sure doc. Everyone knows it. Great show.
“Anyway, I’m trying out a new version. For you I’ll sing it even.
“Gee doc, I’m honored.”
The doc walked over to a cassette player, hit a button. Suddenly music filled the room. He jumped up on his desk and spread his hands wide. “This is my version of a song from Guys & Dolls…maybe you’ve heard it. I think Frank Sinatra and Stubby Kaye and someone else did it. It’s called “We’ve Got the Horse Right Here.” He sang... ‘We’ve got the horse right here, the name is Paul Revere, it’s from a handicapper who’s real sincere. And so on and so forth. Listen on it.”
“I will doc, I will.”
The music began and this is what I heard:
We’ve got the stock right here,
The price was once so dear
It’s from a stock selector who’s real sincere.
We sold it very short, looked like an ugly wart
We covered half for five and kept the rest still short
Can do, can do…this girl says the stock can do
When she says the stock can do, can do, can do.
The name is VeriSign
And on the morning call
The girl has got it figured for one more fall.
We hit it short again, right on the early gap
And covered for ten more when it got soon got whacked.
Can do, can do...this girl says the stock can do
When she says the stock can do, can do, can do.
The name is Juniper,
And this is no bum steer,
It’s from the stock selector who’s very clear
She calls ‘em long and short
She bring ‘em into port
The profits roll right in
Like a real full quart
Can do, can do....this girl says the stock can do
When she says the stock can do, can do, can do.
The name is Sun Micro
The shills said it’s a go
The girl said it’s a blimp
And it’s no, no, no.
The longs were deep in grief
But we caught all the beef
And covered all our shorts
While all the longs just weeped
Can do, can do....this girl says the stock can do
When she says the stock can do, can do, can do.
The doc went through a few more refrains then hit the stop button on his cassette.
“So, what do you think?” he asked.
“Doc, you’ve got a great voice. You sound just like Harry Connick Jr.
The doc blushed, beamed and showed me a smile wider than the Grand Cannon.
Then he began singing again.
We bought the rally hard
Then sold it to the crowd
Reversed and shorted blimps
On a quick rebound
We covered once again
We made a bunch of yen
Just reading short term charts
And the girl’s sharp calls.
At this point I cut the doc off. “Doc, that really terrific” I lied.
He beamed, said it needed a bit of polishing.
“So,” the doc asked, “How was you’re trading week?
“Such a week!” I said, easing down onto his lumpy couch. Monday and Tuesday were pretty flat. The market rallied a bit on Wednesday. But Thursday was wild doc. The Nasdaq was up pretty good in the first ninety minutes and then the bombshell hit.”
“A terrorist attack on the exchange?” asked the doc.
“No, no. The Fed announced that they were cutting interest rates by 50 basis points. It came out of left field doc and the market went wild. Wave after wave of buying. The Dow was up almost 400 points, the Nasdaq was up over 100.” I said.
“That’s nice. But polishing I have to do, more polishing. Our time is up.”
“Same time next week doc?” I asked, a bit worried.
“Sure, sure” he said, waving me out.
Lee Kramer
Welcome to the gthread. "Hope floats" is one of several phrases coined by Jenna. Keep watching, you'll get the gist quickly. If not, re-post and I'll define 'em for you.
If ever ther'es been a time to hit and run on the low-priced (and a bunch of others)...it's now or soon. Reading posts and listening (actually lip-reading as my mute button tunes out CNBC) you'd think we're in a new bull that'll take out the old highs and make all the investors smile. Sure.
Lane: Nice post. Very astute observation.You should apply for a position as an analyst...we can use a few good men.
Lane: <Good heavens> and heavens to mergitroid...MSFT came in.with numbers that exceedes estimates by 2 cents. This has been nice, but this too (this buyer's panic) shall pass.
Lane: You sure can turn a phrase! I love your characterization of the Fed: "flailing about." Wish I'd come up with that line. And Wayne-the-fallen-Angell...I can hardly wait for his next golden words.