Marketgems Earnings Trader- Trading Strong or Weak Earnings Growth

[jenna]

Rally...If you blink, you might miss it.

actually I was not around for the Monday rally as I was in transit but did manage to trade some on Wednesday/Thursday at the "MANU" rally. Today I missed long plays (the rally was probably until 12:00 p.m.) because of more interesting pursuits, but was able to short the highs. The rally therefore might have been a "blink-or-you'll-miss-it rally". There is one caveat however. JULY will be fraught with HUGE WINNERS and HUGE losers and it will be like stepping through land mines. I do expect companies to be up as much as 12 to 15% in one day and down as much as 40% in one day. Needless to say that doesn't give me much enthusiasm for this earnings season. The best thing to do is just keep watching those winners like SHLM and banks, medical products, recreational companies and the sundry few sectors that have always proven themselves. It is technology that will be fraught with dangers. There could be a LOT of MANU_like trades out there. They could be 1 to 2 sessions of "anticipatory upswing" that could likely be SHORTED at the close before the report or the morning after the report.

It is not so easy any longer to make money as it was in bull markets when almost anyone could pick winning trades out of a hat. Now those wanting to get your money make it seem its as easy as "calling a final market bottom" and things going back to the way they were. I don't expect any real upside in technology until 2003 and perhaps as much as 2 months is all we can expect. I could be wrong, I have been wrong, but now before I trade I DO READ the TIMES (UK), The Jerusalem Post, The Wall Street Journal, Investor's Business Daily and all the morning news on earnings, upgrades/downgrades, before I even consider a trade.


Gone are the days when a "watch list" the night before will give you any idea of what stocks will move and especially IN WHICH DIRECTION. Now we are back in the "homework" days and although it might seem "nerdy" and "establishment" to follow these rules, I find its the only way I won't get caught in a maelstrom of moves in the opposite direction of my early or late hours of trading.

I generally trade twice a day for "micro trades" (at 10:30 or by 1:00/3:00) and ignore the rest of the session. These would be days when the Futures are up or down huge in premarket. On huge gap down days, I would enter a long trade by 10:00 that would last until 10:30 or even 11:30 (into the doldrums) and then short the rally. On gap up days, I do the reverse (going short by 10:00 and probably staying short overnight).

Its true that you really have to know MORE about market fundamentals now and the repercussions of news to trade these markets well. The "master level traders" who bestowed these titles upon themselves will need to get a more "rounded" trading education that will include University Level graduate courses in economics, fundamental analysis, technical analysis, statistics, historical market cycles, trading, business administration, psychology and perhaps a BONAFIDE degree at the Master's level after an undergraduate degree in Finance/Economics. I certainly wouldn't entrust my money to anyone with any less of an education. This doesn't mean that the Harvard Graduates were analysts are worth much, it just means that at least you can WEED OUT the truly inefficient and undereducated traders who will try to become the next Masters of your financial destiny. Many of those analysts are now looking for new jobs and getting a Master of Business Administration won’t mean you can get a job on Wall Street, but it MIGHT mean you will be better equipped to trade yourself or entrust your trading decisions to those that have LEARNED from the realities of the horror of past 2 years (if you were long) and are honestly able to INTEGRATE that learning experience to your PORTFOLIO.

To put it another way, I am a huge fan of the Discovery channel (all 7 of them) and have been watching THE OPERATION on the Health Channel going on 7 years now, but that certainly doesn't mean I can perform an operation even in the best of circumstances. Although you are not certain of getting the best surgeon because of his/her previous education, you certainly won't be using a surgeon who garnered his experience from watching "videos" of surgeries or taking a "correspondence" course on the computer or even at a week long surgery "camp". You do increase your "odds" of a better result if you go with those whose education encompasses the last 2 years of this market's cycle as well as the last 80 or so in general.