Friday, May 1, 2009

05/01/09 Market Recap

Another wild swing day in the markets, we broke into new current highs and hit 887.50 in the ES and then came right back down and closed at 864. We are still in a confirmed uptrend but this is the second day in a row that we have pushed above that critical 880 level and came back down to close below, although today it showed much more strength above 880. No reason to switch to the bearish side until we see the market make lower lows and lower highs, a close above 880 will be very good for the bulls, but I still won't move to the bear side even if we get a third close in a row below 880. With the strength that the market is showing it will take some more convincing.



Because we broke into new highs and reversed into the close we are now set up for a swing trade for friday. Let's see if this h&s pattern plays out, we are currenly trading at 872 in the after hours market.
















I executed a fairly successful day trade today with GMCR. They reported earnings after the bell yesterday and shot up 20% after hours. I have made it a habit of looking at what stocks do during the day after destroying earnings, and in the majority of the cases it ends up closing higher than it opened. And naturally if the market is on your side it performs that much better, but even if the market moves the opposite direction the trade still works out. Also if the stock has a high short float and is bursting into new highs, there will be a huge short squeeze. This was the case for GMCR which had a 50% short float. So I entered GMCR at the open and right away the shorts ran for the hills, I liquidated 1/3 of my postion(up 10%) when it started to come down and I got scared it was going to go lower . Then I put my stop in and let the rest of my postion ride. Towards the end up the day I got rid of the rest of the position as is broke what I thought was intra day support (up 13%). Looking at my executions, they definitely were not the best but can't complain about a trade like that.

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