Trade Review - EBAY - April, 18


Stock Selection Information

Ebay had it´s earnings released yesterday after the market closed



Watch List Reason - Earnings yesterdays after the close (yafter)
Pre-Market Volume - 5%
Trading Plan - Support @ 54.25 || Resistance @ 55.00 - play it on the short side

Management

Entry Setup used: Open Range Break Down | Resistance | Consolidation at Resistance


Trading Comments

First trade based on momentum. There was a lot of weakness in the tape. As soon as the bids started to get hit by the sellers, I hit my trade. Waited for a strong momentum to move prices down.
Second trade was a frustration when the platform did not take my offer. Still, I followed the price movement.
Third trade was easy money after the buyer that was holding prices dropped the bids. I could´ve been more aggressive with the position.

Evaluation

First trade was perfectly executed. Took profits and when it fail to continue the down move, the position was closed.
Second trade was a frustration when the platform did not take my offer. Still, I followed the price movement. Added experience, which is very good.
The last trades were really good ones. It took a while to develop, but once it did it was great. I should´ve added to this position and the final target was for it to return to VWAP (value). I am getting better at this type of trade, but still need to work on it.
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Daily PM Prep - April, 18


** Preparation for Closing Session **

MARKET CONDITIONS



SPY - Try to break down below the 154.25 level identified in the morning preparation, but did not hold below. It´s a bit far away from it´s down trend line. Need a lot of volume to break down at this level. A consolidation close to 154.25 / 154.75 would help if this scenario was setting up. The other possibility and the one mostly likely after this fail to break down, is the market to go into an up auction an test the down trend and the 156.25 level at the same time, were the sellers will pressure prices down again. A bullish bias only if the down trend is broken.

Bias: Neutral Bearish but Up Auction
Accuracy: 75%. The up action happen on the day after, but it did not break down.

PM Stock Selection Sheet download - I am limiting my list to follow down to 15 stocks, that´s why the list has levels for only 15 stocks.
Updated at 14:05

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
1.Educational purpose material only. Use this information at your own risk. 2.Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.3.The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.4.The afternoon sheet will be updated between 13:00 and 14:00
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Daily AM Prep - April, 18

** Preparation for Morning Session**

MARKET CONDITIONS

World Markets News: Asian markets finished mixed as of the most recent closing prices. European markets are higher today. Initial Jobless Claims to be released today before the market opens.

Economic Calendar



SPY - Market is gaping up today, following the world markets. Trading is occurring inside a smaller range between 156.50 and 154.50 and around the POC of the larger range at 155.55. There is a strong trend line down that could hold prices, but it still far way. If prices go below 154.25 and start to hold the bias will change to bearish. There is also a weaker trend up, but in order to have a bullish bias the longer trend down must be broken. The most likely scenario is prices trading around the POC til the down trend gets closer.
Bias: Neutral
Accuracy: 80% Prices were below 154.25 but did not hold below.

AM Stock Selection Sheet download
Updated at 7:30

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
1.Educational purpose material only. Use this information at your own risk.2.Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.3.The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.4.The morning sheet will be updated between 8:00 and 9:00
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Trade Review - YHOO - April, 17


Stock Selection Information


UPDATE: Jefferies Raises PT on Yahoo! on Mixed 1Q13 Results
UPDATE: Credit Suisse Raises PT on Yahoo! on Mixed 1Q13 Results

UPDATE: Topeka Capital Markets Lowers PT on Yahoo! Following 1Q13 Earnings Report
UPDATE: Bank of America Upgrades Yahoo! to Buy on Weaker Revenue Trends, Good Asset Value

Earnings release yesterday after the market closed.






Watch List Reason - Earnings after the close yesterday
Pre-Market Volume - 17.80%
Trading Plan - Trade the extremes of pre-market range.

Management

Entry Setup used: Fail to break above pre-market high.


Trading Comments

Bids were being clear on the way down. Sellers took control after it failed to break above. As it came close to pre-market range low buyers step back in and we closed the position. 

Evaluation

It was not a great trade because I did not followed my plan, but it was a good trade. I took half of the position as it was moving in my favor. A big buyer appeared on the bid, but he got taken really fast, meaning sellers were in control. The correct exit would be on the bottom of the range.
I got a bad print when I tried to get out. Could´ve considered switching the position.
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Daily PM Prep - April, 17


** Prep for Closing Session **

MARKET CONDITIONS



SPY - The chart today is a bit far away so we can keep the big picture in mind. During the morning market stayed inside the smaller range between 156.50 and 154.00. It has come down but I do not think it will go any further today. Some consolidation around the 154.00 level before breaking down. If we go below 154.00 and hold this level, then the bias will change to very bearish. Trading around the POC at 155.50 would be a more neutral situation suggesting that we will stay in this range for a little longer.
Bias: Neutral to Bearish
Accuracy: 80% - Market stayed inside the range as expected.

PM Stock Selection Sheet download - Not fully focused on trading this afternoon. Based on my journal observations, I identified that I was having trouble choosing what side (buyers / sellers) to trade with into the afternoon. Will be working on a strategy to pre-defined that.

Updated at 14:20

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
1.Educational purpose material only. Use this information at your own risk. 2.Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.3.The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.4.The afternoon sheet will be updated between 13:00 and 14:00
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Daily AM Prep - April, 17

** Prep for Morning Session**

MARKET CONDITIONS

World Markets News: Asian markets finished mixed. European markets are broadly lower today with shares in Germany off the most. With no big economy number to be release today, Germany market as the strong economy is significant.

Economic Calendar




SPY - Market is gaping down following the world markets. The first scenario we should consider it the smaller range between 154.50 and 157.25. If we stay inside this range there will be more of a neutral day, trading around the POC of the bigger range. This move would have a bearish sentiment to it after the fail break. The second possibility is the break down of 154.50 leading to a sell off and panic. Price will find support at 151.00 or around 149.00s. The third and least expected is the break of 157.50. This would be seen as a bullish sign and we need to re-evaluate if this happens.
Bias: Neutral to Bearish
Accuracy: 100% Market did the expected trading around the smaller range as expected.

AM Stock Selection Sheet download - Today the list seems clear. The levels were easier to identify. Good opportunities today.
Updated at 7:35

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
1.Educational purpose material only. Use this information at your own risk.2.Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.3.The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.4.The morning sheet will be updated between 8:00 and 9:00
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Talking about Value - The Players

Previous articles we talk about the building blocks: PRICE, VOLUME and TIME. These are the elements you should understand if you want to become a real trader. I strongly suggest you read them before continuing reading. They are  more important them indicators, support and resistance, technical analysis. All these topics derived from the building blocks.

In order to keep a line of thought, we will work with the same examples used in those articles. This is another reason for you to read them (if you are still not convinced).

Let´s get to it! We determined that the value of the Ipad is U$400, but that value is not absolute. The reason we say that is because value is based on perception and different people have different perceptions of value. Now we will add attributes to our U$400 Ipad or our buyer and think about this "perception" stuff.

Imagine our buyer is an Apple freak, a collector. Suppose the Ipad we are trying to sell belonged to Steve Jobs. Would it be fair to say, that due to it´s uniqueness, the value should be a lot more than U$400? How much do you think the collector would pay for an Ipad like that? For now, we will say it is worth U$5,000.

But if our buyer is just a normal user, that wants a tablet to navigate the Internet and play games. For him, the U$400 bucks would be a fair value and he could not care less if it belong to Steve Jobs or not.

For a non-Apple fan to buy the same Ipad, the value would have to be even lower. This would be the only way he would to be attracted, a great deal. Remember that price is an advertising mechanism. Just to have a number let´s say U$300.

To add another variable to the equation, we´ll have a retailer, willing to sell the Ipad in return for a profit. Do you recall what a trader is? No, than you should read this: Being a Trader, what does it mean? . For the retailer, that will buy many  Ipads to sell in his store, the value is likely to be lower than, cause this is the only way he can make a profit, so if he buyer 100 Ipads, Apple will give him a discount, and value would be U$350. In a way he will charge U$415 in his store.


Here is our Players Summary:

  • Collector - U$5,000
  • Normal User - U$400
  • Non-Apple Fan - U$300
  • Retailer - U$350




To take note: "Different players have different perception of value". This was an easy conclusion, now the hard ones:
  • In the stock market all players are at the same spot: 
    • This will make it harder to identify value and...
    • ... it will be even harder to identify the players
    • All players will be trading with each other, which is actually helpful, but ....
    • ... all players will be fighting  for the best deals (prices) since they are all at the same place.
  • Know the game players:
    • Your job as a trader is to understand who are you playing against - as a daytrader, for example, you will be fighting other daytraders to get the best price for a long.
    • And more important, who are you playing with - as a daytrader on a long position you want to play with longer time frame buyer
This are the players I consider in the stock market and their time frame.
  • Short Term Traders: from Tick chart to 15 minute charts (Daytraders)
  • Intermediate Term Traders: from 30 minutes to 60 minutes charts (Swing traders)
  • Long Term Traders: from weekly to monthly charts (Position traders)
  • Investors: mostly fundamental traders (The Collectors)
The question you probably have now is: how do you determine the value with all these players at the same place, but with different perceptions? The tool to do that is called Market Profile (or Auction Market Theory) which we will talk about in our next article.
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