Stock Market Day-Trading Discussion Thread

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Holy Cow...what was that fast drop in Financials? BAC went from 5.40 to 4.75 in seconds. Did Bama open his mouth again?



Anyway, doubled up on my calls...was that a free gift? Time will tell.
 
[quote author="skek" date=1236770904]Sorry that you are talking to yourself, BV. I can't speak for others, but this is the one thread where I'm afraid of sounding stupid (insert witty retort here), so I tend to read and study this thread more than I talk.</blockquote>


Same here. I am a novice and get to learn a lot from BV's posts. Sometimes I do have questions, but don't feel like posting as am afraid of sounding stupid. So just keep reading BV's posts and try to learn.
 
[quote author="Ana" date=1236813598][quote author="skek" date=1236770904]Sorry that you are talking to yourself, BV. I can't speak for others, but this is the one thread where I'm afraid of sounding stupid (insert witty retort here), so I tend to read and study this thread more than I talk.</blockquote>


Same here. I am a novice and get to learn a lot from BV's posts. Sometimes I do have questions, but don't feel like posting as am afraid of sounding stupid. So just keep reading BV's posts and try to learn.</blockquote>
Post away, there is no such thing as a stupid question. None of us were born day traders and technical analysts. Some of us learned the hard way of how the market works. That being said, dont be shy and ask away...
 
Right now, the 30, 40 and 50 day stochastics are at their highs and they need to crash without doing too much damage to the market. Some pull back is needed, but needs to be controled. Market can't give back half or more though of what it gained yesterday or things won't look good unless we get bailed out with some good news.
 
[quote author="BlackVault CM" date=1236814450]Right now, the 30, 40 and 50 day stochastics are at their highs and they need to crash without doing too much damage to the market. Some pull back is needed, but needs to be controled. Market can't give back half or more though of what it gained yesterday or things won't look good unless we get bailed out with some good news.</blockquote>
Good info...it really looked like the DOW hit a brick way at around 7000. If the market hammars down today, we'll know that yesterday's rally was full of hot air.
 
[quote author="skek" date=1236820938]Odd day. Markets are down generally, but financials are up. More volatility than yesterday, but the same tug of war between longs and shorts.



BV, why do you think BAC is lagging the other financials? Think they've been overshadowed by Citi's 1Q musings?</blockquote>


BEAR RAID!!!! Simple...



Here...I'll give you a hint how it works. This is what some here disagreed with me long ago when I first started posting on stock manipulation. Cover your ears, this is for adults only.



The phone rings...

Trading Desk One: Volume looks weak on the upside follow through.

Treading Desk Two: Yea! I'm in.

Trading Desk One: Let's call a few others and see if we want to put this turd down.

Trading Desk Two: Back in 10 minutes.

Time Lapses...



One: I've 1 million to short with my firm. And two more from GS and MS in for a half.

Two: I've another 3 million to short. Do it at all:20 in two waves. I'll take the first, you go for the second.



So the drops you see like that...the fast ones, are by coordinated bear raid to push BAC down. Giving BAC as a sample, but can work for any stock or market as a whole.



The uptick rule prevents this from happening. Shorts can still short, they just can't manipulate the stock market to the downside.



One more thing... The push down was precipitious. It took out limit orders and shocked the buyers into stepping away. The raid works like this... they don't need to borrow the shares they shorted. They will cover half their position today, 25% tomorrow, and hold on to the rest of the position to see if they were able to start a trend. It's illegal, but no one enforces the rules.



Now you know how Wall st. operates. Can they succeed? They often do, but sometimes they don't. Key is to create fear, and push away any new potential buyers. This is either to profit by pushing stocks down further or even to keep it at bay while they accumulate. Everytime the stock goes up, they push it back down with a huge raid taking out all bids, then they accumulate slowly, and slam it back down. We wouldn't want a stock to skyrocket without them being on board do we?



So whether one wants to believe it or not, manipulation happens often. This is why I always say NEVER EVER put a limit order, stop loss order or what not if you are going to be near a computer. Do it only if you really have to, like your on vacation. It's like playing Texas limit poker but showing your cards face up to your opponents. Cause people manipulating prices see this, and know that if they push the price 10 cents or 20 cents or whatever...there is a huge amount of limit sells at XX price. Once the price of stock reaches that point, all those stop limits will be triggered and huge supply of shares or sell orders will be unleashed on the market...pushing the stock further down and creating panic.



You get to learn this when you stare at the screen for 10 years...being able to identify it and react to it successfuly is something you just have to experiecne...books can't teach that.
 
Based on markets resistance to it, I would say this is accumulation. It's not a full blown bear raid, its simply enough to keep prices from escalating too much.

Once they bought shares of various stock hand over fist, they will do the same exact thing and push the stock up. Flood the market with buy orders taking out bids...this is often done on low volume because its easier and wont take as much capital. Once the snowflake is pushed off the cliff, they hope to have the public create the avalanche. Whether they create panic on the way down or panic on the way up...



Of course the accumulation part is just my hunch...could be their attempt just to bring down the market...but if that is the case, so far they are doing a piss poor job.
 
[quote author="skek" date=1236822233]BAC just bounced up about $0.10 in a sec... It's resilient today.



Interesting to watch, that's for sure.</blockquote>


It's extremelly fascinating. I can watch it forever. I always learn something new. Watching daily price fluctuations in the stock market allows you to understand the psychological behavior of it all. That is all it is...psychology.



And yes...very resilliant. I bet they know something is coming...something big. So I'm almost certain they are just accumulating from people that got "spooked" and sold them their shares. Thats why I'm not giving them mine...I'd rather them go to 0.



I know how they play. Once they have enough...they will let the bird fly free.
 
[quote author="BlackVault CM" date=1236822346][quote author="skek" date=1236822233]BAC just bounced up about $0.10 in a sec... It's resilient today.



Interesting to watch, that's for sure.</blockquote>


It's extremelly fascinating. I can watch it forever. I always learn something new. Watching daily price fluctuations in the stock market allows you to understand the psychological behavior of it all. That is all it is...psychology.



And yes...very resilliant. I bet they know something is coming...something big. So I'm almost certain they are just accumulating from people that got "spooked" and sold them their shares. Thats why I'm not giving them mine...I'd rather them go to 0.



I know how they play. Once they have enough...they will let the bird fly free.</blockquote>
Wouldn't a good forward indicator of that be looking at the option volume as a percentage of open interest? I've noticed that stocks that have had huge call or put volumes typically move in those directions. Maybe they try to juice their returns by picking up calls or puts and then moving the stock whichever way they want it to go based upon their option position.
 
[quote author="usctrojanman29" date=1236825667][quote author="BlackVault CM" date=1236822346][quote author="skek" date=1236822233]BAC just bounced up about $0.10 in a sec... It's resilient today.



Interesting to watch, that's for sure.</blockquote>


It's extremelly fascinating. I can watch it forever. I always learn something new. Watching daily price fluctuations in the stock market allows you to understand the psychological behavior of it all. That is all it is...psychology.



And yes...very resilliant. I bet they know something is coming...something big. So I'm almost certain they are just accumulating from people that got "spooked" and sold them their shares. Thats why I'm not giving them mine...I'd rather them go to 0.



I know how they play. Once they have enough...they will let the bird fly free.</blockquote>
Wouldn't a good forward indicator of that be looking at the option volume as a percentage of open interest? I've noticed that stocks that have had huge call or put volumes typically move in those directions. Maybe they try to juice their returns by picking up calls or puts and then moving the stock whichever way they want it to go based upon their option position.</blockquote>


Not always. If it was that easy, making money in the stock market would be a breeze.

Option volume happens as the day unfolds. You don't get a clear picture off the bat. However, I look at option volume vs. open interest very closely myself, but its only one indicator with many I use.



For example, what happens if a short seller rode a stock from 10 to 3 bucks. Instead of selling their short position and covering, they could buy XXX amount of call option contracts to protect their short gain. If the stock rebounds, they can sell their calls (which cushioned their loss) and ride the stock back down. Same strategy when you had a nice run in the market, and you bought some puts in case it pulls back. It doesn't mean the stock is done moving up and is about to go down.



The way I look at option volume is simply as another indicator that shows strength. If call volume for BofA at the money strike was 40,000 on 10,000 open interest, this would indicate to me that people are bullish more so than bearish. But I have yet to see a strong correlation as to a predictor in the stock price movement.
 
USC. How do you view option activity? I guess when you see the high call option volume compared to call open interest, what hints do you get from that? Mine is that more people are bullish than bearish, or atleast somewhat scared that the stock can go up?

I'm curious to know, I can always learn something new.
 
[quote author="BlackVault CM" date=1236832988]USC. How do you view option activity? I guess when you see the high call option volume compared to call open interest, what hints do you get from that? Mine is that more people are bullish than bearish, or atleast somewhat scared that the stock can go up?

I'm curious to know, I can always learn something new.</blockquote>
I actually use yahoo finance. Input the ticker symbol and go into it and then click on the Option link. You can do the same thing on TDAmeritrade by going to Trading and then going to Options and inputting the ticker symbol of the stock. You can then pull up the option chain and see what is going on. I not only look at the current month, but I also peek out to future months to look for any unusual volume activity. Just like you said, it shouldn't be used as a sole indicator as to which direction a stock will move but it's one of the tools you can put in the tool belt. Remember MYL? Those $12.50 calls had volume of 3-4x times open interest and the next month was showing high volume on the calls as well so it was telling me somebody knew something and I was going to follow them. I was also able to see that the call purchases were occuring on the ASK price using live NASDAQ LEVEL II quotes (another bullish sign).



I tracked about 100 companies the day before they reported their 4Q numbers as a little study (usually bigger cap companies that had some option activity). Out of the 100 companies, about 30-35 of the stocks had unusually high call or put volumes for the most current option expiration (I also looked at call volume vs. total put volume for the current month). Of those 30-35, about 80% of the time the shares moved in the direction of the options activity (high call volume = stock moving up after earnings and vice versa). I also tried to confirm this information by looking at options going out for the next 2-3 months which also showed the same pattern. It's not a perfect science by any means, but it does show me that it works most of the time however it is something that only more seasoned folks who are open to speculation risk should dabble in.



Like Graph said, one of these days we need to sit down together during a trading day and see what we look at and how we come up with out ideas. I love learning new techniques and strategies from people with a different point of view. I'll be the first to admit that I learned a few things from you and profitted on a few of your trades.
 
News that Freddie will report 50B in loss and needs more money, then countered by news from JP Morgan's CEO Dimond that things are starting to recover and heal. Which one is heavier? Tomorrow will show...I think JP Morgan news, because most people already wrote off Freddie. Plus didn't the goverment set aside 180B for them already? The 30.8B they are asking for should just dip from the 180B already promised.



Anyway, we'll see how market digest it...oh and almost forgot...they are meeting tomorrow regarding M2M...
 
[quote author="BlackVault CM" date=1236835656]News that Freddie will report 50B in loss and needs more money, then countered by news from JP Morgan's CEO Dimond that things are starting to recover and heal. Which one is heavier? Tomorrow will show...I think JP Morgan news, because most people already wrote off Freddie. Plus didn't the goverment set aside 180B for them already? The 30.8B they are asking for should just dip from the 180B already promised.



Anyway, we'll see how market digest it...oh and almost forgot...they are meeting tomorrow regarding M2M...</blockquote>
Remember that there is a Fed meeting next week and the market almost always tends to rise up until the Fed's decision at 11:15am PST.
 
[quote author="skek" date=1236838773]Good mention of M2M. </blockquote>


Ahh skek my friend. That's exactly why I'm even in this position. I started buying BAC stock and mainly March/April 6/strike calls couple of weeks ago in the anticipation of this. I didn't want to be buying too late. First in first out. Financials are rallying more than other equities because of Citi's news AND the anticipation of M2M, perhaps even the uptick rule. So there are many upcoming events to make a bet on financials be a logical one.



Here is what I posted a week or so ago...page 29 of this forum....



<blockquote>BofA isn?t an investment, it?s a calculated hedged bet. The company itself is garbage.



It has trailed Citi?s performance?so I?m just betting that it isn?t Citi.



I?m betting that they won?t get nationalized, which will lead to a pop.

I?m betting that M2M rule gets revisited, which will lead to a pop of all pops.

I?m betting that BofA?s position isn?t as bad as Citi?s, which will lead to a pop. (once earnings come)



Right now, the stock is trading assuming that none of the above can happen. It simply has a huge upward potential, and has significant news baked in. With premiums selling between 11-20% a month, you can significantly reduce your cost average quickly owning the stock outright. At that point, I will let it go and have it do whatever it wants. I wont care if it goes to 0. </blockquote>


I agree that M2M should be left as is. Aside from morals, I hope they abolish it. Don't condemn me though, I have nothing to do with it...I'm just placing my bets according to what the govermnet wants to do. I'm just a spectator. 2 weeks ago when BAC was at 3 bucks, some of these calls were going for 5-10 cents each...now 60-90 each. My cost average though is .27 as I bought more on the dip today.



When I did my risk/benefit analysis, I was pretty baffled by what I saw. If you had bought $5K worth of calls whent hey traded 10 cents each, then that would have given you 500 option contracts or 50,000 shares. BofA has the potential to gaping up to 10-12 bucks a share easy on some great news. At 12 bucks a share, 5K investment will yeild 300K.

How about 40K? 2.4Mil...YUM



Basically at expiration, each dollar above 6 bucks will net you 50K. (assuming you put in 5K only)
 
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