TODAY'S TRADING UPDATE - Tuesday, May 29, 2001
We started the day off right by coming into the morning with our only position being short JNPR. We were short JNPR from just over $52 (per Friday's trading update) and covered incrementally this morning for an average profit of about 2 points on the overnight trade. We then re-shorted JNPR into a fibonacci retracement for an additional profit of 1 point on an intraday trade of JNPR. We netted a total of about 3 points on JNPR. However, some of our clients and one moderator used a trailing stop on JNPR from overnight and were capturing a profit of more than 5 points by covering JNPR in the low $46 area.
The big story in the markets today was the Nasdaq selloff, fueled by disappointing news by EMC and SUNW. The NASDAQ sold off today, completely giving back last Monday's breakout and big gains, closing below it's breakout level (2232) & nearby support (2200). See Steve's posts #114 and #119 <http://www.siliconinvestor.com/readmsg.aspx?msgid=15860829> for more details on this. Networkers, Semis, Internets, Software very weak today... strength in Drugs, Consumer stocks, Oil, Airlines, Banks.
We focused our strategy today on shorting the weak sectors intraday. Here were our intraday trades:
Shorted TMPW twice as counter-trend scalp trades, both for profits totalling 1.50 points, shorted NVDA (covered as a scratch), shorted BAC, which went against us slightly... lowered stop to 59.80 to risk less than one point... stopped out with a half-point loss when the Banks turned up, and a news event on BAC pulled in the buyers, shorted BBY (in the retail sector) for a 1/2 point profit when it lost support of $60. Although we officially recommended covering NVDA as a scratch, several of our members used a trailing stop on the NVDA short and were able to make a profit of 2.6 points. In summary, we netted a closed profit of approximately 4.5 points today (not including the profitable NVDA trade that some held).
More importantly than the profit was the fact that we were emphasizing a great amount of risk control on each and every trade we entered today. If a particular trade did not exhibit at least a 1:2 risk/reward ratio, we did not enter it. This may have caused us to miss out on some potential short plays today, but it also insured that we did not give back any of our hard-earned profits. Our new daily "STALK LIST" that we began emailing to our members this week insured that everyone had a chance to study what we were watching in advance
Finally, we also shorted the DONUT calls (KKD). KKD closed in the middle of its intraday range, and formed a near doji-star on the daily, as well as showing declining volume, which typically indicates a top after a strong rally. The KKD calls were our only overnight trades.
All in all, a solid start to the new week! We also would like to welcome our five most recent trial members.
Deron, Steve, and Ed
General Partners
intradayinvestments.com |
