For those who watched the action today :)
Good Luck
Ken
www.mtrader.com
MTrader Class - 11/04/98 (C) Copyright 1998 The Momentum Trader
KenWolff: OK... lets clean off our quote screens
KenWolff: Lets look at KLAC,BLPG AND QCOM..
KenWolff: those are our first day gainers * Robbie cover pgex 41 1/2 + 1 Hey
great Robbie...
KenWolff: OK.. KLAC ran up from the open.. QCOM sold off... we played QCOM I
believe twice... what can be said of the group??? Not much really...
KenWolff: What did we expect at the open???
almazz: sell off, then run up
KenWolff: right so based on what we expected KLAC fooled us running from the
open... but that
was not exactly a surprise because WHY??? please excuse my poor grammer..
mikelo: overall market?
KenWolff: YES... exactly..
serge1: all general indicators are at extreme today
_mamapg: no surprises
saber: also, klac had sold in recent days
_mamapg: global markets up
KenWolff: the excessive gapping was showing us for whatever reason, "over
seas markets" or "the election" .. buyers were coming out of the wood work
at the open.. So whenever I get surprised I know I am in for a rough
ride...and expect some stop losses WE did fairly well reading QCOM although
I believe the low was very fast and changing... did anyone play it???
murf2: Gave up on it too soon I'm afraid.
royrm: stopped out-then missed the big ut
KenWolff: I think 54 1/2 x 9/16 was the exact bottom..but I think 54 5/8 or
3/4 was the realistic buy price..
Merman: i was in qcom for 1/2 hr. +3/4
dodgedart: you called 5/8
KenWolff: Yes.. we originally bought at 55 1/8 ... and it only went up about
1/2 point... so
Quixande: got 3/8ths.
bishop11: i did, made 1 3/8 500 shrs.
KenWolff: had two choices...
bishop11: broke even on the first 500 though
KenWolff: 1. Play for short term profits .. or 2. hold.. I personally would
have held.. I would have stopped out at 55 bucks and re entered at 55 5/8 ..
I doubt I would have been fast enough to catch the exact bottom.. One thing
worth noting... You saw how at 54 1/2 the bottom was at a pause... and I saw
an inbetweener.. but the buying was not easily read until it upticked.!!!
that is very often the case.. it really depends on the shares outstanding
and the market makers and the average daily volume.. Let me explain: the
shares outstanding is the total amount of shares sold in a company... IT is
much like apples and oranges in a store.. If there are 2 billion apples for
sale... what do you think the price will
be at.. low or high???
jpc: low
Doc235: low
KenWolff: Our market is based on supply and demand.. right... LOW..
h-man: depend on how many want apples
KenWolff: yes.. if there were 50000000 billion buyers.. high price.. LOL ,So
if the apples are in a small supply the price will be high and the activity
will be low... because of the price.. Normally.. that is why the float is
important...
serge1: what is float
cdoc: thank you
KenWolff: low float = small shares ... which means the price and action can
move very fast if the demand rises unexpectedly
serge1: ken, when u have time; when dooes the CURB kick in and how does it
work? thx
KenWolff: for example.. Imagine a ladies shoe sale on the "HOTTEST" selling
shoe but the supply is limited and the dept store is opening the sale at 8
am..
serge1: also how, if at all, does it affect the market do u thnk??
KenWolff: the run at 8 am will cause havoc potentially.. Please DCC nesi...
Nesi: Please, Double Click on Nesi to send questions for Ken
serge1: ok thx
tim23: lol Ken good analogy
KenWolff: when a stock has a small amount of shares the implication can be
"volatility" in price as it is bought and sold.. that is the reason for the
big moves on KTEL.. ***
KenWolff: If they are accustomed to taking liberties anyways... and a stock
gets HOT and the volume rises one day.;.. they will still widen the
spread... or jump the price..
KenWolff: yes roy... the nasdaq market allows more profits for a low volume
stock... it is the profits the Market makers receive to make a market .. so
when you see a stock like QCOM at the bottom.. the above factors will have
an effect on the bottom... and the top... any direction change can be fast,
Is the first day gainers worth trading with a stop loss or two????
almazz: yes
KenWolff: Yes...
royrm: yes
KenWolff: so we are trying to guess the amount of selling at the open and
enter long.. sometimes it is easy.. and sometimes it is not .. so the stop
loss at 55 is not a big
problem... and even missing the bottom a bit is not a problem.. because
WHY???
serge1: a gainer will be a gainer??
dodgedart: the upside is worth it
murf2: Eventual profit.
KenWolff: Yes.. the market is rewarding going long on all fresh gainers with
volume and momentum.. that is the basics of a bull market...
cdoc: does the market always reward going long on fresh gainers
KenWolff: the difficulty is the first 15 minutes reading the bottoms..
serge1: seems at least for the first 2 days
KenWolff: No always... not always
KenWolff: Lets look at our dumpers today.. Please clean off your screens and
put on : APPB,CEXP,ORTL,DURA, wfsec
specy: take off appb,ortl, and plab..bad volume compared to cexp and dura
KenWolff: when I consider a group I like to consider shorting at the
open.... was that a good idea????
h-man: yes
KenWolff: No.. not really... Normally shorting the opens on dumpers is about
50% ... some will go up... some will go down...
h-man: no sorry was thinking about ysterday dumpers
royrm: was it because a mixed open?
KenWolff: the ones that climb MUST be bought at the first uptick.. Yes
royrm... Our bread and butter is "CONSISTENCY"
^minmax: so strong open + gap up buy first uptic?
KenWolff: that is a consideration yes minmax.. depending on the trade.. with
dumpers... YES.. ***
sunburn1 CEXP and DURA were our early considerations due to
volume..as specy pointed out.. the selling at the open was not good enough
to consider shorting them... sometimes I will consider it... depending on
the average movement of
dumpers at the open... at times you will be able to make a very easy 5
bucks.. so I simply note that now... and wait for an acceptable pattern...
^minmax: we judge strong market by the ratio of gap up to gap down
KenWolff: Yes minmax... that is how you judge a market pre open.. and you
judge it in light of the recent action just like you would a stock... for
example:
TSnoopy: Is there in index that shows how many stocks are gapping up versus
down?
^minmax: gee I was going to just ask for an example.. do you read minds to
Ken? :)
KenWolff: If the market has climbed from 7500 to 9500 in ONE WEEK.... and
the market is gapping UP HUGE.. You would assume the selling pressure will
be HUGE..
KenWolff: If the market has fallen from 9500 to 7500 and the market is
gapping up HUGE.. you would assume the buying pressure will be HUGE.. the
gapping is the same... but the pressures are different ,IF a stock has
climbed 100% in one day and the stock is gapping up HUGE..then the selling
pressure is HUGE... downside is greatest... so trying to short a stock like
KTEL is worth the effort and stop loss or losses.. same is true if a stock
has fallen 50% in one day... the upside is worth the stops... trying to nail
the bottoms..
^minmax: thx Ken
KenWolff: One of the best traders EVER.. in the stock market.. traded at
about 50% !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! How was he successful... small
stops and he rode the gains....simple..
serge1: what does that mean? I see thx
^minmx: 50% ?? 50% dumpers?
KenWolff: If your stops are good and kept at 1/8 ... you losses are small..
and if your gains are over a dollar on average.. the numbers will work in
your favor..
^minmax: ohhh ok 50% correct
KenWolff: OK.. now lets look at the bottoms on our dumpers today.. CEXP and
DURACEXP is not too hot... 1/2 pt approx.. DURA you would have had to
buy at the open at about 9 7/8 ... has joined #mtclass the upside was about
a dollar... and the last low was not well supported
...!!! So what is that telling us... as we consider the dumpers from
yesterday???
Quixande: selling pressure
specy: buyers waning
KenWolff: Yep... specy is correct... our dumpers are getting weaker... Now
how should we react if this pattern continues???? are we out of luck??
specy: short the highs
h-man: short dumprs at the opn
KenWolff: EXACTLY!!!!!!!!! Not necessarily the Open!!! SHORT THE HIGHS...
h-man: k
_powder: what will be the %?
KenWolff: why... because the action at the open remember "IS NOT CONSISTENT"
No bread and butter but what is consistent IF THIS PATTERN CONTINUES???
"THE HIGHS ARE GETTING SOLD OFF"
specy: downside profits
KenWolff: so tomorrow I will be inclined to watch the dumpers.. any climb
like DURA about 2 dollars... I am going to consider shorting!!! *** kyu123
has quit IRC (Leaving) Now remember last week if I tried that what would
have happened to me???
h-man: stoped
dodgedart: stopped out
KenWolff: Yep... stopped..
h-man: ok, so I cant spell :)
KenWolff: because we were getting multi dollar climbs and the highs were not
predictable.. *** Jefe has quit IRC (Leaving) the above is the "reasoning
process" I continually go through with each trading day.... and I update my
percentages based on the small changes I see... and I attempt to go with the
flow until it changes.. One more group please...lets look at the 2nd day
gainersVISX,SANG,TRMS,KTEL,TFSM,EGGS oK... VOLUME IS GOOD ON
:SANG,TRMS,KTEL, EGGS
specy: sorry quick question...what constitutes good volume how many shares?
KenWolff: OK.. SANg climbed from the open.. KTEL climbed from the open ..
TRMs sold down..
Nesi: go here to learn more about Ken's methods ----->
mtrader.com
KenWolff: so our open considerations are mixed.. by the strong market..
there is still plenty of reason for buying the bottoms... so we are still
interested.. but we will play them last.. waiting for a good pullback.. that
is how I play them most of the time... waiting for pullbacks.. and I also
consider shorting... OK.. questions??
Nesi: k Ken, this is a broker question instead of trading question; hope its
OK. I'm in the process of signing up at MBTrading, but heard of problems
today. Is A. B. Watley any better?
KenWolff: I do not think ABWatley is better.. I was with them and they
really did not care about my problems
KenWolff: every Broker will mean problems in one form or another
KenWolff: I asked ABWatley to help the traders but they did not care enough
to even respond to me..
Duke1: Thanks, I think I made the right choice then.
KenWolff: MB Trading really cares enough to be with us every day... ***
nbirn (nbirn@ip-100-252.cld.primenet.com) has joined #MTCLASS and you can
scream profanities at the head of operations!!!!
Duke1: LOL
wfsec: Lol...
KenWolff: can't beat that!!
runner: Thx KEN to get MBT @ $5 :-)
Duke1: yes
KenWolff: I like their service, I love their quotes, and execution system...
when it works.. it works really, really well.. Next question???
Nesi: Ken, about news stories, it seems from your books that the type of
story and the content is really important in determining the direction and
pattern of the movement.. but most of the time I have no idea what are the
stories on dumpers and gainers... How important is it to know the story
exactly? And what can we do to know the story for every dumper and gainer
KenWolff: Usually nesi or simon will have access to 80 sources of
information... and simply ask them prior to entering...
murf2: Excellant work by them by the way.
KenWolff: I try to know the story to consider the longer term targets... but
when a stock is bottoming it is many times a "do or die" situation... get in
or miss it... I will usually get in... my only exceptions is the "price" I
will not jump on a cheap dumper under 5 bucks without knowing the story.....
Normally.. I do not want to be in a halted, delisted,bankruptcy.. I have
done it before... I bought BXMNF at 1 1/2 and told my traders to buy it with
"risk capital" you would not mind losing... and we sold at 4 bucks... and
BXMNF is dog food now.. next question??
Nesi: Ken I keep hitting stops.I made it trades on paper today six of them I
stopped out.I bought CIEN and KTEL at various places. I went short on the
cien at 19 5/8 I stopped out at 19 3/4.on Ktell the sold short at 16 5/8 and
stopped at 16 and 3/4. I bought short again at 16 5/8 in covered my shortest
16 1/16. I then bought CIEN again at 17 11/16's and stopped out 17 9/16. I
bought in again at 17 9/16 has sold at 17 3/4. I bought CIEn at 17 13/16 and
stopped at 17 11/16. my last trade was with QCOM at 55 1/16 and stopped out
to lose an 1/8. what am I doing wrong? I feel is though I need to increase
my stop margin. *** Again
KenWolff: You are playing stocks in the middle of the trading range.. on
CIEN the upside was very good off the bottom because the market is very
strong... so trying to short a climbing stock in a strong market that really
is not up sufficiently (percentage wise) to guarantee profit taking is not a
good percentage play what was a good idea in a strong market????BUYING THE
BOTTOMS!!!!! I would rather see you take 3 stop losses trying to nail the
bottom on CIEN in a strong market than trying to short the top
yeltsin: is that why we are in dura
KenWolff: Your last trade with QCOM is: "As trades get longer in the market
time wise, they will become unpredictable making smaller and smaller
moves."... again it is low percentagestock goes up off the bottom as far as
you tried with CIEN is a losing proposition once a stock goes
up off the bottom 1/2 pt it will begin to get selling pressure and you have
two choices... but the bottom...and take 1/2 pt or more when the stock
pauses.. or ride it longer depending on the market and the average gainer
climb... but=buy........... Next question
Nesi: Ken, you said earlier dumpers yesterday only ran 1/2 pt so that could
be the pattern. Today however the market is very positive as opposed to
negative yesterday, does this not make a difference
specy: just proves buyers are waning
KenWolff: No.. usually it does not make a difference... I have found that
dumpers have a life of their own and travel in set patterns that change... I
have never figured out why or when they change
Nesi: When you say buyers, do you mean all possible, or those looking at the
stock?
KenWolff: I can mean both... I generally assess the buying in the market as
displayed by my quotes... and also individual stocks#MTCLASS I try to assess
the buying in the market.. if it is strong and I see a stock at the low that
has sold off 2 dollars.. I will jump on the stock if all the other stocks in
the group
(gainers or dumpers) are getting sufficient buying action... If nothing is
bouncing... I will wait... risk... BUT... if you can keep close stops... 50%
trading can be profitable.. next question???
Nesi: <_mamapg> what is a 90% pattern
KenWolff: It is when most of the stocks in a group behave the same 90% of
the time... 90% predictability... for example: In some markets gainers first
and second day will all go down about 3/4 point from the open and climb 2
bucks on average... 90% of the time, I have traded that pattern for 2 and 3
months 100% of the time... the big problem is they all go up at the same
time...and it is like catching a fly in mid air... YOU MUST FOCUS ON ONLY
ONE AND NAIL ITnext question??
Nesi: <_Redbird> How do you identify the ax? I know about going to
NasdaqTrader to check on volume, but during the day how can I tell who is
the ax on a stock?
KenWolff: usually the ax is indicated by how often he is on the inside bid
and ask... it shows he is the one most interested in trading the stock ,If
the market maker is a biggy like GSCO (Goldman Sachs) then do not go against
him unless the momentum is HUGE... usually problems only occur in slow low
volume stocks... or in the middle of the day when they are bored... Next
question??
Nesi: <_mildog> how does ken determine first day gainers, the high movers
from day before? or does he post a list at his site. could he describe the
diff between those, 2nd day gainers and dumpers thanks
KenWolff: first day gainers are stocks in which there is usually fresh news
and a gap up... first day dumpers are stocks that gap down with bad news...
the following day those stocks all become 2nd day gainers and dumpers..
generally the price level of predictability is about 20% ... Next question??
Nesi: no more questions, thanks Ken
KenWolff: Ok..thanks gang!!!!!!!!!!!!!!!!!!!!
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