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Strategies & Market Trends : Ask DrBob -- Ignore unavailable to you. Want to Upgrade?

To: indexit who wrote (6261)	9/24/2000 10:34:41 AM
From: flyeguy99	Read Replies (1) \| Respond to of 100058

Indexit, re: shorting NYSE, This is about shorting a gap down or a breakdown after the open, My short tricks on the NYSE is to use the specialist as much as possible for help at the open. Since there is no pre-market trading on NYSE (except for the big boys on Instinet, which most of the time are manipulating the stocks with 100 sh lots, so it'll get mentioned on CNBC)everybody is either (a) sending out a market order to sell the open (b) sending a limit order at whatever their price guess is or (c) waiting to see where the specialist opens the stock before making a decision. I will 99% of the time wait for him to open the stock at a gap down, knowing that odds are he will open it too low (specialist going long in the process)causing the stock to bounce up towards the falling moving averages on the 5 minute chart (specialist then selling into the fake rally in the process) Whomever shorted the open are now re-thinking their position and maybe even covering depending if they have "brass or glass" ones, also most shorts from the earlier day are covering before the profit goes away. If I'm going to try to work a large order in, I would cut it into 3 parts, first short goes off at the 10dma, second short at the 20 dma, and third and final short at the 50dma on the 5 minute chart. If all 3 shorts get filled while the stock is still going up from the open then I have a problem as by now the stock is probably getting close to yesterday's closing price. If only one or two shorts gets filled, then I will fill the remaining as the averages reach the stock, instead of the stock reaching for the averages, you always have the risk that the stock falls apart after the first short, but hey them the breaks, book the gain on the 1/3 lot. And example of this would be HWP of Friday on its 5 minute chart. Using the above criteria 1st short would have gone off at $98 1/2, 2nd at 98 7/8 and 3rd at $99 3/4, now I know I have a problem cause the stock is not only above all 3 moving averages but is near the previous days close of $100. As you can see it spent well over an hour in the $100-$101 area consolidating while waiting for the 20dma to catch up to price and push it higher, then it hopped on the 10dma for the rest of the day and headed for $104, I would have cut this trade probably less than 15 minutes after it consolidated in the $100 area for a $1 loss, but probably would have gone long some trying to catch the move up. Now if you go back a day on HWP to Thursday, it opened flat and broke down about 25 minutes later, the shorts here would have gone out at $101 1/2 at 10dma as it started to bounce, then $102 for the other 2/3s as the 20 and 50dma were both in the same spot on the 5 minute at that time, could have covered it all in the $99-$100 at end of day if I wanted to close all positions out. What do I do if the stock gaps down at the open and then "flatlines", not moving much up or down in either direction? MWD is a good example from this week, it gapped down heavy on Thursday and basically "flatlined" at $86-87 for most of the morning, in this situation I would not do a thing at the open but start to watch the stock in the afternoon to see if it wants to roll over into the close, thereby stranding a whole new generation of longs, this one actually went up into the close so no short, no problem. What do I do if a stock breaks down and then "flatlines" after the open? A good example is PCS from Tuesday, 9/19, stock was already in downtrend having just broken some serious support at $45 a day earlier, it was actually trading up a bit at $44 that morning when at noon 'BOOM' it suddenly breaks down to $42 and goes sideways until 3:00 it then proceeds to slip a bit into the close, this one I would short as it rolls over into the close, you can see by what happened the next morning, that somebody "knew something" before the news hit. Usually you just get a gap down or drift continued drift down into the next day, but this one was extra special. Actually some of these tricks work fine on Naz stocks too! Good luck, Fly