Some comments:
*Daytrades from yesterday*
CREE, a long-time holding of mine, traded down to levels which IMO appeared unjustified, given its bright (pun intended) fundamentals. The victim of a confluence of negative events, including FUD from thestreet.com, the stock fell last Thursday to fill a breakout gap between $59-7/8 and $61-12 going all the way back to 12/2/99, from almost exactly a year ago. The duration of time which elapsed (1-yr.) was unusually long, but otherwise a TA-textbook example of filling the "gap", or "window".
The following is a simplified explanation of the significance of a "window": traditional Japanese TA asserts that corrections go back to the window. In other words, a test of an open window is likely. Thus, in an uptrend, one can use pullbacks to the window as a buying zone, because the window should act as a floor. If the window is closed, and the rally that closed the window persists, then the downtrend is finished. However, longs should be vacated and even shorts could be considered if the selling pressure continues after the window closes.
CREE thus became a "buy" candidate for those of us who have been waiting for an opportunity to initiate or add to our positions.
CREE closed at $56-1/8 on Thursday. I also made an observation, that at this price, the market cap of CREE, at $2.004B, stood just a shadow above a level where institutions consider to be the demarcation zone between small caps and microcap stocks. CREE was on the brink of becoming insignificant, in the eyes of the majority of Funds out there...
I often use intraday candlestick charts (set at 10-minute intervals, with volume data) on Bloomberg, and draw trendlines to identify support/resistance areas, as well as negative divergences between price and volume. On Friday, the premarket indications were positive for the Nasdaq.
CREE opened at $58-1/2 on Friday, a breakout "gap". I placed orders to buy at levels clustered above and below the opening price, not wanting to miss a potential rally, but also wanting to "catch" some at better prices in case the opening gap would be filled. Today's confirmation fax showed that I was able to pick up 9k at an average price of $58.70.
For those of you who commented that it was rare to see a posting showing the *quantity* of stock traded, I agree with your observation. This information is usually private, because people don't usually want to reveal the $ size of their holdings. I guess I value privacy as much as anyone else, so in the future, it'll be unlikely for me to disclose the quantity. But it should not surprise anyone that turnover on an active day in multi-million dollar portfolios, whether institutional or private, can be pretty significant.
It's worth mentioning that the fund I manage can "afford" to trade quite actively, since it has zero capital gain taxes (foreign citizens are not taxed), plus it has negligible transactions fees (fixed percentage paid to the custodian on a quarterly basis for "unlimited" trading).
Going back to the daytrading saga, the subsequent sell at $66-1/2 and $67 were based purely on the fact that the stock had encountered resistance at $67-1/8 on Thursday. I wanted to unload into the re-test of the previous day's highs - the TA mantra goes: "sell the first rally". I sold 4k at $66-1/2. Of the 5k I wanted to sell at $67, only 1k filled, because the bids dried up very quickly. I was able to see this in real-time on my Bloomberg, using the funcion QRM which shows a stream of bid/ask sizes. Not quite level II data, but adequate to give me the hint that perhaps I should sell more if CREE couldn't break through $67 on the next attempt.
CREE dipped to around $64-1/2, bounced, and tried trading back up to $67 again, but couldn't hold. By this time, the intraday charts showed a double top, with a broad "rounding top", and was starting to dive down. I managed to sell 3k at $64-1/2 on the way down. How did I choose this price to sell? Read the first sentence on this paragraph again.
The NDX was also dropping at this time, precipitated by the downgrade in Intel. CREE seemed to track the NDX fairly well.
I watched the CREE dive down to retest the intraday low of $58. It held, and appeared to bounce. So I grabbed 5k at $60-1/4.
In conclusion, yesterday's successful daytrade was based equally on three ingredients: luck, TA to determine entry/exit levels, and some "tape" reading based on the flow of bid/ask amounts.
I want to reiterate that I'm mostly a LTBHer, but have had some luck on short term trades. I'm just as fallible as the next trader, and I'm just as scared of losses.
I intend to continue "trading" CREE opportunely. My trading data will probably be mostly ex-post-facto, but very close to real-time. I don't think I want to broadcast my intentions ahead of time to undermine the execution of my own trades.
I hope this has been mildly interesting to read - those who don't believe in TA, please refrain from sending me a barrage of sarcastic opinions. I've got to return to monitoring my CREE position (using some TA, of course) ... |
