Intraday's new SECTOR SQUADRON program!
or, short-term trading with the FUNDAMENTALS on our side
This is to describe a new innovation we're rolling out over the course of the next few weeks, which we feel is going to end up being one of the biggest innovations we've offered to date. It's called the SECTOR SQUADRON program. Here's how it works! (this could be useful to know whether you trade with us or not)
As a brief background, let's first take a look at the Intraday MASTER STALK SHEET (sector model), which we distribute to all trader-members (it's an Excel spreadsheet which is updated frequently): intradayinvestments.com
We pick ALL of our plays from these (~300) issues which represent a broad cross-section of the stock market (not just the techs, but important sectors of the Dow, as well). Of course, we also trade options on individual stocks and indices, but the underlying is restricted to this list. Many of these stocks are in the model just to provide a good representation of the sector, giving us a better handle on overall price action, volume flows, sentiment etc in a particular sector. The "Hot stocks" that we trade the most frequently are highlighted in yellow.
When we are scanning for the nightly STALK SHEET, all of the plays come from the Master Stalk List. This allows us to focus all of our efforts - and the entire intraday community of trader-members - onto a select group of securities which we know a lot about. With the SECTOR SQUADRON program, groups of trader-member volunteers are always studying each of the stocks in the sector they cover to learn everything there is to know about the things that keep them in equilibrium, from the basics (price-earnings, float, EPS, sales growth, product margin trends, key competitition, channel/distribution partners, etc) to the latest news on each company in the sector, knowing which analysts/brokerage are the most influential, which funds are the biggest holders, when the earnings warning season and earnings reports will hit, when/where the key conferences and analyst meeting are, and in general getting a deep enough understanding to be able to 'read' accurately how the institutional investors will react to any kind of news event.
For example, when Synopsis had an analyst breakfast meeting in Las Vegas at which management bemoand the tough sales environment (competitive pricing/margin pressure, budget cuts in key accounts, smaller average sales #'s) we immediately slammed the stock in the room for substantial gains -- our confidence factor was higher because we new exactly now the big guys on the street would react to that (they'll smell a profit warning coming so they immediately dumped).
We're very excited about this program and already have a number of volunteers signed up to cover the following sectors: Banks, Biotechs, Computer Hardware, Drugs, Internets, Networkers, Networked Storage, Retail, Semiconductors, Semi Equipment, and Telco Service Providers. Many of the volunteers have had direct career experience in these sectors previous to trading full-time, giving us a good headstart. We'll be constantly scanning the Wall Street Journal, IBD, Barron's, our live news feeds, etc. for more information and expertise.
In a sense, with this program (and Reg FD helping us) we are turning the traditional Wall Street paradigm on it's head. Traditionally, the analysts at the major brokerages have been the only truly "in the know" through their chummy relationships with corporate America. By creating our own ecosystem of experts intensely focused on gathering this information, we too will gain more of an edge in our day-to-day trading. By knowing exactly what the "why" is behind a move in a particular issue, we can more intelligently fine-tune our level of aggressiveness and persistency with any given play. Even though almost all of our trading decisions are still technically-based, that's a big edge!
All of us at Intraday feel strongly about the following. We believe that to be really top-notch, you really need to understand the what and why behind the move you are trading!! And that you should be able to very astutely interpret likely reactions to news events, institutional buy/sell activity, be able to pick out sympathy plays across any sector, know what the expected earnings are, what the fund managers are watching/thinking, etc. In our experience, this gives you a VERY BIG edge over the daytrader that has no clue what he or she is trading and/or why it might be moving. It's like being in the dark with a blindfold, vs. full living color. We belive that it is a MYTH (propagated in the past few years by daytrading educators) that you can just go out and learn a few price patterns, then go out and trade stocks for a living. The same is true in the commodities markets, although their are always exceptions. Another way of saying this is: the "teach a man to fish" theory is a bit of a myth in this business - it's much more difficult and complicated than that-- if you want to acheive long-term success in a variety of market conditions! This is how the pros on the street do it - for a career - and not just for a few bucks made during an all-time record Nasdaq blowoff run. We'll delve much deeper into the whys and hows these guiding principles and beliefs in future educational posts.
Good trading, -Steve |
