Below is some material from our Weekly newsletter (subscribe for free by sending an email to tdesk@yamner.com with the words SUBSCRIBE in the subject line...some of it may be fluffy but some might spur some dialogue and provide useful info) She's a bit long but there is some good stuff.
Regards,
Steve@yamner.com
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From the Trading Desk -
2/5/99 10:28:56 AM
The week was shifty. Early rallies were over come by end-of-the week selling in technology stocks. The bond market ticked down slightly, and earnings concerns surfaced, throwing many issues for a serious tumble.
While the broad market held tight, that was not the impression that most felt as leading issues such as DELL, IBM, MU, MSFT and INTC gave back reason gains. The failure of these leading companies to maintain their advance shook investor confidence, spilling over into other issues.
Strong gains in blue chip industrials such as AA, Disney, JNJ, Caterpillar and UTX kept the market from suffering a more significant sell-off. Oil stocks were strong as investors began looking for value in this blown-out sector. Many of oil service stocks were up 5 to 15% on average. That's a good thing because this sector has seriously under-performed.
The hard drive sector maintains its leading position as the disaster group of the week, for the second week in a row. After bridging up more than 200 to 300% over August lows, the sector has been simply eroding over the past two weeks. The fundamentals in the sector have only improved, albeit a far cry from the glory days of 1997. Yet, the market always goes to extremes. Issues such as WDC,SEG and QNTM are institutional issues. There is no moderation in the way a fund might move several million shares of these stocks. The waters part when these funds come in or out the door. Currently they are headed out.
We still have significant gains in many of these issues and in fact did some additional buying in several on Thursday and Friday. Our covered calls hedge a small portion of the correction and yet we feel this sell-off is somewhat overdone. If there is anything we have learned about cyclical industries in technology, they are not for the faint of heart.
We barely considered our leading stocks like Ford, JNJ, GE, as well as many of the oil producers. These are solid issues that will move higher when the markets perform and outperform when the market falters. In fact, we hope we can get back to August lows so we can begin picking up some additional issues.
We were more than pleased with the performance of many of our mutual fund selections. Several of our choices were rated top funds by several leading magazines. Your Money magazine ranked the Flag Communications fund as a top ten for 1998 (#9), for three year performance (#4) and five year performance (#9).
Several other of our choices were well considered. In health care fund, two of our choices were ranked #1 and #4 (Vanguard Health and Putnam Health and Sciences). Mutual funds offer great diversification and allocation for investors that need a more balanced portfolio. We often use them for allocations where we dont have enough cash to take positions in individual equities.
In sum, this week was a relative non-event. With the exception of tech issues which faced serious selling, most indices and large cap stocks ended roughly in the same position they started the week. We did a little buying in some technology issues as we have been waiting for such an opportunity to begin using our cash position. With many of the industry's leaders showing strong growth, we feel that there is some value for a select portion of an investors' portfolio. Other than that, we'll continue to sit on our hands.
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**TECHNOLOGY UPDATE****************
Yamner & Co., Inc. continues to embrace the latest and greatest in technologies. While we engage in some of the newest innovations, we scrutinize each process to ensure that it meets our exacting standards.
NET-X Online Account Access
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Our Net-X Online Account system is now fully functional. We have are successfully completing our Beta program and will begin offering this service to all of our existing clients.
Please go to yamner.com to complete the required registration form. Once this is completed, you access will be available within 2 business days. Please be patient as there are quite a few accounts to setup.
Please note that this system, while it offers the same interface and technology as DLJ's award winning DLJ-Direct, does not offer an interface for routing or executing trades with our firm. Note that this interface is the same interface that Pershing will eventually offer all firms which clear through Pershing. Because we are one of their top firms, we are the first Beta firm. It's a welcomed service for our clients. Nonetheless, because the site is developed by Pershing, you will see links for trading, as well as links for order status. These links are inactive. They do not provide any information regarding your open orders or pending orders, cancels or intra-day activity.
The system simply provides historical account history, money balances and account positions. The system is updated each evening, thus unfortunately and currently, intra-day transactions are not available from this site.
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Desk Trader 3.0 by Trade Manage Inc.
Furthering its commitment to providing the industry's highest quality execution and brokerage services, Yamner & Co., Inc. is currently working with Trade Manage Inc. (http://www.trademanage.com) in developing the industry's finest trade management software.
Trade Manage is one of the industry's leaders in financial technologies. Trade Manage Inc. currently provides the technology and infrastructure for the more than 25 execution systems, which our firm employs. As well, Trade Manage Inc. has developed and maintains our expansive and dynamic web site, as well as Video Conference service.
Our new Desk Trader software package will provide several features to our trading desk and clients. It will enhance the speed in which our traders access multiple routes and systems for client orders. The system will provide a transparent means of informing the trader of existing client orders, virtually eliminating errors and simplifying and speeding order cancellations and replacements.
As well, the system will provide auto-emailing of confirmations and reports, as well as provide support for ICQ and enhance and streamline phone based reporting. Clients may also receive end-of-day reports of the days' transactions and open, as well as expiring orders.
Desk Trader 3.0 will provide enhanced reporting and trade execution information. As well, the system will provide an interface for clients to view their open orders and intra-day activity.
As the technology firms and bandwidths expand, this interface will provide a stable platform from which to receive client orders via. a customized, Visual Basic application.
Desk Trader 3.0 by Trade Manage Inc. will significantly enhances the performance and quality of Yamner & Co., Inc.'s trading and brokerage services. We look forward to its arrival in the next few months.
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Quotron Plus 5.0
This past week, Yamner & Co., Inc. significantly upgraded its Data Center with the new release of Quotron's industry-leading 5.0 Plus product. This real-time dynamic quote package is fully featured and significantly enhances our already 'wired' Trading Desk.
The quality of this product reflects the many years of experience that Quotron (previously owned by Dow Jones) has had in the quote service marketplace. The package is fast, intuitive and exceptionally complete. Already satisfied by the previous version, we were overwhelmed by the enhanced features and performance.
For the internet investor, Quotron will have an internet-based version of their software available shortly. We are currently beta testing the internet version which is exactly the same front-end package yet obtains data from internet servers. If the company can provide reliable data and timely servers, this will be, in our opinion, the best package available for retail clients and professionals.
The URL for their internet software is reutersplus.com
I don't believe that they are discussing an internet version on the site yet, but they have stated their intention in rolling this product out in the next few weeks. We are Beta testing it for them now.
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Lessons from the Trenches
Verbiage is critical. On Wall Street, you are held to your word. Your word is your bond.
Many clients often enjoy taking the time to become accustomed to the verbiage and wording that is used with a professional trading desk, such as Yamner & Co., Inc.'s Trading Desk. Phrases such as, "Do me a favor and pickup some shares of AOL", are not only ambiguous, but leave open the possibility of errors and wasted time.
When one is dealing with a computer system, it is relatively straightforward. Detriments come in the form of system failures, poor or slow executions, and poor service. If one can understand the meaning of the various orders and the various form selections, one simply then needs to believe that the system routes, receives, executes and reports in proper fashion. While we continue to work toward providing a user-friendly, stable platform for delivering orders electronically to our desk, our testing still indicates that phone based trading is still the best means of properly communicating orders.
To that end, a client using a phone based Trading Desk needs to learn properly communicate orders. If one can learn this skill, orders can be transmitted, received, executed and reported in a surprisingly short period of time. Some of the most complex orders can easily be communicated in far less time than it takes to enter the six fields on some online order entry forms.
Most clients are initially wary of phone based trading, often from a misplaced perception that such trading is slow. This is not the case. The number one factor contributing to delays in the speed of execution and execution performance is miscommunication. To be quite honest, most clients do not understand the significant impact that ambiguous or uncommon wording can cause. A trading desk and trader prepped and ready to execute immediately must double their efforts when an order is given in an atypical format. If both parties can communicate clearly and concisely, they can work together to enhance their performance.
This concept is no different than the verbiage and jargon used in hospital emergency rooms. For instance, a doctor, in the middle of open heart surgery does not say "Do me favor, Ms. Smith, if you could, please hand me the sharp scissor-looking object on that tray over there when you get a moment." On the contrary, a doctor might communicate the same interest in 3 words. Direct. To the point.
Our traders and executives at Yamner & Co., Inc. go to great lengths to explain the proper verbiage to our clients. While we are always patient and willing to correct mistakes in wording, we find that when both parties begin to speak the same tongue, performance accelerates.
Whether one trades via. an online electronic system or by phone, learning the proper language used by professional trading desks can only enhance your understanding and mastery of the markets.
The number one area where we see clients making errors involves a client failing to cancel an existing order when placing a subsequent order. The typical scenario is as follows: The client calls and places an order to sell a stock which they own with a limit, stop or some other qualifier. Subsequently the client calls and, intending to replace the order, simply places a subsequent order without informing anyone that this new order replaces the previous order.
From my perspective, heading our trading desk, we find ourselves in a difficult position. Do we spend the time to look up the customers' existing order on EACH and EVERY trade they call in? After all, every order could replace another order if the client fails to use the proper wording. On one hand, we want to work the order quickly and get the best possible execution, yet no one wants to see such errors. Trust me, when you are an agency desk like ours, no one benefits when errors occur.
Nonetheless, we feel that we must ask clients and traders to be aware of their existing orders. This is what Wall Street professionals ask of each other and given the high performance Trading Desk which we operate, it is what we must ask of our clients. For that reason, the sections below regarding the modification of existing orders is important.
From experience, I can tell you that if I have an order with a market maker or other firm, if I do not tell them to cancel an existing order when I place a replacement, and both get executed, we eat the error.
Experience here tells us which clients are "on top of their game", in tune with trading operations. Unfortunately, some clients find themselves forgetting to cancel orders, which ultimately leads to mytraders having to check their efforts before handling the errant clients' orders. It is not done with any malice or contempt, yet if a particular client develops a reputation of being forget in canceling orders, we must ensure that errors don't occur. This process could eat several vital seconds.
We want educated clients. We want our clients to be as savvy as they come. If anyone ever has any questions regarding their orders, phrasing or trading operations please contact us. Nonetheless, the best thing a trader can do is to keep clear records of their orders, in a central location, with all other orders. Forget about jotting down scribbled notes on a napkin. It never works. It only leads to errors.
Many experienced traders keep tickets or blotters for their trades. Many use a package such as Quicken for actual trades, but traders and investors should have some concrete, reliable means for keeping track of their open orders. Whether you do business with an online firm which presents these orders on your PC's monitor or whether you work with a firm like Yamner & Co., Inc. or other firm, it is important to track your open orders. I suggest using a table where you track the date and time you placed the order, the side (buy/sell/short sell), quantity, symbol, price modifier, TIF, as well as the trader or system with which you placed the trade.
Please see the Yamner University or the below link for a suggested blotter. Note, this is in Adobe PDF format. You must have the plug-in to view it (free from Adobe at adobe.com)
yamner.com
While no one benefits from errors, ultimately, the client is responsible for making sure they get an confirmation acknowledgement, an OUT, before placing a new order, or the client must utilize a cancel and replace order as indicated in the verbiage below.
Order Entry for Equities and Options
This document provides a cursory introduction to verbiage used on Wall Street. This verbiage should be used to concisely and accurately transmit instructions relating to your order. As an investor, you are held to your word and actions, so it is important to understand the consequences of your verbiage.
Price Qualifiers:
+Market;
+Limit
+Stop
+Stop Limit
+Market onClose
+Market Opening Only
+Markket Not held
Time in Force Qualifiers:
 Day
 GTC (good till cancel)
GTD (Good till date) XX/YY
To Buy:
This is (Customer Name), (A/C#), buy (quantity) (symbol) (name of Co., if available) @ Price qualifier (see below), Time in force:
Example. “ This is John Doe, #038800, buy 1000 DELL, 1000 Dell, Delta, Echo, Lima, Lima at 105 ” or "….buy 1000 Dell, Delta, Echo, Lima, Lima with a 105 limit"
To Sell:
This is (Customer Name), (A/C#), sell (quantity) (symbol) (name of Co., if available) @:
1. the market
2. (price) gtc or day, (limit SELL orders)
3. (price) stop, gtc or day, (SELL stop order)
Example. “ This is John Doe, #038800, STOP order, sell 1000 DELL, 1000 Dell, Delta, Echo, Lima, Lima at $110 STOP, day order.
Modifying Existing Orders
To Modify DAY order: (Cancel and Replace)
This is (Customer name), (A/C#), day around, buy (quantity) (symbol) @ (NEW PRICE) cancels (OLD QUANTITY)@ (OLD PRICE).
Example. “ This is John Doe, #038800, day around, buy 1000 DELL, 1000 Dell, Delta, Echo, Lima, Lima, at 103 cancels 1000 at 105.
To Modify Limit GTC Buy (Cancel and Replace):
This is (Customer name), (A/c#), open around, buy (quantity) (symbol) @ (NEW PRICE) cancels (OLD QUANTITY) (OLD PRICE).
Example. “ This is John Doe, #038800, open around, buy 1000 DELL at 103 cancels 1000 at 105.
Yamner Order Entry for Options
To Buy:
This is (Customer), (A/C), buy (quantity) (call/puts) (symbol) (month) (strike) (day/gtc)
Note: Full month & strike must be provided for order, not short codes)
"This John Smith, #032222, buy 10 Call GE March 100s, Day only"
To Sell:
This is John Doe, #038800, sell (quantity) (call/puts) (symbol) (month) (strike)
Note: Full month & strike must be provided for order, not short codes)
"This John Smith, #032222, Sell 10 Call GE March 100s, Day only"
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The Hard Right Edge Technical Analysis by Alan Farley
Alan Farley is a private trader and editor of The Hard Right Edge web site. The Hard Right Edge provides comprehensive traders resources including original tutorials and strategies on multi-trend technical analysis and short-term trading . Alan also authors complete on-line training courses on technical analysis in association with independent sites. He has been featured in Barrons and Smart Money magazine.Visit The Hard Right Edge at hardrightedge.com.
eading Bollinger Bands
Bollinger Bands add horsepower to any trading system. Just set the bands to the popular (20-bar 2-std deviation) inputs and you'll locate many hidden support and resistance points. They're also highly effective when examined in multiple time frames. Moving from weekly through intraday bands reveals a multi-trend view with excellent predictive value. Often, reversals can be predicted to within a single bar.
Someday another Edwards/Magee will come along and categorize the different band/price scenarios and assign predictability to each. Until then, these should help:
A. Location And Direction Determine Trading Phase:
1. UPPER VS LOWER ACTION
Location of price bars determines the strength of the current phase. Price within the upper band signifies power while price within the lower band signals weakness.
2. PRICE DIRECTION
Direction of price within the band identifies convergence and divergence with the current trend. Rising price within the lower band and falling price within the upper band signal divergence while rising within the upper and falling within the lower signal convergence.
3. TREND TESTING
The lower band, middle band (center average) and upper band represent support/resistance for the trend. Reversal off any band increases odds that price will expand in the reversed direction and return to the last band crossed or touched.
B. Penetration Through the Center Band Increases Directional Momentum:
1. CROSSING FROM BELOW CENTER TO ABOVE
Uptrend increase in strength. Observe directional movement of the upper band as price approaches.
2. CROSSING FROM ABOVE CENTER TO BELOW
Downtrend increase in weakness. Observe directional movement of the lower band as price approaches.
C. Bands Open In Response To Awakening Trend:
1. CLIMBING THE LADDER
If the angle of the upper band rises in response to approaching price, expect a series of upward price bars, each riding higher along the top band. This is an uptrend in progress. Conversely, price striking into a horizontal upper band predicts reversal and resistance.
2. THE SLIPPERY SLOPE
If the angle of the lower band falls in response to approaching price, expect a series of downward price bars, each pushing lower along the bottom band. This is a downtrend in progress. Conversely, price striking into a horizontal lower band predicts reversal and support.
yamner.com
Bollinger Bands define natural extremes in trend development. As bands are hit, price often bounces backward until sufficient strength can push the band out of the way. Note how RATL action reverses immediately when price thrusts too far outside these well-defined barriers. The most sustainable trending occurs when price clings to the band's edge.
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