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Archive for September, 2009

End of the Quarter$

September 30, 2009 Leave a comment

So ends the 3rd quarter of the year! The rally over the last 3 months has been more than impressive. The shorts have been bruised and batter and for the most part gave up. Today, we sold off fairly hard in the morning on poor manufacturing numbers only to rally in the mid afternoon and then late in the day , a bit of selling pressure entered the market.

So starts the 4th quarter and historically the worst month of the year, OCTOBER. It really is hard to make a prediction of what will happen, but we know one thing. The market has been strong with virtually no pullbacks. So initially we will be looking to get long and buy the pullbacks. However, we do believe that the markets rebound may be a bit overdone in the short term. We will continue to be diligent in our stock selection and will be involved in both sides of the market, long and short. We will keep an eye on the volume on the moves down as well as the moves up. If the market continues to consolidate as it has for the last 2 weeks or so, we will be patient to pick our spots and have lower trade expectations

$Debbie: How do you measure your month?

September 29, 2009 Leave a comment

September has been the best month in the last year on my path to becoming a professional trader. After that statement most people will say, “ok, great…how much money did you make”? And then when I follow that question with my answer, “none, I lost a good bit of money this month”, most people will look at me as if I have ten heads.

September  has been “The” month that drove me to reach down deep inside my trading “gut’ and take a deep, hard, ugly  look at what was inside and decide if I  had what it takes to be a professional trader or not. I would venture to say that this is the point that most people quit.

The market demands, without mercy, focus, discipline, strong/balanced psychology, constant learning and skill development, and an alertness to change and the ability to adapt to change that is as quick as a leopard and as sharp as the blade of a knife.  

After, I was forced to take that “deep, hard, ugly look inside my trading, I was able to recapture that feeling of knowing, without one speck of doubt, that I know how to trade and can make money in this business. Simply put, I was able to regain my confidence by learning from my trading and making immediate changes in my actions to improve my trading. More importantly, I was harshly reminded that I have complete control over what I take out of the market on a daily, weekly, monthly, and yearly basis.

 I must add here that Keystone Trading Group has given me the ability to know what I know. They provide a system, education/training/mentoring, and a forum by which traders become a part of a collaborative team.

Here is to October!

 Happy Profit Taking All!!

 

Debbie

Never a dull moment in the markets…

September 28, 2009 1 comment

Even on a light volume day like today, we have some activity worthy to of a mention. Monday continue to produce some nice Merger Arbitrage opportunities as companies have found it easier and safer to finance acquisitions. Today we had a couple of $6bn deals mentioned XRX buying ACS and ABT buying the US division of Solvay. XRX traded down ACS traded up, as merger arbitrage funds took positions. For more information on Merger Arbitrage go to the following link https://keystonetrading.wordpress.com/mergers-and-acquisitions/ the markets have really started to show signs that we will be having more activity not less.

In addition today was worth mentioning that the equity markets bounced off the 20ma on the daily (see chart of SPY http://twitpic.com/jik3i ). The volume on this bounce may not have been very high, but it was nice consistence order flow to the buy side. So despite low volume, our traders were able to make money since the trend was much cleaner in many of the stocks and sectors we normally trade. The NASDAQ led the way higher with stocks in the SMH strong from the start. We also had the financial help out the market especially at the end of the day. As an intra day trader you need to capitalize when the sectors and stocks you trade are on the move. Friday was a day to sit on hands, today was a day to get involved.

At Keystone we have created a community of traders that is geared to maximize opportunities, by pointing out trades and days that have an edge, and maybe more importantly pointing out days or trades that HAVE NO edge. Stay away from the NO EDGE trades; they will burn a whole in your pocket as well as your psyche.

$Debbie: Turning A Drawdown Month Into A Trading Month Of Positive Growth And Learning

September 26, 2009 2 comments

September has been the most confusing month for me since I started trading full time a little over a year ago. Just one month prior I had my most successful month and knew that I knew what I was doing. At the start of my draw down month I got beaten around, in a big way, and took a pretty good hit to my psychology and P/L . I was left winded and wondering what the hell happened.

I took some time to recover, reflected, studied charts, watched the market and got back in the “saddle” again only to continue taking small losses and some small gains. As a result, I was unable to recover from the big hit to my P/L that I took at the start of the month.

The one stock that was my best the prior month turned into my worst, trades that I knew were good trades either did not work or worse worked and then suddenly stopped working and/or reversed their original direction without warning, and momentum has been lost for most of the month (at least in comparison to last month).

Since we are ending a month, it is time for me to gather all of my journal notes and do a cumulative overview of what happened.

As a trader, first I remind myself that I am solely responsible for my trades and my trading outcomes.  The market left me to figure out what was wrong with me and question what I missed because the market is neither right nor wrong. The market is simply a “machine” that just does what it does and does it over and over again.  

The following are my conclusions when I compare my August Performance to my September Performance.

  1. I am a very poor range trader. I am good at trading a trend. In August my two financial stocks basically trended much of the month.
  2. I failed to cut my initial loss on a trade decisively because I was expecting them to trend like they did much of August. I expected follow through at times when I should not have based on the internals.
  3. I tended to switch between stocks in my basket looking for something to do whereas in August I almost exclusively traded one stock.
  4. I failed to recognize early enough that there was a significant change in momentum between August and September.
  5. I failed to recognize early that breakout trades which worked almost all of August did not work at all in September.

The above six items really boil down to me not adjusting to conditions that changed and trading accordingly. Hence,  from my expensive  “trading class” this month I learned that I need to recognize the changes from month to month, day to day, and moment to moment in the market and stock conditions, adjust my trading to those changes, and embrace the change as opposed to trying to resist it or fight it.

To conclude my self-reflection, I am also taking the time here to remind myself and take pride in the fact that I know how to trade and I can trade effectively and make money as a result. So October begins a new month and a month where Debbie’s drawdown ends.

The question is: How do you turn a draw down month into a trading month of positive growth and learning?

  1. Take full responsibility for your trading decisions and actions and don’t allow yourself to think that it’s the market.
  2. Use your journals, past and present, to compare and find those hidden insights that we can easily miss from day to day.
  3. Remind yourself of what you have learned and the progress you have made since the beginning of your journey. You know what you know. It’s a matter of using it the right way in the right conditions. And draw the “line in the sand” where your drawdown ends and where you regain control of you and your trading.

 

 Profitable  Trading All!!

 

Debbie

Video: two hour stock trading mastermind meeting

September 23, 2009 Leave a comment

One way or another as a trader you will pay for a trading education. It will either be through time and losses or you can take classes.

Keystone feels classes alone are not enough, mentoring with real capital is the only proven methid to teach trading for a living.

Each month Keystone Trading Group holds a Mastermind meeting to provide continuing education for our proprietary traders and for those traders who would like to take their trading to the next level both for consistency and and increased profits.

If you would like to learn more about trading our capital please click here.

To view the 120 minute video of our September Mastermind meeting copy and paste the following link into your web browser:

http://keystonetrading.acrobat.com/p70226411/

The beginnings of 52week Highs…

September 21, 2009 1 comment

When stocks start making 52week highs, investors start to take a closer look; if for no other reason that stock screeners start to flash green on their screen. So that is what I’ve been doing every day, trying to get a feel for the underlying strength in the market by noticing what stocks are making 52week highs consistently and what stocks are failing to do so. For now I still see some of the big name stocks making highs almost everyday, stocks like GOOG AAPL GS all have made 52week highs in the last week.

From the list of stocks I am following these are making 52week highs:

Dow Jones Index: MMM

Semiconductors: SMH NVLS KLAC AMD MU

Retailers: XRT ARO GPS XRT ODP

NASDAQ: GOOG AAPL EBAY SBUX RIMM PALM

Commodities: GLD SLV

Financials: GS

What is worth noting from this small list is that Nasdaq and Retail sector are the two sectors with the best order flow to the buy side. Stock in the Dow and the financial sector are still lagging as only MMM (in the Dow) and GS (Financial) have made a new high in this last market uptrend. JPM is closes to test those highs in the financials, $50 would be a new high (just as a reminder where others are: C would have to trade to $23.30, WFC $40, and AIG would have to trade to $162, split adjusted, to get back to last September’s levels).

Another stock that caught my attention was F; it made its 52week high in the middle of the cash for clunker months, and has not been able to make a new one since. On the attempts but failing category MS is right up there, trying to take out the $32 levels three times in the last 3months, and as of yet has not been able to trade and stay above that level.

Keep a log on the stock you follow the most and get familiar with the internal strength they are showing. A 52week high is one good indicator you can follow, and remember that higher highs, higher lows is what creates a uptrend trend, so respect that.

Keeping track of markets internals are critical in developing a clear picture of the overwhelming order flow of the market.

www.keystonetradinggroup.com

Morning Quickie $

September 21, 2009 Leave a comment

Keystone Morning Quickie September 21st 2009

Market Commentary

The futures are down this morning but have regained some ground on the news that Dell computers will buy Perot systems for $3.9 billion and an upbeat report on the housing market from Lennar. Many analysts have come out and said the market is “overbought”. We have heard this before and we will hear it again, but until we see a change in order flow , we will have to continue to buy pullbacks and test the short side , only with caution and minimal expectations. 1025 is an important level in the $SPX to watch. If we trade below, we may some additional selling as nobody wants to see their profits of the last several months disappear.. Leading indicators at 10am EST should give us some direction.

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Call us at 212-594-8900 if you would like to discuss any of our trading programs.

Technical Levels

50 Day 200 Day
S&P 997 891
DOW 9251 8413
NASDAQ 1985 1701

Keystone’s Trades

Morgan Stanley (MS) long trade

After naming a new CEO last weak Morgan Stanley has played catch up with the rest of the market. MS had been relatively weak to the market for a couple of weeks and we were riding the short side, but once they named a new CEO their was some clarity and a breathe of fresh air. We believe the stock will pull back a bit and we will be waiting patiently for an entry. We will look to enter the long at around the $30 level or will buy the breakout above $32.

Profit target: $16.75

stop loss: $13.90

CVS Caremark (CVS) short sale – CVS has trended higher since June, but it seems as though the trend has ended and a possibe reversal is in store. After hitting $37.78 earlier this month, the stock has seen some selling pressure. A big chunk of that selling was done on Friday with almost 2o million shares trading hands, a day when the rest of the market had light volume due to the Jewish holiday. We will look for continued selling pressure as the future are down a bit this morning. CvS broke a support level at around $36.22 on friday and we see this pulling back to at least $35

Longer term target:$34

Stop loss: $ 29

Economic Calendar

10:00 Conference Board’s Leading Indicators
10:00 FHFA Housing Price Index
12:00 HUD Secretary Shaun Donovan speaks on Helping Homeowners Avoid Foreclosure

Notable earnings before Monday’s open: LEN

Top News Stories

Dell buys Perot for $3.9B. Dell (DELL) said early Monday it will acquire Perot Systems (PER) for $3.9B, or $30/share, creating a “comprehensive, customer-focused IT-solutions company.” Perot will become Dell’s services unit, to be headed by Perot CEO Peter Altabef; Dell directors will ‘consider’ chairman Ross Perot Jr. for appointment to its board. Over the past year, the two have produced a combined $16B in enterprise-hardware and IT-services revenue, with half of that coming from enhanced services and support. Shares of Perot closed at $17.91 on Friday.

Building a more robust global economy. Ahead of this week’s Pittsburgh summit, G-20 leaders are scrambling to finalize a framework that will promote stable global growth in part by correcting imbalances in the U.S. and China. The U.S.-led proposal, known as the Framework for Sustainable and Balanced Growth, involves broad changes to economic policies in the U.S., Asia, and Europe, including the U.S. saving more and reducing its deficit, and China relying less on exports. Potential sticking points include China’s reluctance to participate, how to enforce any commitments, and a divergence of opinions on how to estimate future world growth.

BofA forced to spill the beans. A House panel has told Bank of America (BAC) it cannot use attorney-client privilege to keep details of its purchase of Merrill Lynch out of Congress. Panel chairman Edolphus Towns wants Bank of America to reveal information it’s kept secret for months, which could impact a range of ongoing probes into the merger, including one by the SEC, another by NY AG Andrew Cuomo and a third by the DoJ. Towns has given BofA until noon today to provide answers and documentation.

Fed rejects public review. Sources say the Fed has rejected a request by Treasury Secretary Tim Geithner for a public review of its structure and governance. Fed officials say the review – which would have examined the Fed’s ability to accomplish its existing and proposed functions, and the role of regional Fed banks – could have threatened its independence.

FCC to push for open internet. The FCC will today recommend broad new rules that aim to force internet carriers to treat all traffic equally. Currently, some providers block and/or slow the transfer of large files such as videos and music, which they say hogs bandwidth. Sources say FCC chief Julius Genachowski will also push to expand net equality to wireless internet access, a concept fiercely opposed by wireless carriers like AT&T (T). If implemented, net neutrality could drastically impact how ISPs and wireless carriers charge for access, and could encourage internet companies to launch new data-intensive services.

RBS weighs huge share sale. Royal Bank of Scotland (RBS) is in talks with shareholders to gauge the appetite for a £5B ($8.1B) share issue in an attempt to stop the British government’s stake in the bank from creeping higher. The U.K.’s stake in RBS is set to reach more than 80% under the terms of its toxic asset insurance program. Last June, RBS raised £12.3B in a disastrous takeover of ABN Amro.

Ka-boom! Walt Disney’s (DIS) $4B acquisition of Marvel Entertainment (MVL) hit a snag Sunday after heirs to revered comic book artist Jack Kirby, creator of many of Marvel’s mainstays, filed claims challenging Marvel’s long-term rights to some of its superheros. In a statement, Disney said the claims are an attempt to terminate Marvel’s rights 7-10 years from now, and “were fully considered in the acquisition.”

Santander to raise $7.35B in Brazilian IPO. Santander (STD) plans to raise almost €5B ($7.35B) through the previously announced IPO of 16% of its Brazilian unit. The target is well above the €2.5B analysts expected. The bulk of the proceeds will be spent opening another 600 branches in Brazil.

Heading off say on pay. A group of companies including AT&T (T), Cisco (CSCO), H-P (HPQ) and Tyco (TYC) will announce today a joint effort to voluntarily change their pay practices, a move aimed at heading off potentially more onerous restrictions out of Washington. The group, led by the Conference Board, will endorse principles that tie incentives to long-term success rather than short-term gains, and advocates doing away with ‘overly generous’ golden parachutes, but stops short of signing off on ‘say on pay’ legislation that would give shareholders a vote on executive pay.

The return of risk appetite. Global and emerging-markets bond funds, and global stock funds and sector funds, saw the highest inflows this year in the latest week, while money-market funds had their second-biggest weekly outflows. Risk appetite is clearly on the rise, although the move remains cautious, with bond funds growing at a faster clip than stock funds.

One more chance. The IRS will announce today it’s extending its amnesty program, giving wealthy Americans with secret offshore accounts another 22 days, until Oct. 15, to come forward. The program, which began in March as a way of luring UBS (UBS) clients of out of the woodwork, has attracted 3,000 taxpayers so far, compared with just 80 last year

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