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Know Your Sector…

Even when you are trading on an intra-day basis you still need to do your homework in regards to the stocks you are trading, things like: knowing levels of support and resistance on multiple time frames, understanding the direction and flow of the overall markets so you are trading with the wind on your back, and you also need to understand what sectors you are involved in or want to get involved in.

As the Thanksgiving season and Christmas season kicks in – the retail sector has really come into play. Stocks like JCP M SKS GPS BBY WMT have all seen increases in volumes as traders and investors take positions on the seasonal sales expectations. For the most part it felt like most analysts were expecting a better Black Friday than what seems to have taken place. The good thing about this time of the year is that we will be getting plenty of data from this sector well into the start of 2010. We have Cyber Monday data to deal with as well as the pre-Christmas sales. Same store sales, inventories, $spent per customer are all variables that will be batted around on television as analyst try to predict how earnings will do. For us intra day traders, you need to be aware of these variables because they will impact the flow of these stocks. It’s also important to recognize that volatility should increase in this sector and it will therefore be a good sector to be trading.

The Thanksgiving Day news from Dubai World also set the credit markets on fire as risk premiums were recalibrated higher over a very short period of time. By Monday it seems that Dubai World was being more transparent with the restructuring of a portion of its debt – which seems to have calm down the markets. The financial stocks, which had been beaten up on Friday, rebounded today on this news. Once again, as intra day traders you need to be aware of the variables that are moving your sector and as a consequence your stocks. So financial will also be a sector worth keeping an eye on as we come to the end of the year.

Lastly with the US$ making moves it is worth looking at commodities, including energy stocks, as they will be on the move with any change in flow in the currency markets.

Suffice is to say that you need to add another dimension to your homework so you can take better advantage of any shift in order flow in the stocks you are trading.

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