Finding a Catalyst

Our job as traders is to find readable order flow and capitalize on the opportunities that present themselves.  This order flow is caused by large institutions buying or selling a stock.  Generally if you can find an entire sector that is moving in unison this is the easiest indicator that money may be flowing in or out of a sector. 

Recently the casino sector has been in play.  I have been focusing most of my attention on Las Vegas Sands(LVS), but MGM Mirage(MGM) and Wynn resorts(WYNN) have also been very strong.  This move has been caused by the increase in revenue from the casinos located in Macau.  For the last few days these stocks have been consolidating but today we got the breakout move we have been waiting for. 

As I posted on twitter this morning (http://twitter.com/keystonetrading) I’ve been waiting for WYNN to get above 78 because I thought this would give LVS the momentum to breakout above 22.  I was watching WYNN hold this level in the pre-market so I figured LVS would be in play today with an aggressive entry above the 2-day high of 21.62.  We got above this level and my first entry was a pause at 21.73.  I timed this entry by watching my level 2 for a pullback from the first 5 minute high of 21.80.  I started this position with 2/3 of my normal share size planning on adding on above 22. 

My profit target for this trade was in the 21.50 area because from what I could tell this was the next resistance.  Above this I could see LVS running into the 30 area.  Obviously LVS wouldn’t do that today but the point is I could really see the stock running.  I sold 1/3 of my position at 22.20 just to lower some of my risk.  I rode the rest of this trade into the 22.80 area.  I sold 1/2 of my remaining position at 22.80 and the rest on a pullback at 21.60. 

I ended up reentering on the break of 23 with low expectations because of how much the stock had run.  The key was to recognize that there was volume running into this sector so don’t fade the move.  I went into the trade with lower expectations and ended up exiting when LVS had a problem getting above 23.28.  I ended up selling at 23.20 for a quick .20. 

As I move further in my trading career I have found that stock selection is more and more important when it comes to making the easier money.  When you see a sector lighting up like the casinos did today its almost like the market is giving away money.  When you do the proper preparation for the day, have a plan for the day, and spend the day executing that plan you can be one of the traders making this “easy money”.  Best of luck with your trading. 

Kyle

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