NYSE Day Trading

The market these days seem to be all about volatility and no general direction. Major positioning plays have to be taken earlier in the day to maximize profits. The S&P futures went down almost to the 1,370 range before bouncing back to 1,385 at the close. Just to give an idea only a week or so we were in the 1,415-1,418 range. Market sentiment along with data seem to indicate that the credit crisis is far from over and the market will continue to fluctuate as the economy recovers. The rally towards the close was assisted by lower oil prices and decent housing Data but overall the market is still moving sideways and will continue to do so this month.

Citigroup (C) had a lot of volume today and had some decent size during the morning which allowed for some good long positions to be taken. A more effective  play however seemed to be for traders with large  shares and throughout the day quick profit taking was the order of the day. Another good stock was General Motors (GM) which tanked hard during the day. The company has been in trouble for quite some time now and with the high oil prices it’s SUV and truck sales are dropping further. Traders might have noticed the ADFN ECN (electronic communication network) which was selling pretty hard and often had reserve shares behind it. A great technique today on GM along with American International Group Inc. (AIG)
was to wait for the ADFN to show up on the Ask with around 9,000 -12,000 shares and go short with it. There was almost always reserve size behind and allowed for easy money opportunities throughout the day. Disney (DIS) was another stock which after hitting the low $33.26 turned direction and closed at $33.64. After every few levels  the Archipelago ECN (ARCA) would show up on the Ask with around 20,000- 25,000 shares which almost always got hit as the stock kept rising throughout the afternoon. Again good entry and exit positions were provided by the ECN and the market specialist with decent sizes. Bank of America (BAC) and JP Morgan (JPM) were other stocks which had decent sizes and liquidity.

The market as I stated earlier is just sliding back and forth and no general direction has appeared as yet. The remainder of the month should follow in a similar manner unless we hear some good news (Oil going down) or bad news (housing worries, Inflation, Credit crises etc. etc.). Those of you who are looking to invest in Stocks for the short to mid term are advised to be cautious and more careful in choosing stocks. For the longer term investors there are actually quite a few big players who are at very LOW prices. The Stock price of General Motors was last at this level back in the 1980s and Citigroup has also come down to the $20-$21 level which for the longer term is a very attractive buy in my opinion. Questions and comments are most wlecome!

-Danial Jameel (www.daytraderlog.com)

As I stated in my last blog that this week will be all about economic numbers and we could expect a small rally on good news. The S&P Futures and DOW were both up with the futures hitting a high of 1,421 range before sliding back to 1,408.66 at the close. Consumer prices reported better than expected despite worries in the market at the affect of higher fuel prices on food prices.

The Financials such as Citigroup (C) and Bank of America (BAC) were all good plays with decent volume and volatility which allowed great entry and exit positions. Fake sizes and Pushers were also very evident on many Big Cap stocks which provided unique opportunities and at the same time increased the risk factor today. EMC Corporation (EMC) was a very good long early in the day with a good bid size near the open. The stock pretty much went up the entire day.  Nabors Industries Ltd. (NBR) had a pretty big level for its volume at $40.00 which allowed big short positions to be taken and for those with lower share sizes, scalping between the ranges throughout the lunch and afternoon session. Honeywell International, Inc. (HON) was another good candidate today which broke key levels and allowed some great punches (Hitting the Ask Side) and hold positions to be taken.  Overall the market was not clear on a direction and will be analyzing the numbers coming out this week to determine the direction of the economy. Expect similar market activity during the next two days.

Yahoo had some interesting developments today as Billionaire investor Carl Icahn (who owns significant shares of Yahoo) is attempting a proxy slate to change the Yahoo board of Directors. This is definitely a key development as it might lead to a potential Yahoo acquisition depending on who Ichan brings on board. Rumors are running around of Microsoft’s covert backing of Ichan and an attempt to acquire Yahoo through proxy means (i.e via the shareholders).  The proxy slate is to be announced tomorrow which should give us a good idea on the players behind the scenes. The decisions of two other key shareholders namely Gordon Crawford who has a history of influencing Yahoo’s board, and Bill Miller (their combined holdings total to a 23% stake in Yahoo!) will play a major role in the future shake up of Yahoo and whether Microsoft will be coming in again.

From a business point of view it is important to ask whether this deal is a solid proposition to both companies. Yahoo which had been in dire straits since last year clearly needs to redefine itself and its core business (something which it has failed to do for a long time). It’s competitor Google knows its core business which is search and has ensured its entire focus on search and search related products. Yahoo on the other hand views itself as a Web Portal rather than a search engine but has yet to define itself on what exactly it needs to focus on and what are its core areas of revenue generation. The DNA of the company is also very different from Google (which is a more chaotic business model) and does not motivate innovation which is a key element of web businesses. The same problem also exists in Microsoft’s DNA (i.e innovation) and it is one of the reasons why it is simply unable to compete with Google on the Internet domain. Microsoft if anything needs this deal badly so it can seek to have a presence in cyberspace which is increasingly being viewed as the next evolution for software (i.e Cloud computing etc.). Just like IBM was killed by Apple and Microsoft in the late 80’s the process of creative destruction seems to be re-occurring once again and MIcrosoft knows it needs to have a greater presence in cyberspace to ensure its future survival and dominance over the Software and IT market. I will be keeping a close eye on this deal and it should be interesting to see what efforts Microsoft undertakes in order to pose a serious challenge to Google’s dominance over the Internet…

-Danial Jameel (www.daytraderlog.com)

Monday saw a small rally in the market with S&P pushing back up to the 1,400 level and recovering some of its losses on Friday. The DOW was up 1.02% (12,876) while the S&P Futures closed at 1,403 (up 1.10%). The Market is expected to continue its sideway movements as economic numbers come out this week. Investors and traders alike will be looking at these numbers in order to determine the shape of the economy and market direction. Stocks rallied today due to the decline in Oil prices to around $124.23 at the NYX (New York Merchantile Exchange) as it eased some Inflation fears.

Major moves included Bank Of America (BAC) in early morning where the stock continued to rally throughout the day. Some decent size and volumes along the way helped taking easy positions for quick profits as well. American International Group Inc. (AIG) was another stock which allowed good short positions around 10am and the stock pretty much tanked the rest of the day. It closed at $38.37 with $41.15 being the high of the day at around 9:45am. Good short positions with decent size were available at around 10:00am -10:05am.

The most significant move was ofcourse Hewlett-Packard (HPQ) at around 3pm where the stock litreally crashed in a matter of minutes with big market orders. Wall Street apparently did not like the logisitics of the new acquisition of  Electronic Data Systems Corp (EDS) which is HPQ’s biggest acquisition after Compaq. Unfortunately I wasn’t able to capitalize on this move despite being a second away from punching short at $28.25. Fear and Greed are the two dominant emotions which run the market and in this case my fear prevented me from getting into this insane tank. With hindsight ofcourse one can argue of the lack of courage on my part but in these moments it is hard to determine the direction of a stock. My advice for those who love taking crazy risks is to take fewer shares in order to protect their losses. Two good moves that I did participate in were Alcoa (AA) at $40.00 during the pre-noon session and later near the close with Citigroup (C). There was a big seller who showed up at the $23.50 with around 350,000 shares. This allowed for big positions to be taken as the seller tried to chase down the stock to get filled (Good exits were at the $23.37-$23.38 range in front of a 120,000 bid at $23.36).

As for Tomorrow, eyes are going to be on the Retail sales number which is expected to increase by 0.2% and ofcourse earnings from WalMart (WMT) the largest US retailer. The Market is expecting good news from Walmart and we might expect a short rally if numbers look good. This week will continue to be volatile as the market analyzes the upcoming numbers on the economy.

Question and Comments are most welcome. Cheers

-Danial Jameel (www.daytraderlog.com)

I will be out of the city till Sunday. Daily updates will be be back on Monday 12th of May. Cheers…

First of all, I apologize for the disappearance the past Month and a half. The Market, University, side ventures and exams took its toll and i was pressed for time. Well now that things have settled down, its back to business and hopefully this time ill try to post daily updates and make some time for the blog

Today apart from the open it was a relatively uneventful day with major moves on Sprint (S) and of course Yahoo (YHOO, NASDAQ) due to news. Another interesting stock in play was CFC. Big sizes and level breaking allowed traders with decent share sizes (10,000+) to make some fast money with quick entries and exit. Major plays for today during the open included COP (Conoco-Phillips) which was a good short at $87.99. I was hoping for a big position on this but got filled much lower than expected. Long Story short the stock tanked to around $87.50 in about 15 minutes and it was on heck of a position. To put it in perspective, taking lets say even 2000 shares short at $87.99 and exiting at around $87.59 would have made around $800 in 10 minutes or less. NewMont Mining (NEM) was another interesting play, however it failed to break the $45.40 level for much of the day. The best moves were of course YAHOO (YHOO) and potentially Sprint (S) and just a look at the chart and volume is enough evidence.

The S&P futures remained in their 1,404 - 14,16 range but closed lower than Friday (1,413). The fall in the futures and the brakes in the market was partly due to the Yahoo, Microsoft dealing falling apart; partly due to the weakening US dollar and rumors on certain financials (*Cough* CFC). I expect the market to continue its grind upwards and hopefully as i stated in my previous blog (when the market was on a free fall downwards) that the Us economy should start to rebound significantly by 2009 unless there are other hidden surprises in store for us. Oil prices should also start to decrease as the dollar rises again.

Before closing, I would like to review some of my past posts to see how far I have grown into understanding some of the market fundamentals. My first and biggest call was to buy Citigroup at around $20-$24 range for the long term. The Stock actually went all the way to $18 before rebounding back to its current $25-$27 range. I still think for longer term investors Citigroup remains a promising investment and should expect to see the company re-surging in 2009.

Another question that seems to be on people’s mind is the rising price of oil! Why is this happening and are we running out of oil??? My simple and reasonable understanding is NO. The current rise in crude oil prices has more to do with the weakening dollar than demand and supply. As i stated before as long the oil stays above $50, huge reserves such as Alberta’s Oil sands (worlds biggest) and Venezuela’s offshore deposits are economically viable. OPEC is also pumping out more oil but are also aware that the issue is not of lack of supply but purely speculation and protection against the weakening dollar. The US dollar is currently the major currency used throughout the world. Several countries including oil producing ones in the Middle East are pegged to the dollar. When the dollar weakens, investor worry about their declining value and in order to protect its value (also from future inflation) they start investing in commodities instead. As a result we are seeing record rises in the prices of commodities such as oil, gold, copper and other resources etc. Hopefully by 2009-2010 the US economy should settle down, restore investor confidence and the prices of commodities as a result may start to see a decline. The rise in oil prices unfortunately has an impact on more than just our fuel pumps and the rise in world food prices resulting in major food crises around the world is one example of its effect on our society….

Any thoughts or comments are most welcome. If by chance there are any oil traders reading this, I am curious to know how you guys are viewing this. Cheers

Danial Jameel - www.daytraderlog.com

It had been an interesting weeks of sorts with the S&P and DOW hitting highs of 1,380s and 12,700s respectively during the week. The week’s market gain was lost today with the S&P and DOW  back down to the 1,335 and 12,301 respectively.  So what happened here? To put it simply; consumer spending and the high price of oil. If you recall in my earlier post i outlined a simplistic model on the types of recessions and the two variables affecting the economy (Consumer spending and Housing). With the current Housing problems, many eyes may very well be on consumer spending on indicating the condition and possible short term direction of the economy. Yesterday’s news indicated that consumer spending has been flat  since January and as expected the market took a hit downwards to our current levels. The Market seems to be trading back to the 13,25-40s ranges for the S&P.

Fridays have traditionally tended to be difficult days to trade due to lack of liquidity and volume. Major moves were all taken up close to the open and not surprisingly in one direction. JP Morgan (JPM) was a great short today with the stock down $1.50 currently. Decent volume of around 22 million shares allowed some adequate size positions to be taken during the open. As expected Financials are taking a hit today with Citi Group (C) down almost 88 cents. The Big story today was ofcourse American International Group (AIG) which is down more than 7% ($3.70). AIG posted around $5.3 billion in losses mainly due to the credit crisis which have affected so many financials. They apparently also own $42 billion in bonds which are insured by bond insurers. I talked earlier about the recent problems in the Bond insurance sector and this may not bode to well for AIG or the market. The Pit today at the Chicago merchantile Exchange also appeared confused and the bears seemed to be back in significant strength. 

All eyes should be on the FED and econonomic data in the month of March. There are already rumours on the market that the FED might cut rates ahead of their upcoming meeting. Speculations on a .75 cut may also be in the play.

-Danial Jameel (www.daytraderlog.com)

It has been pretty interesting the past week as the market is still trying to ascertain the condition of the economy and find direction. The Futures and Stock exchanges saw gains during the last following the FED’s commitment to battle the recession, The government stimulus package and Mr. Warren Buffet’s positive views on the economy. As expected the situation is still very volatile and the market declined again today. S&P index is around the 1328-1334 range which is the lowest range this week.

The Financials continue to take a hit with Citigroup (C) on a new low of below $25. interesting plays today included Sprint (S) which despite the tank in the market continued to rise. Size breaking at $8.55 allowed a big position to be taken with an out at around $8.70. Sprint is currently at $8.77. Other plays included citigroup (C), General Motors (GM), Bank of America(BAC) and BMY. Fake sizes and pushers continue to dominate the market throughout the day which allows both quick opportunities and cause for caution when taking position ahead of big sizes.

Coming back to the economy: The question on most people’s mind continues to be ‘where does the economy go from here?’ “Is this time to start looking for a bottom or are we going to continue with the declines?” Apparently as far as the FEDs are concerned the economy is in reasonable shape and will eventually correct itself by the end of 2008. The housing and financial troubles are no doubt causing many problems, however they are expected to correct themselves in the near future. In my opinion, things will take a little longer to fix than the FED is expecting. Problems with the Bond insurance and Housing are far from over. Manufacturing numbers released this week by the Philadelphia FED were also viewed as disappointing. Finally, another interesting point to note is the current stock market rip may be more due to the fact that traders are speculating (*Cough* betting) the Fed will cut another .75 off the interest rate. If this is the case then greater caution must be taken during the current market volatility and all eyes and ears pointed towards economic indicators and the FED.

- Danial Jameel (www.daytraderlog.com)

I stated my expectations in my last blog that the market would continue it’s slide down. So far apart from brief rips in the NYSE and S&P futures (and other US markets) followed by profit taking action, not much is happening and we are slowing sliding down. Investors seem overly cautious in entering the ring and are waiting until there is a more clear direction on the economy. The S&P went down to 1,324.89 with the Dow at 12,136.86 ( 0.90% lower). From a day trading point of view lack of action and liquidity often makes it difficult to make good profit and the search is always on for stocks with movement and good ranges.

Today the financials took a decent hit with Citi Group (C) closing below 26 (it was 29 something a few days back!) and might just go back to its low of 24-25 if the market continues to slide (the range before the fed cut interest rates). According to an analyst on CNBC today, the financials account for almost 40% of the action on the major US markets. In my opinion the fact that they are in such a bad shape and overly cautious will likely have a negative impact on NYSE and other Stock markets in the coming weeks. The main worry for today seemed to be primarily focused on the mortgage backed bonds and investment firms are duly in the process of lowering their ratings on companies such as MBIA. It still isn’t clear whether we are going to be in a recession in the near future but the market is definitely taking a beating and the economy needs to resolve several issues before we can expect a bounce back.

Now for some Good news… the government stimulus package seems to be coming through and the FED have clearly indicated that they are willing to fight the recession beast. We may expect some more interest rates cut in the near future as the Feds help stabilize the economy. Where the market bottom is, that cannot be answered accurately but stock such as Citi group hitting the 24ish range seem like an attractive buy for the longer term (the stock was well above $55 same time almost a year back). The Arabs swimming in their recent oil wealth certainly seem intent on buying a stake in Citi and I wouldn’t be surprised if another round of investments comes in on Financials such as JP Morgan, Citi, Goldman etc. if the market continues to decline.

For us daytraders, it’s not easy times to trade (depends on the stock and strategy we use ofcourse) but money is still being made on the right stocks driven by momentum and big plays. Speaking of nice opening/closing plays Pepsi (PEP) had nice rip of almost 3 dollars on Thursday. Hopefully you guys were in on the action. Cheers

- Danial Jameel (www.daytraderlog.com)

Well the market finally decided in the short term after the fed cuts where it wants to go and down seems to be the direction. S&P Futures closed at  1,326.45 lower than yesterday and finally broke that week long 1,340-1,380 range. In some ways this is understandable as the market will take time to resolve its issues unless we are heading for a recession. Our old friend Alan Greenspan indicated this months ago and it seems he could yet again be right unless the Fed actively pounce on this by slashing interest rates. Mr. Greenspan did something similar during the tech crash of 2001 where interest rates went down to 1%! Ironically this may have been a major impetus for the sub prime mortgage boom as demand for housing rose. Fast forward 2007-08… the very same sub prime mortgage crisis is causing the current market problems.

For those of you who aren’t entirely sure what causes recession and the indicators us economist (well I’m only a major in economics) look at. Using a simple example, like earthquakes there are different types of recessions from moderates to the killers. Moderate recessions are usually the result of production inventories exceeding demand and as a result manufacturers sharply cut production over the short term until the demand and supply stabilize. The more worrying ones arrive when the demand itself decreases and these become more of a headache when it affects either consumer spending or housing (*cough* sub prime mortgage).

So living in the monetarist world it will be up to the Fed to battle the recession beast and up to the government to provide stimulus packages which in my opinion don’t really help (except for the fact that maybe minor tax cuts by Uncle Sam will convince people to spend more). Speaking of Uncle Sam, Mr. Bush’s record breaking current and next year’s fiscal budget of $3.1 trillion will make it much more difficult for the state to provide a meaningful shot in the arm to the economy. They will most likely end up taking money away from social care oriented programs. Yes expect cuts in Medicare, veteran medical care, feed the poor programs etc. (well he did say he was a War President). Finally, before i go back to the topic (daytrading) I would like put in my 2 cents of international relations as well (sadly that’s my other major). War my dear friends costs a lot of money even if you fighting in an oil rich country. The current export of Iraqi oil (apart from the stuff being smuggled away by those vested interests) remains pre-Gulf War II levels.  Add in multi national corporations whose incentive is profit maximization (not stability), and security firms (whose incentive is…well… keep the chaos going so they have a job!) and you exacerbate the problem many times over. Perhaps, one day i will venture into political blogging as well.

Back to Daytrading. Not much happening in the market these days, good plays today included a certain seller on AMD who would literally drive down levels with decent size (400,000 to 600,000 shares). If you have access to big share sizes a punch short for a few levels would have resulted in quick nice returns Other decent moves included CHK, DIS, AXP (decent movement), and C (the usual). Pepsi has earnings so it should be interesting to see what Pepsi (PEP) is up to tomorrow. There wasn’t much action on PEP during the trading day. Futures were ebbing to new lows which indicated the lackluster performance of the market and I shall be expecting similar progress tomorrow.

- Danial Jameel (www.daytraderlog.com)

The first blog as you can tell was written in haste during the close of the market. Now that I have time on my hand I guess it is important to explain certain terms and concepts for those who are not familiar with the trading world.

Long or going Long: This is when you have bought a certain amount of shares of a stock (e.g AMD). This is the classic example of buy low sell high concept.

Short: A little trickier than the previous definition and the best way to explain this would be through an example. Basically this occurs when you know the price of a share is going down in value. So lets assume Mr. Sam has item X worth $10 today and you know that tomorrow it is going to go down to a market value of $5. You simply borrow item X from Mr. Sam (promising to return it to him tomorrow) and sell item X on the market today for $10. Tomorrow you simply go to the market and buy item X which has gone down in value for $5 and return the item X to Mr. Sam while pocketing that extra $5! That is how traders make money regardless of the market going up or crashing.

Rip: A rise in the price levels of a certain equity (stock value is going up)

Tank: A decline in the value of the equity (Stock value is going down)

Level 1:The current Bid and Offer price of the stock on the market (e.g Citigroup is currently 27.80 - 27.81; 27.80 is the Bid while 27.81 is the Ask).

Level 2: Orders sitting at prices below or above the Market price (Level 1) of the stock.

Punch: To hit into the next price level, indicating that you are willing to take the amount of shares instantly instead of waiting on the Bid or Ask level.

Ask Level: This is  the lowest price an investor will accept to sell a stock. In the case of Level 1 ask, that is the current price an investor will accept to sell a stock.

Bid: This is the current bid (level 1) or minimum bid that investors seek to buy a stock.  

Futures: Legally binding standardised agreements to buy or sell a commodity, currency or security at a fixed time in the future, at a price agreed upon today (source: www.nzsuperfund.co.nz/index.asp)

S&P: An Index of the 500 widely held US Stocks. (Standard & Poor; think of it as a basket of major stocks which may indicate the condition and movement of the market).

DOW: Same as the above but a different index.

Feel free to add any terms that you think are missing or unclear.

- Danial Jameel (www.daytraderlog.com)