In the middle of earnings season, and still a mixed bag. BAC, MS, EBAY, VZ rallying off their reports, and QCOM, EMC, YUM disappointing the street. What's the trade?
Thursday, April 19, 2012
Wednesday, April 18, 2012
April 18 10:30 update
IBM opens at support, bounces, but now drifting down. GOOG starting to look weak. SLB rallies in sympathy with HAL.
Tuesday, April 17, 2012
AAPL Hit With "GMFO" Orders
If you have been trading for any period of time, you certainly know what that acronym stands for. But if not I'll try to clarify as much as I can. GMFO = Get Me F...ing Out!
After relatively mild opens (even some with an upward bias) during Apple's 72 point nosedive, today was the first time you had a “flush out” open, slicing through a critical support level (578.00). And who do think exited on that open and where do you think their stops were filled at? The “little guy” and at 571.91. You also had the “I am finally going to get short” crowd piling in, vowing not to miss the move down to 550.00.
And what happened? After the “GMFO” orders were executed and ill-timed shorts entered the market, a wicked 28 point rebound followed. Now what for AAPL? Although there is going to be a pile of orders to exit and get short around the 600.00 level, something tells me the rebound will not stop there. Instead I look for the rebound over the next few days to gravitate to between Friday’s close (605.23) and Monday’s high (610.28). At that time, we will be better able to determine if this issue is destined for new all time highs (644.00), or if this is just a dead cat bounce with another major selloff in the cards. Keep in mind, with earnings out next week there just may be a consolidation period as traders take some money off the table, no matter what side of the market they are on.
After relatively mild opens (even some with an upward bias) during Apple's 72 point nosedive, today was the first time you had a “flush out” open, slicing through a critical support level (578.00). And who do think exited on that open and where do you think their stops were filled at? The “little guy” and at 571.91. You also had the “I am finally going to get short” crowd piling in, vowing not to miss the move down to 550.00.
And what happened? After the “GMFO” orders were executed and ill-timed shorts entered the market, a wicked 28 point rebound followed. Now what for AAPL? Although there is going to be a pile of orders to exit and get short around the 600.00 level, something tells me the rebound will not stop there. Instead I look for the rebound over the next few days to gravitate to between Friday’s close (605.23) and Monday’s high (610.28). At that time, we will be better able to determine if this issue is destined for new all time highs (644.00), or if this is just a dead cat bounce with another major selloff in the cards. Keep in mind, with earnings out next week there just may be a consolidation period as traders take some money off the table, no matter what side of the market they are on.
April 17 10:40 am Update
Wild ride for Apple today...and Coke (KO) approaching levels it has not seen since 1998.
April 17 Premarket Update
Earnings, earnings, and more earnings. GS, KO, JNJ, USB highlight a busy morning, while IBM, INTC, and YHOO report after the bell.
Monday, April 16, 2012
Understanding Imbalances
If you were watching the IBM tape late in the day, the stock started to sell-off significantly around 3:45 ET, and then gapped down on the closing print to close at $202.72. What happened?
Your answer is a large sell imbalance was posted by the NYSE at 3:45 pm ET. These sell imbalances are published every day at this time, and sometimes they can have a major influence on the price of the stock.
The designated market maker (DMM) on the floor of the NYSE continuously logs all the buy MOC (market on close) orders, and all the sell MOC orders, on their security. And then at 3:45 PM ET, this information is disseminated to the market. (It is a good idea to check with your data provider, to make sure they carry the imbalance feed).
Large buy imbalances will typically press the stock higher, where large sell imbalances will typically press the stock lower.
In the IBM example, traders subscribing to the imbalance feed, seen the sell imbalance at 3:45, and then began selling the stock, with the expectation that the closing MOC sell orders would press the stock lower. It worked perfectly in the case of IBM today, as the stock gapped down on the closing print.
It is not always that simple however. In this HFT world, many algorithmic systems will manipulate these closing imbalances, and sometimes in the last minute or two they will flip, causing a sell imbalance to go to a buy imbalance. If that happens it catches many imbalance traders by surprise.
Sometimes these imbalance plays get crowded as well. And if too many imbalance players are on the same side of the trade, the imbalance could also flip.
In any regard, funny things happen after 3:45 in NYSE issues, and if you don't subscribe to the imbalance feeds, you might be missing some pretty important information.
Your answer is a large sell imbalance was posted by the NYSE at 3:45 pm ET. These sell imbalances are published every day at this time, and sometimes they can have a major influence on the price of the stock.
The designated market maker (DMM) on the floor of the NYSE continuously logs all the buy MOC (market on close) orders, and all the sell MOC orders, on their security. And then at 3:45 PM ET, this information is disseminated to the market. (It is a good idea to check with your data provider, to make sure they carry the imbalance feed).
Large buy imbalances will typically press the stock higher, where large sell imbalances will typically press the stock lower.
In the IBM example, traders subscribing to the imbalance feed, seen the sell imbalance at 3:45, and then began selling the stock, with the expectation that the closing MOC sell orders would press the stock lower. It worked perfectly in the case of IBM today, as the stock gapped down on the closing print.
It is not always that simple however. In this HFT world, many algorithmic systems will manipulate these closing imbalances, and sometimes in the last minute or two they will flip, causing a sell imbalance to go to a buy imbalance. If that happens it catches many imbalance traders by surprise.
Sometimes these imbalance plays get crowded as well. And if too many imbalance players are on the same side of the trade, the imbalance could also flip.
In any regard, funny things happen after 3:45 in NYSE issues, and if you don't subscribe to the imbalance feeds, you might be missing some pretty important information.
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