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Intra-Day Update: Pesky Earnings
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Intra-Day Update: Pesky Earnings

by The MoleOctober 21, 2008

UPDATE 9:40am EDT: Futures dropped overnight on bad earnings but are shooting up again now. If you wonder why, here’s my quote of the day:

“We need to get earnings behind us,” said Jonathan Monk, a fund manager at Aerion Fund Management in London, which oversees $1 billion in U.S. stocks. “They’re not going to be great. Until analysts and companies own up to the fact that numbers will be lower, they will be a headwind.”

Slope of Hope all the way, baby! Yes  let’s get those pesky earnings out of the way, so we can focus on what’s really driving this economy – government sponsored bailouts!

I won’t be around for very long today as I am accepting an award at the Gallactic Brotherhood of Evil. Berk will probably pop in and out in the comments section. Keep it clean and don’t let the tape fake you out, boys and girls. Remember it’s 2 weeks to the election – they will pull out every last stop to prep up the market and won’t let a silly thing like pesky earnings let stand in their way.

UPDATE 11:16am EDT: So, I keep watching the Yen push up, the TNX is down, while equity futures are hanging on to their pivots on low volume. Thus, I have no idea what’ll happen today. The medium term stochastics on all cash indexes are completely overbought. So, I know which way the market should go, but it’s not. Having said, that – I keep adding puts wherever I see a good entry, but I am cognizant of the fact that this could backfire. But I made clear yesterday, when I see a market rally on vapor I just can’t help myself. I will not be posting for the remainder of the trading hours – expect me back in the early evening.

UPDATE 3:30pm EDT: I’m BACK! Seems I didn’t miss much – my account is where I left it this morning. Yen is pushing up strongly now, so we could see an EOD selloff.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • gagelle

    Dear Berk and Molecool, I want to thank you for that excellent link http://ftalphaville.ft.com/blog/2008/10/17/1719… to the Alphaville web site. The article especially hit home for me as I have been active in various organizations that fight against the forced drugging of the mentally ill with the various concoctions that big pharma pushes to increase their bottom line. One organization is Mindfreedom international: http://www.mindfreedom.org. There are millions of the mentally ill with no history of violence that are forced to take these drugs and to undergo other barbaric procedures such as electric convulsive therapy which causes permanent memory loss. http://www.idiom.com/~drjohn/ect.html yet will be arrested if they smoke a joint to make themselves feel better. All I can say is that the hypocrisy is astounding.

  • molecool

    Yes, hypocrisy galore in the last 2 decades. Well, the Bill of Rights guarantees us the right to request changes in government. November elections baby – do your part.

  • Ukla the Mokk

    I have twin boys who are 5…both of them are autistic. I feel very strongly that one is largely due to a vaccine injury. The other I feel is more genetic. But when you look at what pharm companies are pushing in terms of the “what” and “when” (as in, the schedule…36 shots by the age of 2), it starts getting scary.

  • molecool

    Yes, that's insane – glad I grew up in Europe where I got 2 injections in the first 10 years of my life.

    BTW, have you looked into changing your boys' diets? I read that nutrition can have a major impact.

  • ProZachJ

    Is it just my data or did volume just fall through the floor?

  • molecool

    I don't fully trust my data recently either but volume has been weak since yesterday. I think it's like 3 primary dealers controlling the entire market right now.

  • gagelle

    In my opinion, the yahoos will be shocked in November, . (Why anyone who even has a passing familiarity with “Gulliver's Travels” would name a company “Yahoo” is beyond my understanding.) My town is fillied with people like the woman at the McCain rally who stated that Obama is an arab so we shouldn't vote for him; except that they have money and live in gated communities to keep people with dark skin out. We refer to them as the rich rednecks. They still love bush and their kids drive around in pickup trucks with confederate flag stickers on them. What can I say? They will never change. It's funny that they're outraged with the political power on the coast of CA and that they have little voice in presidential elections.

  • ProZachJ

    We almost got a head and shoulders going…

  • http://www.thedocument.com thedocument

    Hey Mole, you used to trade the gold market actively. What's your take on the divergent behavior of gold/silver? They seem to be moving in opposite directions almost every day. Hedge funds still unwinding paired trades or is something else going on?

  • gagelle

    They're probably telling their clients that they're picking up bargains.

  • molecool

    Gold is being manipulated – silver less so. Also, the gold/siver ratio is expanding, so in the longer term expect more money flowing into Gold than Silver – a common occurrence during economic contractions. From a wave prospective, they are both in a down trend currently.

  • http://www.optionaddict.net OptionAddict

    Nutrition is the solution.

    My son recovered after being diagnosed as “severe” over 2 years ago.

    OA

  • http://www.evilspeculator.com berkshire

    +1 For finally posting on our site. Welcome aboard.

    Skål!

  • http://www.evilspeculator.com berkshire

    BTW how do you like the intra-day triangle on MA….Good for 40 points.

    Skål!

  • Ukla the Mokk

    Yeah…I'm there bro. Both my boys are on a glutien/cassien free diet, and receive enough supplements to make any health food store rich…at least we buy them enough supplements. Getting them into their bodies is a whole other challenge. But they do OK. My wife and I are working our asses off and doing whatever it takes. But autism is as much (maybe even *more*) a condition of the gut than of the mind IMHO. When you clean the gut, the body can digest the food properly to feed the brain and thus, the rest of the body. So a good diet and a whole lot of therapy is the ticket as far as I'm concerned.
    +1 mole for the awareness (in addition to your excellent analysis)

  • Ukla the Mokk

    email my yahoo address — headbanger51 — I really want to know the details of your story. I don't wanna intrude on privacy, but whatever you feel comfortable imparting, I want to know.
    God bless you and your son…My goal is to make the same post you did before too long regarding both my boys.

  • ProZachJ

    according to the resistance that the fib calculator gives looks like to day is going to be a go nowhere day. The 50 percent reversal levels are like 975 on the long reversal and 985 on the short reversal. Works for me…keeps the triangle intact.

  • Ukla the Mokk

    I am steering clear of the market today. I have done 8 trades so far this month I think (don't have my handy-dandy spreadsheet that I use to track my trades, which is much better than TOS's version IMHO, in front of me), and I've only lost money on one of them. If I woulda had the balls to stick with it (FSLR) I would have made out handsomely. Regardless, my goal is 10% of my account in profits each month. And THANKS TO THIS SITE I'm at 9.5% and I'm in all cash right now.
    $19K more and I can day trade without restriction. Slow and steady wins this race. I just have to learn to let my winners ride.

  • molecool

    An old friend of mine has an autistic son as well – this is a lot more common than people think.

  • molecool

    It was about autism though, not about trading, so I'm not counting it 😉

  • http://www.evilspeculator.com berkshire

    Mole mentioned that I would be in and out today, and he will be stepping out for the rest of the day. I am going to throw out a few things that I have included in my “rules” that everybody should be able to benefit from.

    1) Don't buy in the first hour. Sometimes (especially lately), I have broken this rule, but it usually reminds me why it is on my list. Typically, buying in the first hour will get you expanded spreads from volatility, as well as stingy market makers. Not too mention, often times, a morning move has been reversed by 10:30.

    2) Don't sell FOR A LOSS in the first hour. Just like before, many times the spreads don't work in your favor, market makers are busing pillaging the amateurs, and the morning move is often reversed.

    3) Sell for PROFIT in the first hour. If you are holding a winning position in the first hour of trading, then all the above-mentioned reasons are strong support for you to sell into strength. Volatility is usually most in the first hour…if you are selling, that is more money in your pocket. Markets often reverse their morning direction…a good reason to take some profits.

    4) Trade stocks you know. I have taken a lot of flack for this one, as I feel I “know” BIDU, MA, GOOG, FSLR, POT, CF, CME, etc. I probably should not trade some of these solely based on the price of the stock, but I have found thus far, that if you can read a stock, and know when to enter, you can play stocks out of your price range IF YOU ARE CAREFUL. This is not a recommendation for someone to sink their entire 1K account into a single GOOG option because the entry is right, risk management still takes priority.

    5) Trading IS NOT gambling. I try not to trade earnings, as they are typically just a coin toss, especially in a bear market, where good is bad and bad is good, unless it's worse, and then it's great! That said, when you trade earnings, or off of the recommendations of others, only use as much capital as you would WILLINGLY throw out the window, shred, or hand to your nearest bum. Not to say that people cannot win gambling, or trading using a coin, but that is not the method for ME to trade.

    That brings me to the most important part about rules and/or system development. MAKE SURE IT FITS YOU, and how YOU want to trade. My rules were designed with MY timeframe, MY risk tolerance, MY capital, MY beliefs on market movement, etc. Someone else picking up my rules may be able to trade “like me,” but would not be as comfortable as if they were trading rules THEY made for THEMSELVES.

    I would grab some MA here if you haven't already. When that 40 point triangle breaks down, it will be ugly. I will post a chart of it later on. Right now, you can take my word for it, or do your own analysis.

    Skål!

  • http://www.evilspeculator.com berkshire

    I agree with the second part. Without Jeff, I would not have been able to tell an option from my ass-hole. He is one of the best traders I have seen, and I count myself lucky to say that I have learned from him.

    Only wish I went to that stupid 3-day from InvesTools. The week I would have gone, Jeff made a “special” appearance. Would have been great to see the guy in real life. But soon enough our paths will cross in real life. Of that, I am sure.

    Skål!

  • BigHouse Aka Mr Vix

    Market is starting to go down finally

  • C.C. Rider

    Breach!!!!!!

  • C.C. Rider
  • gagelle

    Thanks for the chart C. C.

  • http://www.myspace.com/181419967 JZT_CHIL

    You're talking about the “Ranchos” communities in Palm Springs area? …where former Republican officials & supporters retire or at least live there during winter (& live in NE, SD, or ND during summer).
    Fact is, they're tired of the Bush name, W is not a Repubican's Republican.
    Democrat insiders say that, too, about the Clinton name, Pelosi shot down Hillary's hopes…. Kennedy endorsed O, etc.

    …& many more points to this topic we can talk about :) – lots of opinions from everyone…

  • gagelle

    It's amazing–Prophet charts automatically puts in the support line. I was using Telechart all year and didn't know what I was missing.

  • http://investingadventures.com Jorge

    A very wise person from the shadowtrader room echos #4. She always reminds us to stick to just one stock for an entire year and trade the hell out of it. Should help to sharpen your rules for the rest of the market.

  • C.C. Rider

    Your welcome. It could get nasty again and I'd be looking for 1228 on this chart.

    http://www.screencast.com/users/texana44/folder

  • ProZachJ

    SPX gapped down then filled the gap and reversed

  • http://www.evilspeculator.com berkshire

    Yes…Part of me always wants to be in that move that is exploding. But another part of me knows that if I know how to trade the NAMES that explode on a regular basis, I can do as well or better.

    Like Raimo used to say…”bring out the rifle, not the shot-gun!”

    Skål!

  • http://www.evilspeculator.com berkshire

    That is good for an intra-day move lower for sure…maybe more. Good eye.

    Skål!

  • http://investingadventures.com Jorge

    Ahh.. Raimo. I miss him :( Him and his crystal balls of doom.

  • http://www.evilspeculator.com berkshire

    Here is the chart of the MA trade I spoke about earlier. Prohpet charts are not working, and I don't want to re-load TOS….Damn data providers.

    So, this is from Esignal, showing entry @ 160 and target between 120 and 100.

    http://screencast.com/t/24C2txPQZ3

    There are a few more patterns that look almost as good as this that I will post if I have enough time.

    Skål!

  • LearningWizard

    Does Prophet comes free if you trade with thinkorswim?

  • http://www.evilspeculator.com berkshire

    yes…Prophet charts are a built-in feature on the TOS desktop platform.

    Skål!

  • http://www.evilspeculator.com berkshire

    No doubt…And they will only become more abundant as the political unrest comes to a head in 2 weeks.

    Skål!

  • http://z-stock.blogspot.com/ zstock

    XLE shorting XLE right here at 50.47 ahead of the oil inventory report on Wed. Plus I don't think the bear commodity is finished, cause I'm looking at how deep gold stocks are getting hammered. See FCX as an example.

  • BigHouse Aka Mr Vix

    More activity in the NOV 75 calls in the Vix .Volume is 17k . Some one is setting up for a move up in Volitility.

  • toad37

    These bulltards won't give up today. ;0)

  • BigHouse Aka Mr Vix

    This triangle pattern is taking a while to form. Good God.

  • BigHouse Aka Mr Vix

    Apple earnings after the bell.

  • molecool

    Oh, those can be nasty and usually they take longer than most traders would like. However, in my experience the longer they take the more explosively they move when they resolve, in either direction.

  • Archangel

    so far the bulls had more chances to break the pattern. But they don't manage to get up above 98x.

    Today resolution could only have happened if some bank had called CNBC and complained that bank X or hedge funds y have not met their obligations to pay the CDS (well, this can still happen…)

  • molecool

    WAY ahead of you – got that yesterday :-)

  • molecool

    Nasty little buggers – I wish they sold some kind of spray.

  • toad37

    made a little off day trading QID. Nibbled on 10 November SPY 92 puts….

  • ProZachJ

    I'm not sure we'll finish forming this thing before the week is done
    I've trimmed positions just slightly near some of the lows today hoping reload higher tomorrow or thursday

  • BigHouse Aka Mr Vix

    qqqqq's are making a new low :)

  • gagelle

    Broke through 1288.

  • ProZachJ

    That would be a bear bomb wouldn't it??!!! 😉

  • molecool

    Those bulltarts are defending 9000 on the DJI. Don't think it'll happen today – not enough time and institutional keep stepping in. Let's call it the 'pre-election 9k pin'.

  • gagelle

    Went back up to 1292.

  • gagelle

    Closed below support at 1283.

  • gagelle

    Got into MA today. Thanks Berk.

  • gagelle

    I think all the selling at the end is a good sign. $NDX broke support at around 1288. We just have to break through 9000 on the Dow.

  • Growler

    I was just gonna add a little tid bit re: QID. Around 3:15 everyday, QID will trade between $2 to $7. For me, it always produces a great end of day scalp.

    I figured I would add something to the site being that I'm a massive leach.

    Well, gotta get back into my cage….

  • gagelle

    Bad earnings news for Yahoo.

  • BigHouse Aka Mr Vix

    Looks like aapl is halted. The qqqq are selling off after hours.

  • molecool

    Oh, this is gonna be good tomorrow – LOL :-)

  • T.B. Aurelius

    Amen!

  • ProZachJ

    I was wondering if anyone would share information about their money management techniques. I have found over the past year of learning to trade that there are a million different ways for me to find good trading opportunities. I also have learned to manage my positions size to limit my initial downside risk( I call this amount “R” novel concept right?). What I am struggling with is this: I find myself in a winning trade that is approaching a gain of R and I find myself in a dilemma, if I close the trade at or near a gain of R my risk reward ratio will alway be very near 1:1 ( this would mean that I need to have a greater than 50% w/l ratio to be consistantly profitable) I really don't like the idea of trading with such a low risk/reward ratio. I would prefer to cut my loses at R and let my wins run out right? So if I stay in a trade past the point of a 1R win it seems I always get killed by corrections, in almost all cases the trade seems to come back to 0. This makes me want to look for an approch of taking partial profit at specific R multiples. My main question centers around…What multiples?…how much do I cut the position? When do I decide to increase the position after a correction and resumption of trend? I know that end the end I must answer these questions for myself as a trader but I thought that understanding how some of you guys with more experience than myself might help me to develop and understanding of this all important aspect of trading.

  • ProZachJ

    What do you think the chances are of an open below 9000?

  • T.B. Aurelius

    Medically and physiologically, what we know about the engineering of nature is beyond ignorance.
    Yet doctors and so called “experts” of the field dominates the field and tells the rest as if they “know”.
    I am a student of psychology, and of human mind and spirits.
    I have a clear notion that we are, as a mass, always at faults labeling what is norm and what is not.
    We simply welcome what we are familiar with and dispel that is strange to us, rather shallow and ignorant indeed.
    I strongly believe every spices communicate through the ways that we do not know of, and that includes human race also. And that fiber optic cable is especially apparent bt. siblings, parents and children.
    I commend your courage and effort dedicated to your children, and I can see it is no easy task either…
    Whenever though, you and your wife are in doubt, of choices, I wish you would remember that there is no authority above you, and no expert that can challenge you when it comes to to your children.
    The only thing I might offer you is this.
    If you want to understand more, communicate more, just “watch” them.
    No thinking, no judgement,

  • BigHouse (Aka Mr Vix)

    apple now green after hours

  • molecool

    Boy, this is a HUGE subject and in order to properly answer it you should go on Amazon and buy 'The Way of the Turtle' by Curtis Faith. Now, I'm not trying to make you a turtle trader, but all the answers you seek are in there. You can use those method for trend trading, day trading, whatever works for you. Capital commitment guidelines are essential in assuring survival as a trader over the long term. I would also recommend 'Trend Following' by Michael Covel – he covers the subject in detail as well.

    There is another source online however, and it's from a blog that used to be very popular until Jeff decided to focus on his subscription service. However, his 'greatest hits' section has a lot of the answers you seek:

    http://www.optionaddict.net/greatest-hits/

    Just go through it or use the Firefox keyword search to jump to appropriate sections. Nobody explains it as well as Jeff.

  • BigHouse (Aka Mr Vix)

    Looking like we will have a positive opening due to apple

  • C C Rider

    ( Smiling mischievously) It was a tough trade to hang with yesterday, but I averaged up on the NDX. Proud owner of a basketful of puts that are already in the money. With the AAPL miss, can you say ABYSS!!!!!!!!

    Tomorrow will definitely be fun and WILL be my biggest profit day off the year. Hello Giiiiiiiiiiiiiirrrrrrrrrrrrrllllllllllllllllssssssssssss!!!!!!!!!!!!!!!!!

  • http://investingadventures.com Jorge

    Shadowtrader red Way of the Turtle. Awesome read. Trading in the Zone's another one more a bit more zen/psychological like.

  • ProZachJ

    I have read trend following several times…the problem with it is that it seem to spend more time showing you why to trade this way then how…I will check out the blog and the way of the turtle…thanks for the info guys.

  • http://www.beanieville.blogspot.com beanieville

    Too funny. Did the shorties short AAPL below 90? Ouch.

    Huge gap up!

    Buy something and sell sometime tomorrow.

  • http://investingadventures.com Jorge

    Mole, sent ya a couple of emails.

    Thoughts on this short?

    RAI – http://screencast.com/t/fEotfHOIs

  • http://investingadventures.com Jorge

    My AAPL and RIMM longs are smiling :)

  • http://www.beanieville.blogspot.com beanieville

    To add to the shorties' pain, YHOO is actually green afterhours.

    Huge huge gapper tomorrow.

  • http://www.for-really.blogspot.com Jana

    God, an option and an asshole are very different – how could you not tell them apart?

    The spread tends to be wider on options.

  • Ukla the Mokk

    For what it's worth, and only looking at it for about a minute, here's my take:
    It looks like it is failing short of the trendline. Today's candlestick is a psuedo inverted hammer. If it breaks yesterday's low of about 44.50ish, I'd say that's your first of several decent triggers to short it or buy puts. However, on a daily timeframe, it still has an established series of higher highs and higher lows, so it isn't broken down completely yet. Therefore if you short it, keep your guard up! IMHO, this stock will be officially broken down (or, rather, will resume its broken down state) when it breaks 41.50ish which is the previous swing low.
    Be wary of earnings though…if you're in a trade during earnings and you're on the wrong side of it, you could also lose with IV crush as well, which would devastate your position.
    Best of luck and thanks for your idea! We all need to do more of that IMHO…it's what makes this blog RAWK.

  • http://investingadventures.com Jorge

    Indeed. I'm personally going stock until the VIX comes back to earth a bit. Hopefully it's soon enough. I hate playing with stock. Here's another one for ya 😉

    THS – http://screencast.com/t/NhtP4xWn8D (H&S)

  • jcoors

    Have you seen AAPL after hours?

    You might be in big trouble.

  • Ukla the Mokk

    Looks like a pretty nice H&S pattern forming.  Only thing I don't like is the low volume, but I haven't checked effect that has on the bid/ask spread.  I typically like at least 1M on the volume.  But I've thought several times about doing stock instead of options since the VIX is truly insane.

  • BigHouse (Aka Mr Vix)

    Looking like we will have a positive opening due to apple

  • C C Rider

    ( Smiling mischievously) It was a tough trade to hang with yesterday, but I averaged up on the NDX. Proud owner of a basketful of puts that are already in the money. With the AAPL miss, can you say ABYSS!!!!!!!!

    Tomorrow will definitely be fun and WILL be my biggest profit day off the year. Hello Giiiiiiiiiiiiiirrrrrrrrrrrrrllllllllllllllllssssssssssss!!!!!!!!!!!!!!!!!

  • http://investingadventures.com Jorge

    Shadowtrader read Way of the Turtle. Awesome read. Trading in the Zone's another one more a bit more zen/psychological like.

  • ProZachJ

    I have read trend following several times…the problem with it is that it seem to spend more time showing you why to trade this way then how…I will check out the blog and the way of the turtle…thanks for the info guys.

  • http://www.beanieville.blogspot.com beanieville

    Too funny. Did the shorties short AAPL below 90? Ouch.

    Huge gap up!

    Buy something and sell sometime tomorrow.

  • http://investingadventures.com Jorge

    Mole, sent ya a couple of emails.

    Thoughts on this short?

    RAI – http://screencast.com/t/fEotfHOIs

  • http://investingadventures.com Jorge

    My AAPL and RIMM longs are smiling :)

  • http://www.beanieville.blogspot.com beanieville

    To add to the shorties' pain, YHOO is actually green afterhours.

    Huge huge gapper tomorrow.

  • http://www.for-really.blogspot.com Jana

    God, an option and an asshole are very different – how could you not tell them apart?

    The spread tends to be wider on options.

  • Insect Overlord

    For what it's worth, and only looking at it for about a minute, here's my take:
    It looks like it is failing short of the trendline. Today's candlestick is a psuedo inverted hammer. If it breaks yesterday's low of about 44.50ish, I'd say that's your first of several decent triggers to short it or buy puts. However, on a daily timeframe, it still has an established series of higher highs and higher lows, so it isn't broken down completely yet. Therefore if you short it, keep your guard up! IMHO, this stock will be officially broken down (or, rather, will resume its broken down state) when it breaks 41.50ish which is the previous swing low.
    Be wary of earnings though…if you're in a trade during earnings and you're on the wrong side of it, you could also lose with IV crush as well, which would devastate your position.
    Best of luck and thanks for your idea! We all need to do more of that IMHO…it's what makes this blog RAWK.

  • http://investingadventures.com Jorge

    Indeed. I'm personally going stock until the VIX comes back to earth a bit. Hopefully it's soon enough. I hate playing with stock. Here's another one for ya 😉

    THS – http://screencast.com/t/NhtP4xWn8D (H&S)

  • jcoors

    Have you seen AAPL after hours?

    You might be in big trouble.

  • Insect Overlord

    Looks like a pretty nice H&S pattern forming.  Only thing I don't like is the low volume, but I haven't checked effect that has on the bid/ask spread.  I typically like at least 1M on the volume.  But I've thought several times about doing stock instead of options since the VIX is truly insane.