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Good evening I'm Dan Fitzpatrick here at Stock Market Mentor on Monday, April
29th. I want to go over a couple
on trades here. First of all
c_ net.
This was the com I sent a note out on this just a couple minutes after the
open to members and posted in the forum as well or Option Market Mentor too
for that matter
saying that this was setting up
to be a pretty good short
and so this is an a_t_a_ for me video that's not what this is
about
actually I'd just want to show you a dynamic here that I think you can
capitalize on if you just understand basically how stocks trade.
The company announced that alley bob dole was taken like
18 percent stake
in com
and I've seen a slight E-commerce social networking something or other you know
honestly I don't understand all that stuff
but I as far as the nuances of the company but I know there's social
networking of business over in China
with e-commerce is well so that's all good stuff social networking E-commerce
kitchen and it's a big crowd favorite here
in the Fitzpatrick household
so this news comes out,
the stock gaps up huge
as a trader if you're a really long the stock
and actually it's one that i've been covering though i don't know of too many
people were really long this
but if you're already own the stock now what you're doing is you're scratching
your head
saying, and I'm talking about day trading here guys what you're doing is
scratching your head going okay will do it myself I'm in the stock was at $50.00
on Friday now it's up at $60.00 today anika gotta take that
20 percent gain so you're gonna get a lot of folks that are taking profits as they
should
look at the volume
I would say there was a lot of trading activity on the stock
so if you're a day trader
and you're looking at the same okay well do want a long or short
your bios should actually be to the short side not alongside
because what tends to happen with he stocks is
everybody rushes in at the open
to buy a stock that's up 20 percent white because they want to be the first
ones in the door because they think maybe
they're going to be able to get another 5 percent or something like that
they're not understanding that professionals
and I'm not talking about
you know the guys with the crepes old she's walking around the for the
n_y_s_e_ there's only about nineteen of those guys still around
everybody else is in front of their computer terminals
but I'm talking about other traders who get
how stock straight
they're sitting there waiting to assess what the demand is
so all these orders come in right at the open
to buy stock
if you've been trading stock for a while you know that the orders that come
in right at the first part of the day
it's not like that same
none that same amount of money
is going to continue to come in
all day long it's a big rushed for the entry it's a big rash of money to get it
and by that stock will if you understand how dynamics work how these trading
dynamics work
your professional
you're going to say, hey
I want to fill some of that demand if everybody wants to buy stock
unhappy decided that's not but
it's going to cost you money
so you start raising your offering price you raise your offer price
see how high traders are willing to pay you're selling stock otherwise known as
shorting stock
you're selling stock
and then once that demand starts falling away then if you're continuing to sell
you can get less and less money for the stock so you're dropping your offer your
dropping your asking price
and on the price is slowly coming down
until you're done
selling the stock will then does the stock stop going down
all those buyers that came.
Well guess what? They are on the stock and they're not a big happy about it
so now the theirself
so what the but what this morning's buyers have done
is replace you
at the front of the selling line
listen to me I'm giving you policy and amp
they have replace you at the front of the selling line so then very are
creating the supply
that's now overwhelming the demand and driving the stock price lower the stock
that you sure did somewhere up here
so what are you doing well
you're waiting for that supplies
to run its course and then once the stock
is done going down now you're happy to buy it back at a discount that would be
called closing out your short position
guys this happens every single day
in the market where stock gaps update
and it trades off you've got folks two smart guys or shorten the stock first
thing in the morning and then they're covering later in the afternoon
or even later in the morning and my 59-Minute Trader course
goes into the dynamics of shorting stocks first thing in the morning
there's a reason why it's called the 59- Minute Trader you sit and
watch the market for a minute
then you decide where your move-in is you get your set-ups in within say five
minutes after the market opens you should be properly position in your
trade
are not every trade is going to be profitable
the you'd be amazed at the amount that are profitable if you use to some
tactics that i explained there so
on hopefully if you haven't already checked that out on please do that you
can find that in the
in on stock market mentor and educational products. Anyway,
so here on SINA ( $SINA Sina Corp ) the stop gapped up,
opened at $59.53, traded up almost a buck, and that was that.
Okay, that was it, actually traded up a little more than a dollar
and then the stock turned around.
You could have actually got off a short
right here in the 58's and then made a nice chunk of
change. Well,
as it turns out this stock trades sideways during the day
on very, very low volume which is what stocks do.
But where's the highest volume bar? It's right here at the open.
Massive volume, over three million shares traded; on average less than two hundred
thousand trade, so this is your first tell
that you've got massive, massive buying interest at the open. Now how do you know
it's buying interest as opposed to selling interest?
Because the price is up.
You can say like, "Oh well there's more buyers than sellers."
No, the buyers were more passionate about buying
than the sellers were about selling, so its relative aggressiveness
of buyers verses sellers.
Please take note of that, I'm giving you pearls, it's really important that you
understand that it's an aggression thing, its relative aggressiveness, relative
passion, whatever you want to call it.
Buyers were really, really excited first thing in the morning; I just want this
stinkin' stock, I'll pay anything for it. Boom! Well guess what? That's as much as you
have to pay for it, you could have all you want.
Then the stock is traded lower,
trailed off during the day,
started to trade lower. My bet is to you're going to get even lower prices on this
tomorrow. Now before you start thinking, "Well, wow Dan thanks, that's a real
money printing
machine, I'll just do that."
No, this was a trade that we were looking at last week and I'd suggested the
opposite, that
stock
gapped up
and kept going. This turned out to be a really nice gap and run
as opposed to
a gap and crap. Here
you had a little different dynamic going on. We'll go down, I think, to the
15-minute
chart here,
where you can see the stock gapped up and just never really looked back; it just
kept moving.
So my point for bringing this out is there are two ways to make these
intraday trades
on big dislocations, on big price dislocations
up or down.
You just have to understand the dynamics of trading, you have to
understand that it also relies on what the market's doing.
If there's a lot of selling pressure on the market on a given day,
a stock that gaps up, that might normally keep going, would instead
sell off just because traders are trying to raise cash. So
there's a lot to this stuff.
My point for bringing it out in this video is just to show you there is a way
for you to make money other than just buying and holding stocks. And by the way,
if you can understand this dynamic,
then what do you think if you're holding this stock,
what do you think was the right move for you this morning?
Sell that stock at the open. You like SINA ( $SINA SINA Corp ), you like the prospects,
you see the stocks forming a base, you want to be a buyer and a holder,
fine.
You bought it here, you held it
all the way up until this stock gave you 20 percent in a day,
that's your yearly return, you're happy,
take the stock. Now wait for a little bit more of a pullback,
buy it, don't expect a similar gift, but at least you've had a really nice profit in
this stock.
You wait for the stock to come into the low fifties and you buy it back.
That's it for this video. Look if you haven't
joined Stock Market Mentor, at least on a free 30-day trial,
check that out because I'm telling you, you will become a better trader over
your first 30-days,
I promise you that. So anyway I hope to see you there and members I'll
see you in the forum tomorrow.