|
The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)
1.
Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.
2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.
3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.
SEE OUR TOP PICKS FOR 2006...
|
|
Wednesday, February 16, 2005
Market Recap
Stocks were having a decent day until about 3 PM EST when the sellers came out of the woodwork and took the market into the red in the last hour. The Dow fell 2 points but closed 21 points from its high. That high took the Dow within 15 points of its 52 week high. As we get close to that high, sellers will come in and take profits, and I think we saw a little of that today in the last hour. We are closing in on a double top formation for the Dow and S&P so it would be wise to play it safe and see if the market will (a) reverse course and go lower, or (b) if it can get through the resistance and make new highs. The S&P was flat at the close but came within 5 points of its 52 week high today. The NASDAQ lost 1 point and did not have much of a range at all. The small cap stocks led the way and if the RUT can get above 641, that index could take off again after its brief pullback.
Who is the “axe” on Level 2?
I am not sure how many of our members use level 2, but if you do not use it; you are at a competitive disadvantage. Of course, if you have a job and work full time, you will not be able to use this trading tool.
The "axe" is a market maker who keeps showing up on the bid or ask side, buying or selling a large amount of shares and blocking the price movement in a stock. This market maker has the most influence on a particular stock at that particular moment. You can find the "axe" by observing the stock you want to trade very carefully. For example, if you are looking to take a long position in a certain stock. But every time it gets close to your entry price, NITE (a market maker) is on the best ask and keeps dumping shares. Even though there are a ton of trades going off on the ask, the stock is not moving higher. He is clearly blocking the market and therefore is the "axe".
Why is the "axe" there?
The reason he is doing this might be because he has a huge customer sell order he has to execute. He may be displaying only 100 shares for sale at a time instead of the whole block. If he shows the whole block, buyers will dry up fast knowing there is a huge seller in the crowd. This lack of buying will cause the stock to drop and he will not get a good price for all the shares he has to sell. By showing only 100 share blocks, nobody is the wiser that a huge seller exists. He does this by auto refreshing his quote after each 100 shares are sold.
It is never a good idea to trade against the "axe" because it is most likely one of the big institutional market makers. I would not want to trade against them. If they are doing some heavy selling and trying to hide it, common sense tells me, they want out for a reason.
Not Immune to Deception
Level 2 is a very useful tool if you know how to use it. Unfortunately, it is also subject to manipulation. MM's do play games on level 2 so beware that it does happen. Deception is common practice on level 2 (as in the example I used above). Sometimes, it can be very difficult to determine what is really happening on Level 2 and things may not always appear as they really are. As always, level 2 should be just another tool you use to trade with. The others are the charts of course, with all your favorite indicators such as moving averages, bollinger bands, MACD, support and resistance levels, etc. I use level 2 for the sole purpose of trying to determine if the odds are in my favor. It is a very good tool but it is not perfect and is subject to manipulation like everything else.
The Retail Trend
It looks like we were on the money again in a past commentary when we mention trends in retail. Abercrombie & Fitch just reported their earnings numbers and sales were up 23%, and they beat the Wall Street estimates. The reasons behind it were obvious, it was the Christmas sales and we reported many weeks ago to start watching the clothing trends that your kids were into for the holidays.
http://money.cnn.com/2005/02/15/news/midcaps/aberc...
We often stress following trends. You already know how to find the trends in the stock charts and in sectors of the market. Trends in the economy can also help give us an idea on which way the general markets may be headed. Finally, trends in spending habits. The key is to identify the trends early before they take place. By the time everyone knows about the next fashion craze, stocks have already moved up in advance. The smart money buys the stock of companies before you read about the new fashion trend on the cover of Cosmopolitan.
Holiday and Reminder
The markets are closed on Monday February 21st for President's Day, so there will not be a bulletin on Sunday February 20th.
There will also not be a bulletin on Thursday February 24th due to the fact that I will be out of town for that one day. I will not be available for trading that day either. No alerts or trades will be made that day. Business as usual on Friday the 25th.
Please Tell A Friend
Please tell a friend about our service. As always, thank you for your support past, present and future! We'll see you Tomorrow evening.
Earnings Calendar
Don't forget to check your short-term holdings and know when those companies are reporting earnings. Holding a stock through earnings is risky and I do not recommend it. You can always buy the stock back after the dust settles.
http://www.fulldisclosure.com/highlight.asp?client...
Stockcharts Listing
Please vote for us once a day at stockcharts.com.
http://stockcharts.com/def/servlet/Favorites.CServ...
Thank you all for voting. |
|
|
|
|
|
|
