The Day that Was - July 25th 2007

Well.. what a day. In some ways the events of the market today made me think the whole market was in the old TV show "The Twilight Zone".

We started out in pre market with the futures up as was expected on a reaction bounce from yesterdays big down day which closed right at support on the DOW. So it was expected that we would have a reaction bounce. The question was would the bounce hold or would it fade and push us further down.

What we got was a day that went up well in the first hour and then it sold off quickly and took us into the red. Then we went back into the green to only be sold off again and end up in the red once again. By the end of the day the market made another try at going into the green and then as the day got close to the end the shorts started covering and we had a quick run up around 3pm. Which was also sold back down before the market closed. We did end the day in the green but it was not a healthy green in my view.

In the pre market we had good earnings from Boeing and that got the buying going early. Some even thought the comments from CountryWide Financial yesterday were "over done" and so the bargain hunting started. But each time the markets ran up there was someone waiting at the top to take their money and send it back down. That is what I did not like about today. Too many times the market would run up and then it would be cashed in an hour later and brought right back down. For me, today's trading action represents "uncertainty" for the rest of the week. If anything will help the market going forward is the good earnings that came in after the market closed.

And speaking of earnings. Apple... all I can say tonight is that out there in the world tonight there are people who were short on Apple who are feeling tonight they were ripped off, and there are people out there that were long on Apple and are thinking they got away with something.

When the numbers from Apple crossed the wires they showed very good earnings and revenues for the quarter, but then the next line said they were lowering guidance for Q4. And it was a large amount that they were lowering by. I was watching the trading activity in the after market on Apple. It looked like total confusion at first. I'm sure there were traders saying to themselves "was that good or was that bad". Then something happened (I don't know what) but a short squeeze was underway and bingo... Apple jumps up to almost $150 in after market. Personally I had no position in Apple (long or short) and I still don't. Normally when a company guides lower in a forward statement the stock will sell down. It is not "what have your done for me lately" that matters. It is "what are you going to do for me tomorrow" that is more important to the investor/trader community. So today's price movement was really strange. In reading some of the news wire comments crossing the screen tonight I find that even the analysts that cover Apple full time are somewhat confused. I don't think they know if they should upgrade it or downgrade it...

So that is the day. I sold my position in Western Digital (WDC) to lock in the gains and not risk it to a possible bad earnings which they are releasing tomorrow. (Today I mistakenly said earnings for WDC were today. I meant to say tomorrow after the close). And with the trading that was taking place today which was looking "unstable" I wanted to bank the profits today. WDC was a good swing trade and I will keep my eye on it for a future setup once the earnings are out of the way.

The swing trade on NightHawk Radiology (NHWK) I decided to keep through earnings as the first purchase price I made was close to support and the downside risk for an extreme loss was limited. So I decided to let NHWK ride. They released earnings and they raised their forward guidance so we should see NHWK trade tomorrow to the upside (as long as the overall market is healthy).

I was in the process of evaluating the downside risk in the GRP swing trade to determine if I wanted to sell all, part, or none at all going into earnings. But I did not have to make the choice because GRP had a big whipsaw at 10:45 and my trade hit the stop at $52.25 and closed. Because GRP never made it to the next buy point for adding the remainder 1/2 of the funds for this trade the loss was small as it was only on a 1/2 position size. I was disappointed in the whipsaw today but rules are rules and that is how we stay disciplined. If I get thrown from the horse I can just get back on again if it is still healthy. Because I still like GRP and I may re enter this as I see how it develops. I will post my intentions on GRP when I see what it does.

I have many charts on my wall with setups that I really find attractive. Yesterday put a big bruise in the middle of many of them. So I need to watch to see if the setups are now damaged or will recover and establish themselves again as valid setups.

I am watching carefully SCUR. When this makes the move over the trend line in the chart I will be initiating a swing trade on that one. They report earnings tomorrow so that will be a catalyst one way or another on the stock. More charts and setups to come as soon as I can say they are still healthy.

See you all in the morning. Good night fellow Rebels!

P.s.: Michael, you are so correct "have a plan and trade the plan". That is the only way to make money in the markets.