Stalking Stocks

Gross: +$293.72
Net: +$222.10
Loss From Top: 27.73
Trades: 42
Shares Traded: 62800

Stocks Traded Today (net profit/loss):
Pepsi (PEP): +$145.78
Boston Scientific (BSX): +$40.84
JP Morgan (JPM): +$31.98
Hewlett Packard (HPQ): +$15.73
Walmart (WMT): +$12.30
Pfizer (PFE): -$1.34
Time Warner (TWX): -$5.59
Disney (DIS): -$17.61

Another disappointing day today. I spent most of the afternoon waiting for levels to break to the upside on Walmart (WMT), Pfizer (PFE), and Disney (DIS), but they never occurred. Well, actually, Walmart did break, but it was one of those "One Print Breaks". Interestingly, had I gone long on the Walmart "One Print Break" (and I did have an opportunity to get long on some ECNs), it would have been a winner. But what people must realize is that trading is about probabilities. And from what I have observed, "One Print Breaks" have lower probability of working out.

I'd like to clarify something about the "One Print Break" from my previous post. A "One Print Break" usually has a low probability of working out if the S&P Futures (or the overall market) is flat or trendless. Which is what happened with the Walmart break - the Futures were flat.

BUT, if, for example, the S&P Futures are ripping upwards and a level breaks in one print, it will have a good chance of being successful (because the specialist is waiting for all buy orders to come in so that he can fill the level in one print). If some of these terms are confusing, don't worry - I'll write up a post on the weekend to give definitions to some of these terms.

And so to the point of this post. I like to put on trades that have a high probability of working in my favor. This means patience and waiting for certain conditions before putting on a trade. In a way, you must stalk your stock. For most of this afternoon, that was what I did, but unfortunately the opportunity never came. But I will tell you this: NOT being in a position is also a position. I'd much rather NOT be in a position than to put on a trade where the probability of working out is low.

For Disney (DIS), I was waiting all afternoon for it to get to the $28.00 level. There was about 4000 size on the ask at $28, but it just couldn't get up that high today.

For Pfizer (PFE), I was waiting for the $26.50 level (had about 3000 size on the ask), but like DIS, it was not able to get up there.

The best trade for me today occurred on Pepsi (PEP). There was massive size on the ask at the $59.50 level (about 1500 size). Usually PEP has less than 10 size on the bid and ask, so 1500 size is big for this stock. At 9:58AM it broke when the S&P Futures ripped up. I went long 2000 shares at $59.50. As soon as the level broke, PEP burst upwards and I got 1000 shares out for a 13-cent winner, but prices then began falling back down. I got 600 shares out for a 3-cent winner and the last 400 shares out for a 1-cent winner.

There were no really bad trades today per se - I managed to keep my losses to a minimum on trades that did not work out.