The Daily Note - When Everyone's in the Parade...

"When everyone joins the parade, it's time to become a spectator." I had that saying for a while but it's not easy to recognize when to step out. A sure sign however is when everyone is piling on top, just as when everyone is jumping on the ship about to sail. In my mind if I take a break too early, I won't touch the sky but I won't be crushed on the bottom either. So is it time to pack bags and head for home yet?

Not so fast. There are several things to be taken into consideration before pulling out of the markets all together. One is that you have to admit that you will "never", meaning most likely never, get out at the top and consequently you will "never", meaning most likely never, get in on the bottom. As a long time trader, I doubt if it would fill up my 10 fingers and toes in addition. So you may ask what is the purpose of all the analytic s of tops and bottoms if that is not "where it's at"?

The purpose is recognizing that there are cycles in stocks not to necessarily hit them. The purpose is to see when those cycles change and to be able to adapt to the ebb and flow of the cycles like the phases of the moon. Once full or high, you know some emptying has to take place before a vessel can become full again. It's not good or bad, it's just the way it is. The purpose is to learn to choose your exits and entries wisely, rather than at random, and it's to accept the reality that being at the beginning of the parade is as good as being the one who starts one. Rivers don't start with a full gush but with a trickle of a spring and on the other end, they empty into seas or oceans. In order to make money in markets, you don't have to be the spring or the ocean.. just the river flowing in between the two.

Trouble is that many traders see things often as good when on the way up and bad when on the way down. But, in order to become good at adopting to changes, a trader also has to let go of the notion of "up and down" as well as "good or bad". Of the two, it's harder to let go of the notion of "up vs down" especially if you don't short stocks because there's no denying that charts point up in green and down in red. Also because of the hype of new highs, ytd highs and all time highs that are often celebrated whereas the opposite is very much dreaded.

It's difficult to jump in and buy when stocks are at the bottom, as it is difficult to sell when stocks are at the top and it's what keeps most traders from recognizing opportunity. Hence not selling at the top or buying at the bottom, but if you pay attention to where most traders are, you might notice that there are no spectators left, so, perhaps, it's the time to become one.



Happy Trading, Living and Dancing
Anni

The Daily Pick - DJIA


©DayTrading with Anni 2012 All Rights Reserved

The Daily Note - I'm No Analyst

Nor do I pretend to be. I'm just like everyone else out here on the stream with a point of view and an opinion. I will not hit you over the head nor will I negate your point by making derogatory remarks or nasty jokes about your eyesight, brainpower or size of your shoe.

We all suffer from an experience or two which clouds our vision if we let it. We may even have thoughts in the moment that negate anything positive we may think. That is what many pro or amateur analysts don't realize and neither do their readers. We do not know what they were really thinking at the writing of the article, do they have a negative disposition or a positive bias toward the subject. Nobody is immune from "coloring" their writing with their true opinion even if the figures show otherwise. Knowingly, I don't like to analyze a company nor your opinion of it.

If you have followed me for some time, it won't be news to you that NFLX was on my "uplist" last year until the turn. All the time I was trying to penetrate the bias view of Netflix permiating the blogosphere. Opinions were flying about, calling to short the company and some of it with venom were posted regularly. Regardless, the stock kept rising and a couple of hundred points later, there was a turn. Interestingly it happened just about the time where many "threw their hat in the rink" after being punished all the way up the ladder.

It was time to short then because when traders give in, it's a sure signal that the stock has topped, or bottomed. I've been short until the last gap down in November, at which time it was put on my "shelf". All stocks need to rest from our list sometimes. It looked exhausted from the ride up and the ride down, and frankly I was not about to jump on the band wagon of further bashing a company that was so innovative to begin with. If it was going to go to $50 or $30, I was not going along with the ride that was purely emotional.

Just as a fyi on the side, many people I had conversations with during the last year, interestingly revealed something important to me about Netflix. They were loyal and that loyalty did not really go away and in my opinion, no business can make it without loyalty and it's also true that a business with strong loyalty is hard to demolish.

Since then, from time to time I looked at the NFLX chart for movement and often it looked too exhausted for it. Then a slow rise began to happen in December, which became a crescendo in January; nice signal to start playing again, and so we did. Mystery about why I did not ponder but reasons were revealed in yesterday's earning report. I'd say someone knew something in early January, but then I'm no analyst, therefore I just follow the chart and the chart is where the earnings plays get born.



Interestingly after the announcement, I again started seeing many comments about NFLX and the report being doctored, impossible, and the battle cry for going short one more time. A sure signal that ....



Happy Trading, Living and Dancing
Anni

The Daily Pick - NFLX


©DayTrading with Anni 2012 All Rights Reserved

The Daily Note - A Historic AAPL Day*

I don't know if I'd want to be an AAPL today. All eyes are on it and it's first earnings report after Steve Jobs' passing. It is also the leader of the markets lately.

It must be tough on the company heads knowing there is billions riding on this. What will be the reaction from the public? How will the numbers reflect on the future of the company? It will be decided by millions of traders, investors regardless of fans.

Much will depend on the trust and faith in the new leadership and the delivery of the report. I am sure that Steve Jobs did the best he could passing on the baton, but the people will still be the deciding judges on Tim Cook's leadership. It is the way with all icons, once they are gone, the future of their leadership is too. New icons will rise but not necessarily in the same realm or in this case, company. We saw that in Microsoft also. New challenges arise and have to be faced with expected results of the old. Not an easy task.

I have admired the leadership the masterful marketing and creative output for many years, but I also know that Ford did not live forever and great leaders are few and good leaders can come and go. The public is fickle no matter how they espouse otherwise, just take a look at RIMM's Blackberry. One icon is to be taken down by another is a natural way of things.

But I will not judge, I will just stay in the moment it is with dignity that you shall be received and from me you'll only get best wishes.


Happy Trading, Living and Dancing
Anni
*Published prior to earnings report on 24Jan2012
The Daily Pick - AAPL


©DayTrading with Anni 2011 All Rights Reserved