After a rough week and a half of trading November is turning out to be a very difficult month to trade (at least for this developing trader). When an individual knows what to look for, how to act upon what she sees, and then is able to see it through and capitalize on it, one basically knows how to trade and needs to focus on developing skills and expertise in those skills.

One very important thing that a developing trader needs to be able to identify is when to pull back and just simply refocus. My criteria for knowing when I need to pull back and refocus are:

1. More loosing trades within a day than is my normal or average and more days that this happens.

2. Being engilfed in the feeling that others are making money and I am not.

3. Trading a trending day like a range bound day.

4. Being nervous about positions.

5. Skipping from chart to chart.

6. Knowing what should happen and then  rarely seeing it unfold in comparison to a good month.

7. Feelings of frustration that sounds like, “This worked before why not now?”

8. Feeling like you just want to kick your dog for no apparant reason (of course not really doing it).

9. Noticing that a  trend seems like a long lost friend who abandoned you and you are left empty asking why. 

10. Your P/L leaves much to be desired and you know that there is no reason, except for yourself, that your P/L is what it is. Basically you are left feeling disappointed in yourself.

What is important, once one knows that all the criteria for a difficult month are staring one right in the face, is that one recognizes and does the following…….

PULLS BACK  & REFOCUSES

I have come to realize that when the top ten items happen, which used to be devastating to this developing trader,  I simply pullback and refocus by doing the following. As these have become a part of my plan. Pulling back, to me, means….

 1. Going back to a lot of watching and sitting on my hands in wait for a trending day and/or a trending stock when most all variables (that make a great trading day) add up. For example, extreme tick readings, trending vix, momentum in the direction of the trend in market and stock, all indices making higher highs or lower lows, nice volume, and orderflow that just screams “find a spot to enter you dummy”.

2. It also means focusing a lot on my “pet” stock  and perhaps trading it exclusively.  This way I am able to capture momentum moves on range bound days.

3. It means having an intense  focus on finding “the”  move when it decides to happen and capitalizing on it with the appropriate share size.

4. It measn that my  average  total volume of shares  traded on a day or in a week is  cut way down.

All of the above helps this developing trader to refocus and capitalize on what little the market has to give at times or in times when the market seems a little Bi Polar and is basically difficult to read much of the time.

So if you are having a hard time this month pull back and refocus:)

Profitable Trading ALL!

Debbie

Terrific webinar last night and a lot of participation from both new and experienced traders. We covered what traders focus on during different stages of the learning curve and what it takes to reach new levels of profitability.

You can watch the video here.

Enjoy!

Keystone Morning Quickie November 10th 2009

Market Commentary

Futures are slightly down this morning after a impressive rally yesterday. As impressive as it may have been, we must take not of the lack of volume that was associated with the run up. The Dow Jones made yearly highs at 10023, however the $SPY failed to make a new high and is sitting below the significant resistance level of $110.

A big reason for the rally was due to the G20 meeting in which the leading nations gave no indication to removing stimulus. The US dolard made 15 month lows as both Crude oil and Gold continued the stellar rally. Many believe that the price of Gold is a bit inflated, but as always we will not try to pick a top, but rather wait to buy pullbacks or wait for signs of a reversal.

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Technical Levels

50 Day 200 Day
S&P 1056 1008
DOW 9765 8647
NASDAQ 2100 1805
Keystone’s Trades

CVS Caremark(CVS) Short sale – After gapping down on earnings last week on an exhaustion volume bar, CVS has rallied back and recovered some of the losses. However, we believe that this is nothing more than an opportunity to position ourselves for a short. We will look to see how it reacts around the 200 EMA ($31.78). If we show signs of weakness early this morning, we will enter the trade on the first rally.

Closing Price:$29.79

Target: $27.49

Stop: $31.76

20 EMA:$34.64

50 EMA: $35.97

200 EMA: $31.78

Apple (AAPL) Long – Apple has been tried remain above the $200 “psychological” level since December “07. It failed back in “07 and after their earning release in late October it once again breached that level, only to sell off and retrace back to $186. Yesterday it once again has risen above the $200 level and we believe that it is there to stay. Technicals strong, fundamentals strong. A must own stock. Buy the pullbacks.

Closing Price: $201.46

Target:$210

Stop:$193.66

20 EMA:$193.46

50 EMA:$186.05

200 EMA:$141.82
Economic Calendar

7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
8:55 Fed’s Lockhart: Emerging Trends in Real Estate
9:00 Conference: Cross-Border Insolvency Issues
10:00 Job Openings and Labor Turnover
10:00 Q3 Metro Home Prices/State Resales
10:05 Fed’s Yellen: The Outlook for the Economy and Real Estate
11:15 Fed’s Rosengren speaks
1:00 PM Results of $25B, 10-Year Note Auction
7:30 PM Fed’s Fisher: Economy

Notable premarket earnings: ARM, BZH, DSX, JASO, TYC
Notable postmarket earnings: AONE, ATO, CLWR, PAAS

Top News Stories

EU casts shadow over Oracle’s Sun. European antitrust authorities formally objected to Oracle’s (ORCL) proposed $7.4B takeover of Sun Microsystems (JAVA), issuing a statement of objections that focuses on whether Oracle ownership of Sun’s MySQL database software would reduce competition. The move doesn’t necessarily mean the EU will reject the deal, but should delay the process. The U.S. Justice Department, which has already signed off on the combo, reiterated that the merger is “unlikely to be anticompetitive.” Oracle, meanwhile, said the acquisition “does not threaten to reduce competition in the slightest,” adding that the EC’s concerns “reveal a profound misunderstanding of both database competition and open source dynamics.”

Lending standards loosen. A smaller percentage of banks tightened lending standards in Q3, according to the Fed’s loan officer survey, but credit conditions remain far from a comfort zone. About 25% of banks tightened standards on good quality real estate loans, down from 75% in July 2008. Banks tightening standards for credit cards fell to 15% from 35% last quarter, the lowest percentage since April 2008. And 15% of banks tightened standards on commercial and industrial loans, down from 80% in October 2008. “We’re back to just normally tight, not pathologically tight,” says an economist.

U.K. most at risk of AAA downgrade. The U.K. is most at risk among large developed economies of losing its AAA rating, Fitch said Tuesday, but the ratings service maintained its stable rating which it said “reflects our expectation that the U.K. government will articulate a stronger fiscal consolidation program next year.” In response, U.K. Trade Minister Mervyn Davies insisted Britain’s sovereign rating is “absolutely” safe, and said the government’s “been very clear that over the next four years there’s going to be a program to reduce the public debt level.” In May, S&P put the U.K.’s AAA credit rating on negative outlook, saying it would make a decision after the government makes its intentions clear.

Moody’s sees AIG comeback. AIG (AIG) will be able to repay its $60B Fed credit line and “much or all” of the Treasury’s $69.8B investment if financial markets stabilize, Moody’s said Monday. In a vote of confidence for CEO Robert Benmosche’s strategy of rebuilding some of the businesses AIG previously targeted for sale, Moody’s said, “We believe that the slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales.”
Employment trends turn corner. In perhaps the most bullish employment report since the onset of the recession, Conference Board reported its Employment Trends Index rose 0.7% to 89.3 in October from 88.7 last month. “The

Employment Trends Index has likely turned a corner in September, and the historical relationship between the index and employment suggests that job losses will end in early 2010,” the group said, adding, “While layoffs have certainly declined in recent months, we still expect to see employers adding hours to their existing workforce before hiring will strongly increase.” The improvement was driven by positive contributions from measures of jobless claims, temporary hires, industrial production, and sales. Conversely, Gluskin Sheff’s David Rosenberg said unemployment may hit a post-war high of 13% as growth stagnates. “This is going to be the mother of all jobless recoveries. At the beginning of the year, who was calling for unemployment to go up to 10%?”

Hedge funds alive and well. Hedge fund assets may top the previous high of $2T by the end of 2010 as double-digit returns lure investors, Deutsche Bank says. “We fully expect to see material inflows into 2010 and beyond. The expected growth is reflective of continuing institutional demand for increased risk-adjusted returns in the face of low bond yields and disappointing passive equity performance.” Global hedge funds have rebounded faster than expected, recovering to $1.53T in September from $1.33T in March, even as regulators turn up the pressure to increase scrutiny of the industry and amid some high-profile scandals.

Barclays accused of huge Lehman heist. In a recent court filing, Lehman’s creditors claim Barclays (BCS) received Lehman securities valued at $50B for just $45B in cash, accusing the U.K. bank of the “largest theft in banking history.” Some Lehman executives who negotiated that deal, the complaint asserts, knew they would receive offers to work at Barclays, and received or were offered plump compensation deals. At the time, the deal was presented in bankruptcy court by Lehman’s lawyers as a wash.

Cadbury bitter at Kraft’s bland offer. Kraft (KFT) took its offer for Cadbury (CBY) directly to shareholders, disappointing investors who had hoped Kraft would sweeten its original bid of 300p and 0.2589 new Kraft shares for each Cadbury share. Kraft said its proposal “offers the best immediate and long-term value for Cadbury’s shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent.” Cadbury, not surprisingly, recommended shareholders “emphatically” reject Kraft’s (KFT) “derisory” offer, which it says “is worse than the proposal that the Board has previously rejected as fundamentally undervaluing Cadbury and its prospects,” due to a drop in Kraft’s share price. The cash and share offer originally valued Cadbury at £10.2B, but is now worth about £9.8B. Kraft now has 28 days to publish a prospectus on the offer for Cadbury shareholders, and 60 days to collect enough shares to clinch a deal.

Google picks up mobile ad leader for $750M. In a push to expand its digital advertising empire to cellphones, Google (GOOG) agreed to acquire mobile advertising start-up AdMob for $750M in stock. AdMob is a leading seller of banner ads on iPhone apps and mobile-specific web pages; the acquisition could help establish Google as an early leader in the small but rapidly expanding mobile phone advertising business. Aggregate sales of mobile ads were just $160M last year.

Madoff payback fund could swell. Settlement talks between Madoff trustee Irving Picard and lawyers for the estate of Madoff investor Jeffry Picower are making progress, with Picower’s family lawyer saying discussions range between $2.4B (the amount Picower withdrew over the six-year recovery period allowed for the trustee’s claims under New York State law) and $7B (the total amount of his withdrawals over several decades). The estate is large enough to add at least several billion dollars to the $1.4B the trustee has gathered so far.

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For success in anything you need to set short term and long term goals. Almost everyone knows this concept of goal setting. Something that I have realized lately is that I needed to break down my short term goals into shorter term goals in order to make sure to focus on consistency in my trading. Also, it helps my psychology to know that I am attaining my “small” goals which will, overall, lead to attaining my bigger goals.

Simple Concept But Important

Profitable Trading All!!

Debbie

As always this developing trader continues to identify what works and what does not and then adjust accordingly. It is amazing that in this process of development (in trading) is really more about developing one’s self than it is developing trading skills (although I am not negating the importance of continuous skill development.

Even when one knows what to do and how to do it and knows that he/she can be profitable, there are demons that always show there ugly faces. The following are two that I have been fighting lately.

1. Overtrading as a result of not realizing soon enough the type of day it is.

This is specifically a result of misreading or being out of sync with what is actually unfolding in front of you.

2. Being the first mouse to get the cheese instead of waiting to be the second mouse.

In life we are taught to be the first to make sure that we get our needs met. In primary school all children fight to be first in line. In big families at dinner time if you don’t get what you want on your plate first then you get the leftn overs. However, in trading its the totally opposite. The first “mouse” gets slaughtered and the second “mouse” gets the best entry and capitalizes on a move that unfolds.

Profitable Trading All!!

Debbie