Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Last week, I mentioned Facebook as a buy (yes, believe it or not), and I suggested the gap at 22.60 would be a good target. What was today's high? 22.59! Strange but true. Anyway, even a dim-witted permabear like me can offer up a good long idea now and then.
Once the market opens each day, it can be rather difficult to surmise which direction it will go by the end of the day. For some it seems like a a random walk in the park. But for me, as a trader, there have been countless observations that I've made from over the years about what is seen in the early morning action and what it means for the rest of the day.
I'm going to be doing a 5-part series on understanding the early morning action and how you should be positioning yourself for trading the rest of the day. Today, I'm going to start off by talking about gap-downs.
As I lay out the 5 different scenarios (no way is the market limited to just these 5, but they tend to be the most common ones), I'm not saying that every time you see something play out early on, as I've noted, that in the end the result will be exactly as I say. Instead, you should look at in a way that says "the conditions are favorable that…."
So let's examine today's market condition example and what you can expect from it.
There was a very large move overnight as the EU eased repayment rules for EU banks, and announced a $149bn plan to promote regional growth at the EU summit. Much has been made of Merkel's isolation at the summit and I was reading this morning that French President Hollande won't be backing down on his demand that Germany back a Eurobonds plan, so it seems that risking future German bankruptcy is a risk that the (ahem) French are prepared to take. We'll see how that goes today, but given that unconditional agreement by Merkel looks like political suicide at home, that she stated earlier this week that no such agreement would be reached in her lifetime, and that it would most likely be ruled unconstitutional by German courts in any case, it seems unlikely that Hollande will get his way.
What we might see however is German agreement to a Eurobonds scheme conditional upon Euro members surrendering a lot of fiscal sovereignty to, in effect, Germany, and that might have the potential to kick any major crisis a few months down the road. We'll find out what has been agreed over the weekend.
Truth to tell, my broker couldn't find a single share of this to short – – but here it is anyway. I'd use a stop of 12.95 if I were able to actually short it.
