Monday, May 29, 2006

My plan-It's a work in process, this stuff takes time to learn


First, I will take a look at the futures premarket on tuesday. Then Depending on the opening price I will go long or short of one of the stocks I'm looking at. Also, I'll scan for news before the trade. The target will be small, but a small profit target has a higher probability of being hit, so doing many of these small trades should add up over time. Of course all it takes is one bad trade to wipe me out.

I think INTC and MSFT are going down even further. INTC to 15 and MSFT to 22. I was thinking of the Jan 07 puts on both. The ITM puts are best on both, 2 strikes ITM.

Overall, I don't think the market is going anywhere this summer for the tech sector, except down. Oil may rally higher. Natural gas I hear should go down. I think the metals may retrace, although it tends to move in the same direction as oil. The US dollar is very weak right now and is near its lows, if it rallies, the metals may be a good short. Also, we may have our usual hurricane season down in the gulf, which always helps the oil sector.

Interest rates should continue to rise, and the market should setup nicely for a bearish market this summer and maybe continue to the fall if the Fed thinks its neccesary to keep raising the rates. Considering inflation and the current status of American debt at all time highs, and the housing market declining, and oil going up, it is a good chance the market may turn bearish. WHAT's there to be BULLISH about, unless interest rates are lowered.

I can day trade OIH pretty well by watching breakouts on crude oil. OIH trades smoother then most of the individual oil stocks like BHI, HAL, and SLB, but these 3 main stocks are good to watch because they make up the weight of OIH.

So I want to trade OIH, scalp GOOG the first 2 hours, trade options with lots of time value left (3months to leap options), sell futures options that are close to expiring(vertical credit spreads) and trade volatile small caps based off of the trend and opening gaps.

Overall, I'm bearish on the market, but I will trade stocks long intraday and using options.

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