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May 9, 2005
Follow-up to Consumer Financials, Mon., May 9, 2005, 11:25 AM
A good trader tool is the overlay of the stocks in a group that are expected to under/over perform the Dow (or S&P 500) following a decision.
Earlier today I gave a recommendation that the Consumer financials would under-perform the Dow, across all time horizons, including the intra-day trading range.
Given that you can throw out the first 15-to-30 minute trading on a Monday morning, as it is not representative of the day's action since there are a lot of orders entered from the past week and over the weekend, I use the trading from 10:00am on Monday morning to follow up on the pre-open decisions I made (and probably fairly accurately represents the trading activity on my part as well).
Let's have a look-see.
In this case, the decision to sell-off the Consumer Financials from 10:00am was a good one for those seeking Alpha, i.e., to out-perform the broad market averages.
I suspect this is mundane to a lot of you, however, bear in mind that a lot of my readers are not so knowledgeable about Wall Street trading tools. I do this to give everybody a look at what is important, and how to measure the results of your decisions.
For long-term traders, the same tools (i.e., comparative analysis) are useful.
Posted by Posted by Bill Cara on May 9, 2005 11:32:04 AM | Category: Trader Tools
Discourse
Far from mundane, Bill! Thanks very much for considering less experienced traders in your informative posts. Something for everyone ;)
Keith.
Posted by: Keith Nelson at May 10, 2005 2:17 AM [link]
Bill,
Thanks for this super-informative Blog.
I was actually thinking for some time that Consumer Financials (and Banks) that have extended enormous amount of lower quality credit will be at risk in the rising interest scenario. Thanks for pointing out the Best of the candidates.
Now - a trading question - as I have never done more than simple buying stocks- Is it possible to short all these stocks (say equal-weighted for $10,000) and put all the proceeds in SPY? Over a year, SPY should outperform these six stocks!
Thanks again!
Posted by: Rick at May 9, 2005 11:21 PM [link]