Monday, May 09, 2005

The Knight Trader

I stumbled onto this Knight Trader blog over a month ago but I didn't put it in my blogroll links because I wanted to check it out for a while first and make sure the guys running it knew what they were doing. I can now testify that these guys are on point. It seems like any gold I find, these two guys have already been talking about it. But what else would you expect from two sharks nick-named Gordon Gekko and Budd Foxx, who can be found hanging out at the boiler room message board? Ok cool.

There are two reasons I brought this up. The first is obvious: I added a link to my blogroll on the right. The second is sort of what I was posting about last week. Speculative money is coming back into the market. It doesn't really matter why, but if you pay attention to the right things you can feel it. When this money is moving into the market, you are statistically invincible on the long side if you are carrying a wide enough array of prospects. Consider my own long positions mostly accumulated last week: TASR, TZOO, GRU, ARRS, NSI. But I couldn't quite pull the trigger on a few other tempting setups, like the GEOI layup trade I talked about last week.

When buyers realize that prices won't be this low again, they get into a panick and you'll see stocks that were already too high go way higher, like BLUD, PTC, and NSI. Its absurd, but we're only trying to make money here. And when the ducks are all lined up in a row, you'll see the monster squeezes come into the highly speculative issues like MSO, DCAI, ANTP, and TASR. Just take a look at those charts, you see the sellers dry up last week? All we need is an excuse like a bunch of bond money coming in via a new 30-year note issue. Another great tell is when 2 month's worth of decline in WMS is retraced in a single day after earnings. Yes I was short going into that earnings release, and by the end of the following day, I wasn't! And last week SBUX releases another single digit SSS number, which 4 months ago was enough to drop the stock 10%, this time we move up and close at the high! Fact is, the hot money is behaving differently. I don't know how long this move will last, today could have been the end because the hot money can go away as fast as it came, but in the mean time guys like the Knight Traders are a good way to tune in to what the speculators are going after. To make some money you just add patience and risk management skills.


At 9:26 PM, Blogger Gordengekko said...

Thanks for the write up on our site. I found your site through a referral link on my site. We work hard at it. This is the first time I have seen your blog and will visit more often.



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