Playing & Trading Strategy

Ideally, you have to combine both, but you have to know where to look.

1) Short (or near) term performance of stocks- upcoming openers, stocks with recent news items, new IPOs.

-For openers, keep in mind what YOU think the movie will open to, but don't just hold it based on your projection until it halts on Saturday and adjusts on Sunday. If it's more than 2 weeks out, try to figure out how you think the market will evaluate the stock, especially with news of projections trickling in. For example, back in January, a lot of the March/April/May openers were on the uptick, but the miserable performance of the box office since then seemed to suggest to many traders that those films were becoming overpriced. Thus, you will notice in general that these openers have gradually come down in price.  That's where a savvy trader would have shorted stocks and made a nice profit. Within 2 weeks of release, it becomes a different animal, and you have to keep track of which projections are coming out on which days, and play the stock according to those projections. And of course, once Nikki's numbers roll in on Friday evening PST, the stocks will trend towards those projections.

-For items with news, those stocks will generally go up immediately following the news (unless it's bad news of course- see Dune and Gypsy recently)  That's fairly obvious. If you can't be obsessively locked into the game during the day (or are in a different time zone, as I assume you are), don't go chasing the stocks after a news bump, though unless the news is so big that you are confident that the stock will continue to rise.  If you're too late (sometimes several minutes, sometimes several hours), you might invest just as the stock is slowing its gains.  And that can be bad as detailed below.

- For IPOs, either stay away, or play them safely. Big IPOs that will make their "cap" during the day they IPO will usually move up an appreciable amount that day.  IPOs that don't make their cap will depend on the first reset movement to determine their course.  Be careful here, as with "news item" stocks.

-Why be careful? Because you may have noticed that in general (I'd guess more than 60% of the time), the big movers on one day tend to be big movers in the opposite direction the next. A stock with a news bump might go up a few $H on day one, and inevitably, it will be down a few $H the next day as traders take their profits.  Vice versa applies. Down one day, up the next. So if you're coming to a stock with news LATE, and you buy it as it is peaking and hold onto it, the next day you will see losses as the stock swings back down. Instead of gnashing your teeth over this, think AHEAD. If you know you are coming to that stock with news late, gauge or guess how much higher the stock will go and try to SHORT it at its peak.  That way, you get to grab some downward action before reset, and then all the downward action the next day. This applies to All three types of short-term performance stocks.

- One caveat about short term stocks- sometimes, the news is so huge or the IPO is such a no-brainer that it will defy the up-one-day-down-the-next paradigm and it will just go up-up-up or down-down-down.  See the recent news on Wolverine 2.  That's when you have to go with your gut about whether/when to switch positions versus holding on for the rise/drop.

Long term performance in the next post.