Trade – MVSN - 4th May 2004
Today provided some excellent examples of why I like to trade stocks as my main vehicle. The market as a whole was moving in slow motion for much of the session as traders were waiting for the interest rate decision from the Fed. This is what the ES (e-mini S&P futures) looked like at the start of the day:
Not much going on there - a range of about 3 points. Each full ES point is worth $50, so assuming you had a system that gave a signal here and could somehow capture half this range, the profit potential would be $75 per contract.
In the meantime, here is what Macrovision (MVSN) was doing during the same period of the day:
Now this is much more interesting - we got some movement here! This stock was clearly strong, it gapped up at the open and made no real attempt to even try and close that gap. Now if you had a system that gave a signal and could somehow capture half the range between the lines marked on this chart, then you'd be looking at a profit of of $750 per 1k shares.
Looking back at the ES chart, I can't really see much in the way of an obvious entry - perhaps you could play the bounce off support at the bottom. MVSN however gave me a clear entry signal at $21.75. I closed out half my trade at $22.00 to put a quick 25 cents per share in the bank, and finished up the rest at $22.50, for 75 cents a share. On 1000 shares that makes $500 profit before commissions, which with a discount broker would amount to less than $20. Not a huge winner, but okay for a trade that lasted about 10 minutes, and a market that was essentially flat. And that is why I like stocks - there is always something moving somewhere - no matter what the rest of the market is doing.
Harvey can be contacted via his website, where you can also read about his day trading course