The Importance Of Independent Order Flow - $FB $QCOM $SPY

SPY closed positive today by a mere penny, so certainly there wasn't anything going on in the market, right? Wrong. As I noted on StockTwits, there were several names I was looking at today on an intraday basis.

While I was watching a handful of different stocks, my primary focus today ended up being Facebook (FB) and Qualcomm (QCOM), as you can see below:

FB - beat Q2 earnings estimates, opened up over 6 percent higher (it had been as high as $78 pre-market). While I feel that given the large pre-market up move we saw, some of the intraday opportunities were limited, I still managed to make a couple of trades in the stock, seen below.

QCOM - beat earnings, but offered weak guidance. Stock opened down over 5 percent. I made a note on StockTwits that I was watching the $77 level right on the Open, as there was a seller that appeared there. I covered my short on the quick 1 point drop down to $76. I tried a short once again when I saw what I thought was a $76.20 seller. The stock made a new low after I got short but quickly reversed, stopping me out of my position.

FB - trade management on the Open (1min)

FB - trade management after the Open (5min)

QCOM - trade management (1min)

Please don't equate a slow day in the indices as being the same as being a 'slow' day overall in the market. This seeming paradox is especially apparent given the nonvolatile nature of the indices themselves (except for perhaps IWM) combined with being in the heat of earnings season. When the indices aren't moving, I'm not trading the indices. I shift my focus even more on stocks exhibiting unusual order flow (read volume) that are gaping up or down by a significant amount with fresh news catalysts behind them (e.g., earnings). I want to be trading stocks that are moving on their own, that is, stocks that are In Play. I will be focused on where the movement is. The concept of stocks with independent order flow is key for shorter-term traders. While it doesn't guarantee success, trading stocks that are In Play will significantly increase the probabilities that you are profitable on a net basis for the day.

Please let me know if you have any questions or comments below.

StockTwits: @MarketPicker
Twitter: @MarketPicker