Trading Over Night Holds (ONH)

• Posted by TraderStewie
• on November 15th, 2009

One of my favorite trades are Over Night Holds(ONH). Sounds like a swing trade but it’s NOT! It’s more like an overnight momentum play. I am looking for a stock that follows thru the following morning. If I am short an Over Night Hold then I am looking for a Gap Down or continued weakness early on the next morning and if long an Over Night Hold then i am looking for a GAP UP or early strength the next morning shortly after the open. I am very picky and only demand THE BEST POSSIBLE TRADE i can find, if i don’t find anything, then i will DO NOTHING and wait.

Things To Look For:

1. NEVER hold overnight a stock that reports earnings after the close or in the morning. Be AWARE of earnings and avoid them like the plague. Earnings are pure lottery.

2. Always be on the look out for hot sectors, short squeezes, highly shorted stocks & momo stocks. A highly shorted stock trapping shorts is a gift from the trading gods: go with it!

3. HIGH OF DAY (HOD) and LOW OF DAY (LOD) closes. I wanna see the stock close near it’s HIGHEST tick of the day for long positions and near LOWEST tick of the day for short positions.

4. VOLUME, VOLUME, VOLUME! I wanna see volume and lot’s of it. Big decisions are always made near the close and if you see heavy volume going into the close, that should tell you something!! Listen to it and go with it!  It ain’t mom and pop shuffling shares around. It’s THE BIG GUYS squaring off their positions.

Check out HK in this example: Here’s what the stock looked like nearing the close on the daily chart:

….and here’s what happened the next morning….

Check out SKF here: This is what the setup looks like on the daily chart as we approach the close the day you take the trade: You should be thinking: I need to LONG SKF ONH

and here’s what the stock did the next day:

5. Always Trade in the path of least resistance of the market. If the market closes on it’s lows on strong volume, then you want to take Short Over Night Hold(ONH) Candidates, not long positions (for this strategy)! BUT, always be aware of where these selloffs are taking place: are we near climax selling zones? is there a big event coming up the next day? Think a little and be responsible with these decisions. Look for stocks that are nearing breakouts levels or stocks that are breaking out from formations, bases or tight patterns.

6. DISCIPLINE!!! To take a loss if there is one if the stock doesn’t do what you expected! GET OUT! Preservation of capital should be your number one objective, making money should always take a back seat to keeping your account afloat.

7. You wanna BUY/SHORT right before the close after you are reasonably confident you have made the right decision and you have found a potential winner. Be picky: what do you see? are you seeing shorts trapped? or are you seeing longs trapped? Go the other way and capitalize on their panic.

That’s it. It’s sounds simple and you’ll find out it’s easier said then done. hahaha! Just needs a little practice and eye training just like anything trading related i guess.

Stocks that I would have taken ONH that fit the criteria:  watch these candidates on monday 11/16/2009

here’s one more to watch on monday 11/16/2009

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus