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EXPERT SPOTLIGHT
DAMON SOUTHWARD
Chief Market Strategist
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Damon has provided extensive trading insight, calls, and analysis
for Briefing.com since graduating from Stanford in 1996.
He oversees a team of fundamental,
technical and special situations analysts focused on uncovering
short-term volatility opportunities and intermediate-term investment
ideas in Equities, ETFs,
Fixed Income, Commodities and Futures. Find Damon's analysis
on Briefing.com premium products under the SCALP, YIELD and FOCUS
custom tickers.
Get the inside scoop on Damon Southward.
This expert spotlight features:
• Q&A
• ScalpTrader Sample Trading Calls
• Featured Videos |
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Q & A
Q:
You’ve provided analysis for Briefing.com for the past 18 years.
What trends/themes are you seeing in today’s
market environment?
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A:
Patience and research rewarded!
When I started in this business, speed was one of the most important
factors in an active investor or trader’s success. News of a
2-for-1 stock split could be good for a 10% move for those who
punched their orders in quickly. A major contract announcement
could easily set up a 50-100% run in a stock. And, if you traded
on a platform such as the SOES system, you could even get your
orders filled ahead of most Retail investors.
In this new era of individuals competing with supercomputers
to read, analyze and trade news, I estimate that speed makes
a difference in less than 20% of opportunities. In my opinion
the ability to perform fundamental analysis and to practice
patience have taken over as the key elements of success for
both investors and traders. Given the bouts of extreme volatility
we seem to get about twice per year, the opportunity is given
to buy stocks low and ride them back for potentially spectacular
gains. Unfortunately, many people only want to buy into strength,
with the crowd, and then get frightened into selling with the
crowd during periods of heightened volatility. This is not a
recipe for success. Rather, it’s dysfunction. In my opinion,
the three steps to recovery (success) in this market are to:
1) know what you want to buy (fundamental story, relative value
metrics, growth drivers, etc), 2) exercise patience by waiting
to purchase at lower prices, 3) scale into the position instead
of buying it all at once.
Briefing.com has developed several proprietary strategies and
provides ongoing research reports that help you identify the
types of names worth owning.
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Q: What
are some of the strategies that are currently working for you and
your team?
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A:
We have developed multiple strategies to
help investors and traders identify attractive stocks and general
opportunities in the markets.
Emerging Growth: This system identifies the
most compelling growth names in the market based on fundamental
and technical outperformance. Our team provides ongoing fundamental
and technical analysis that helps you stay out in front of the
story and identify attractive entry points.
Emerging Value: This system identifies deep
value opportunities that are starting to show signs of institutional
accumulation. Studies have shown that the combination of certain
valuation metrics combined with high relative strength has outperformed
just about all other strategies.
Liquid Momentum: Designed for swing traders,
Liquid Momentum features daily set-ups for names in our proprietary
Focus List of the 50 strongest, most liquid stocks in the market
today.
TA Page Scans: Designed for day and swing traders,
our daily proprietary scans identify opportunities based upon
specific technical criteria.
The Next Big Thing: Our team identifies and
rates the most attractive IPO opportunities.
Special Reports: Provides strategies for profiting
from various market-driven themes or events using stocks and/or
options. Areas of focus include Covered Calls, FDA Calendar,
Earnings, M&A.
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Q:
How does the BriefingTrader team help subscribers develop into more consistent and well-rounded traders?
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| A:
The average market speculator makes money under these two conditions: 1) trading intraday volatility in stocks on news, earnings and technicals, 2) trading the Long side in momentum stocks on a Swing basis. But what happens when the markets become choppy on an intraday time-frame and momentum stocks stop going up on a swing basis?
It is our belief that there is always an opportunity to make money. You just need to know where to look. Over the last several years, we have dedicated considerable resources to expanding our coverage into new corners of the markets. These areas include Distressed Stock/Debt, Index and Commodities Futures, Emerging Growth stocks, Income/Yield opportunities and IPOs.
For example, ChartTrader (CHART) has taken subscribers deep into Futures and Commodities and has received considerable praise for amazing trades in Gold, Silver, Oil, S&P Futures, Nikkei Futures.
EventTrader (EVENT) has done an excellent job for us covering special situations opportunities, such as the American Airlines bankruptcy, helping subscribers catch a ride that saw the stock run from $2.50 to $12.00 in just a few months.
GrowthTrader (SETUPX) has developed an extremely large following with his Swing Ideas on IPOs and Emerging Growth stocks and I have hit home runs in distressed situations such as Fannie Mae/Freddie Mac common shares & Preferreds and the STP bankruptcy.
Conditions are not always ideal for shorter-term trading, so we engage in educating our subscribers on new areas of opportunity. Personally, I’ve found that balancing out my shorter-term trading with special situations opportunities has greatly enhanced my overall performance.
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ScalpTrader Sample Trading Calls
INTRADAY TRADES
Damon is known for providing live trading calls
and intraday set-ups for those looking to scalp trade on the Live
In Play page under the SCALP custom ticker. Below is an example of his intraday calls:
AMZN traded down 10 pts initially on its earnings report (to the $250 area) as almost all headline metrics came in below consensus. However, with the stock trading below $260, ScalpTrader highlighted the opportunity for a squeeze in this name as most of the people trading (and Shorting) AMZN were unaware that operating income came in above expectations (showing that AMZN continues to focus on profitability). With the crowd leaning in one direction on the headline miss, SCALP felt this very important (underappreciated) metric would create a squeeze situation as institutional investors dug deeper into the report.
The idea played out for a move of more than 20 pts (up to 30 pts for those who rode it to after hours highs).
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16:01 ET |
SCALP |
AMZN -- Watch for potential squeeze after operating income posts above expectations, while EPS misses.
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16:05 ET |
SCALP |
AMZN -- If playing the squeeze idea, would lock some in here as stock surges to fresh after hours highs...last trade 267... |
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16:08 ET |
SCALP |
AMZN Update -- Real battle there in AMZN as just about everything missed, except the Operating Income figure. Market seems to be slowly transitioning to AMZN as an earnings story vs a top-line growth story. Seeing very nice squeeze here. Now $277.50...If playing the squeeze, would be out 1/2 of rest here as stock surges about 18-19 pts from where I highlighted the squeeze oppty |
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16:17 ET |
SCALP |
AMZN Update -- Would be out remainder of AMZN here as stock hits $281.50. Think magnitude of this squeeze is due to Shorts hammering stock after AMZN disappointed on just about every major metric except the most important one -- operating income. AMZN showing for a change that its focus is on making money, rather than growing revs or building out infrastructure.
That's more than 20 pts on the play.
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BRIEFING TRADERS SAY:
"SCALP - AMZN - perfect, ask for a gold medal!!! You made my birthday today!!"
"AMZN - Nice trade I took 5 pts on it and ran cause of its squeezability but good call!"
"Nice 15 pts trade off of AMZN thanks!"
SWING TRADES
While the intraday opportunities were tremendous in 2013, much of Damon's commentary has been on Swing situations that we have presented. Trading/investing is about making money. Many people equate making money with being extremely active during the day. Damon will tell you that the world has changed and that the hyper-active trader is less likely to be successful. Here is an example of one of his swing trades:
BNFT Swing Long Trade + 10%: I have learned over my +15 years of trading
experience that it is very difficult to pinpoint the exact bottom in a stock.
As a result, for most of my Swing Trades I prefer to scale in. If the stock
continues lower, I’m able to put on additional size at lower prices. If I’m
lucky enough to have picked the bottom in the stock, I’m at least able to participate
in the move, even if not on full size. In this case, I was able to lock
in a 10% profit after just two days in the position.
| 15:50 ET |
SCALP |
BNFT -- Putting on a 1/3 Swing Long Position in BNFT.
Expecting a meaningful bounce in the coming days/weeks, especially
as underwriters begin to initiate coverage of the stock. Willing
to scale in more at 2 pt increments. (39.10 -4.15)
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| 13:10 ET |
SCALP |
BNFT Swing Long Update
Given the 12% advance in Benefitfocus (BNFT 42.90 +4.59) shares
today, I'm going to take profits on the Swing Long Position.
I was expecting a market rally as soon as it became clear that
the U.S. Government would get a Debt Deal done. That rally is
occurring today, so I am going to be opportunistic and take
profits on the position. I would have been happy with 10-12%
over two weeks, so I'm more than happy to grab those gains over
just a couple of days. |
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BRIEFING TRADERS SAY:
"SCALP was with you on BNFT ($39.50) and was just thinking about selling
when your 13:10 came across. Out at $42.80, thanks!"
"Thanks for a great call on BNFT. I took your advice and sold part at 42,
just sold the rest at 46. U said it could run and it did!"
DISTRESSED SITUATION TRADES
Damon's biggest gains came in distressed situations that he spent days/weeks researching. In fact, his personal Distressed Portfolio delivered a gain of over 1100% in 2013. That’s an eye-popping number and one that has him excited this year about putting in all the time and effort it takes to dissect these situations. He's found a niche in which investors can capture meaningful gains for years to come, especially as interest rates move higher and companies face difficulty rolling over their debt. Here is an example of a distressed trade:
MTL Intraday Trade +30%: It clearly pays to always have an eye on the Distressed Securities market, as opportunities to post 30-50% gains intraday and triple-digit gains over a few weeks are not uncommon.
After spotting unusual price action in shares of Russian mining and steel company Mechel (MTL), I quickly dug into the story – looking at SEC filings, checking the prices on the company’s publicly traded debt and performing a liquidity analysis.
This due diligence gave me the confidence to start buying the name, which resulted in profits of up to 30% in less than an hour.
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09:28 ET |
SCALP |
MTL -- Trying to figure out why this is tumbling to $1.75 from yesterday's close of $2.87. There is an operational update on the wires, but it appears this same info was disclosed in SEC filing on Nov 7. Stock was down about 3% in Russia overnight vs trading down 39% here. (2.87)
I'd consider a spec Long in this (smaller size), as just doesn't seem to make sense at this point. Still digging though. |
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09:32 ET |
SCALP |
MTL -- I just bought a piece of this MTL. Will see how it plays. This decline doesn't make sense to me. (1.70 -1.17)
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09:37 ET |
SCALP |
MTL Update -- Would consider locking some in on this pop. Beautiful trade. (1.93 -0.94)
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09:40 ET |
SCALP |
MTL Update -- Would lock in more here. Stops to $1.83. Only keeping 1/3. (2.11 -0.76)
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09:54 ET |
SCALP |
MTL Update -- Would look to take off 1/2 of remainder here with stops at $1.95. (2.18 -0.69)
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10:07 ET |
SCALP |
MTL Update -- Closing out last piece of this MTL for over 30% on this portion. (2.30 -0.57)
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BRIEFING TRADERS SAY:
"MTL your trade of the year, bought 30000 1.70. sold all at 2 (a $9000 profit!)"
"Great read on MTL. I followed your lead. In at 1.70, out at 2.12."
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Featured Video
Watch these recent webinars to learn
more about the insight, analysis and strategies that Damon and his team provide
to our subscribers.
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Strategies and Insights from Our Veteran Traders
Chief Market Strategist Damon Southward (SCALP) and Senior Market Analyst Brett Manning (CHART) as they provide invaluable trading insights, strategies, and a behind-the-scenes view of their approaches to the markets. Don't miss this opportunity to learn from our veteran traders and get the insight you need to improve your trading technique.
Click here to watch the video in a separate browser window. |
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How to Avoid Costly Mistakes When Markets Shift From Overdrive to Neutral
The Briefing Trader Senior Analysts discuss mistakes they have made over the years that may save you from experiencing the same pain. They also highlight strategies they are utilizing as the markets shift gears and answer questions about strategies, trading styles or the Briefing Trader service.
Click here to watch the video in a separate browser window. |
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