The Second Day

A Stock In Play on Day One, the day it has news, may also be an excellent stock to trade on the Second
Day. If you trade RHT following the release of its earnings (or after some other important news is
released) and are unable to find a good stock to trade the next morning, you may consider trading RHT
again. It is generally best to find a stock that is in play with fresh news (Day One), but if you cannot or you
feel more comfortable trading a stock the Second Day after important news was released, that is
acceptable. Below are some suggestions that you should consider prior to trading a stock on the Second
Day…….

1) Stocks can be easier the Second Day because there is not as much noise as the First Day. It is often
easier to read the tape the Second Day.

2) Check if the stock was upgraded or downgraded or if there is any new and important news before the
Open.

3) Use the important prices and levels that you gathered on the First Day to your advantage on the
Second Day.

4) Develop trading plans based upon the First Day’s prices or levels.

5) Follow your plan and do not sell or cover too quickly. Do not get caught up in the noise the Second Day
when you are trading off of important levels from the First Day. Levels that will give you an edge, an
advantage.

6) There can be a lot of easy money gathering important levels and prices on the First Day that can be
used on the Second Day.

Example

On Day One, the day RHT releases earnings, you notice that during the afternoon it does not trade below
20 nor above 20.50. So, if on the Second Day you don’t find a great stock to trade, you consider trading
RHT. You develop a plan to get long if RHT holds above 20.50 and get short if RHT trades below 20.
When you notice UBSS holding the bid at 20.52 on the Open, you get long. You use the information that
you gathered on Day One to make easy money on the Second Day.

On the Second Day a stock generally trades less volume than it did on Day One. And there will be fewer
traders involved so it may be less choppy. And you have the advantage of knowing more than most
because you traded it the prior day. And you are armed with important intraday prices from Day One. All
of the above offers you an advantage while trading this stock.

We suggest that you trade a stock with news. Sometimes you may not feel comfortable with any of the
news plays. Maybe the Stocks In Play are too fast, or too hard for you for that day. So trading a stock on
the Second Day can be an attractive option. Your first choice should always be to find a stock with news
that day. But if you can’t find one that is good for you then consider trading a stock on the Second Day.

Today I was trading KLAC on the Open. I did not feel comfortable trading M or STJ on the Open, though
they both released news. M had gapped up on a buyout rumor and STJ had gapped up, but was not
finished with its conference call. So I traded KLAC, which I had traded the day before, the First Day. I
knew the stock had not traded above 62. So when it traded quickly up to 61.50 on little volume after
trading down because of negative INTC news and was met with a huge offer, I got short. And I made a
quick 40 cent chop. I just could feel that it was unlikely for the stock to trade through the 61.50 huge offer.
So I got short and made a quick profit. I had a good feel for the stock because I traded it yesterday. On
the Second Day you will have a better feel for a stock than a stock you are trading on Day One.

After you trade a stock on Day One set alerts for great longs and shorts. Make sure you set these alerts
with an expiration date for the following month. A stock in play on Day One, may follow through days later.
The stock does not have to follow through the very next day, the Second Day.

I have seen Mr. Spencer get ripped on many a stock on Day One. Then kill the stock on Second Day. He
learns the important prices and then kills it. I saw him lose 11k on Day One in SNDK and then make 25k
over the next few days in the same stock. This is a trading opportunity you should consider.

SUMMARY

• Set Alerts from Day One

• Less volume
• Better Feel for the Stock
• Where couldn’t the stock get above and below on Day One?
• What were the important intraday support and resistance levels from Day One?
• Try and find a stock with news first