I have a degree in Mechanical Engineering from Columbia U. Although my days of analyzing control systems and playing with complex math problems are long gone, I still use plenty of those analytical skills to quantify my trading performance.

Seriously, I am so meticulous about my numbers that even Mike, Partner at SMB, thought I was a spy for another firm when I first interviewed at SMB. He thought I was just asking too many detailed questions about performance, risk/ reward on trades, etc.

According to him all those questions only meant I had to have been gathering intel for another prop shop – and there were a lot of them at time trying to play that game just for the record. Actually, I was just being myself, a true number cruncher at heart.

For today’s column I wanted to give you an inside view of how and why I review my trading numbers. Keep in mind that I am a high frequency trader and thus my system requires this kind of analysis, but the same approach towards reviewing your work will serve useful for those not as active. So let’s dig right in.

First, let’s tackle the issue of why it is worth spending the time having a routine to review your work. Though not obvious to most traders, it provides a framework for looking at your work in an unemotional way. Often, we become emotional and overweight the results from any one trade and conclude erroneously whether that is play that must be kept/eliminated from our trading.

Secondly, it gives us the ability to quickly to really see how we make/lose our money. And most importantly, and with the right record keeping, you can tell with excruciating accuracy when the market conditions change and when it is time to shift gears in your trading mentality.

I like to keep track of the following stats that I find useful for my own trading. It has been really more by trial and error that I have come down to this relatively small list – it used to be much bigger. But this list works for me:

• Performance and Volume per time of the day (premarket, open, mid day, close, after hours).
• Max size during the times of the days vs their profitability and percentage of big winners.
• Risk/Reward per trade setup – I have my trades broken down into three categories: A, B and C. A-trades being the ones I have most confidence/size/risk on, and C-trades being the least probable trades that I treat as scalps.
• Profitability per stock and per sector.
• Profitability Longs vs Shorts.
• Profitability per market setup: I want to know how my days is tight up to a trend day, inside day, or just range bound day.
• Profitability per news item: I want to see how my results are for stocks gapping up/down big, stocks with upgrades/downgrades, stocks fresh with earnings (mixed, heavily weighted to one side), secondary offering pricings, etc.
• Average holding time for my different trade categories.
• Liquidity adding percentage per time of the day.

During the weekend I take a couple of hours to go over my results from the week and try to find some patterns. I want to find out if the market conditions have shifted so I know where to spend most of my mental energy in the coming days.

Do I play more C trades and be lighter on my A trades? Do I just load up on my A trades but reduce my price targets to about half of what I usually shoot for? Is my data meaningful or is it littered with emotional/angry trades? If so, then what must I do to correct that mental state? You get the point. The more time you spend on this, the closer you get to knowing who you are as a trader.

Monthly and quarterly I look at my results and update my stock Ban list. These are the stocks that should have a charity named after me, those I just day in and out single handedly donate tons of cash to. Every two quarters I make an effort to give the stock one more shot to come out of the ban list. But normally they are in there for a reason.

In the end what matters is being overly meticulous about your results but only AFTER you have developed the skills to perform day and out. I am at a point in my trading career where I feel I know myself as a trader pretty well and now I am just trying to cut the fat in my trading. Take, for example, a recent analysis I started doing:

I wanted to look further into my trade categories (A, B and C) and do a breakdown on how much I make and lose on each of them. I am trying to figure out if there are some silly losses I could eliminate all together. Doing this analysis showed me something I hadn’t seen before. All of my little losses (paying for information in a stock if you will) could amount to about 50-60k a month in my trading. So it is my recent quest to figure out how to cut some of that fat and put that money back in my pocket.

Again, it does not matter how you analyze your results but you must have a way to look at your numbers from a quantitative point of view. And you must use your journal as a way to help you keep track of your progress. Yes we all have different styles, time frames, risk parameters, types of trades, etc, but in the end we are just trying to squeeze money from the market consistently.

Happy trading!

Gilbert “Gman” Mendez is the head trader at SMB Capital.

Price Headley

Price Headley has been a trader since college. He has learned the skills necessary to earn a living in this challenging profession. In our interview, Price talks about his decision to become a full-time trader, his firm Big Trends, and the important lessons he’s learned along the way:

Background

Price: I started trading during an investing competition in college. While using “buy and hold” I was in the bottom quartile, so I decided to start trading every day. One month later I was in the top 1.5%. I loved it. I called my father and said, “I’m changing majors!”

At that point I started learning everything I could about markets, trading, and investing. After college I was briefly a broker and quickly realized it wasn’t about trading. But that led to a job as a research analyst for the largest options newsletter company in the country. After rising to head the group for several years, I decided to start Big Trends in 1999.

Advice

Damien: What is one of the keys that keeps you interested after so many years?

Price: I am always learning. If you want to be a great trader, always be learning. At Big Trends we say, “Always be green and growing rather than ripe and rotting.” The markets mandate for traders to stay on their toes.

The last decade has shown that opportunities can be found on both sides of the market. However, you must be ready for those opportunities by staying flexible andadapting to what the markets tell us.

Damien: What are other important lessons you’ve learned during your long career?

Price: A lot of traders fall in love with one stock or index and get locked in trading that one vehicle. That’s fine if you’ve got a good feel for the personality of that stock or index. But why not keep your eye out for the next big trending stocks and take advantage?

Another big lesson is: it’s easy to get into a trade, but very hard to get out without a plan. Most people watch losers run because they are hoping the stock will come back. On the other hand, many traders are afraid of giving back profits, so they exit too quickly. Traders must learn how to properly use stop losses and take profits. That’s the only way to be consistently profitable.

From a psychological perspective, we must learn to stop fighting the tape and instead go with the flow. Many people want to pick tops and bottoms, so they end up fighting the market when they are wrong. I’ve learned that you don’t want to be a hero. You want to hit the sweet spot of a trend where the predictability is much higher.

This helps with training yourself to do things which lead to consistent profits. Unfortunately, I see a lot of traders score big while loading up and getting lucky, then loading up again and getting unlucky. As a professional, I want to remove the element of luck and turn trading into a game of probabilities. That requires training myself to trade with risk management and a plan.

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Fari Hamzei is a straight shooter. He works hard, takes his craft seriously, and constantly aims to improve. He is the founder of Hamzei Analytics and the author of the excellent book Master Traders: Strategies for Superior Returns from Today’s Top Traders. I had the chance to sit down with Fari to hear his adventurous life story and pearls of trading wisdom:

Background

Fari: I got interested in markets while studying financial engineering at Princeton. I enjoyed analyzing non-linear systems which included both known and unknown variables. That was how I first learned to make decisions while accepting the unknowns — a very critical skill for good traders.

Later, I was at Northrop Grumman where I had access to data systems. A mentor suggested I work on my weaknesses to compliment my strengths. So, I attended the Business School at UCLA. There I learned about equity options. It wasn’t long before VPs at Northrop were coming to my desk in the morning to see what options were worth.

My brother and I teamed up and started writing some balckbox trading programs for futures. After gaining more experience, I ultimately started my own shop Hamzei Analytics.

Advice

Damien: As a quant, how do you keep your systems successful as market characteristics change?

Fari: We are always testing and adapting to improve the programs and keep up with the market environment.

Different signals work in different markets. With our expertise and contacts, we observe when something is working and then adopt it. I am not a first mover. I want to see proof something works before jumping on board.

Damien: What advice do you have for other traders who want to explore a career like yours?

Fari: You must be willing to work on your weaknesses. That was one of the best things I ever did. Too many traders focus on what they do well, but they neglect improvements.

Love your losers. This means you may get lucky or have done everything correct on the trade you won, but don’t dwell on that or waste your time saying how good you are. Instead, go back and learn from your mistakes.

Relatedly, to manage your risk you could determine the standard deviation of your returns and quit once you pass your trigger. This is one example of creating a good routine. You have to find your own routine to be consistent as a trader.

Don’t overtrade. If you don’t see what you want, just watch. I like to sit back and play some music — you can listen with me on Twitter. You will save a lot of money learning to stay out of the market when your system isn’t giving you trading signals.

Lastly, one of the biggest mistakes traders make is not cutting losses fast enough. We’re dominated by a strong psychological force of hope. All pro traders, including myself, are always working to get better at cutting losses. Successful traders must become agnostics about the market’s future. Otherwise emotions will take you out of the game. There is no room for praying while trading. Before you enter a position, you need an exit plan.

I would like to close by reminding people of the cherished words of my Freshman Crew Coach at Princeton: “I will never cut you from the boat, you will cut yourself.” The same goes for trading. If you put in the effort, you can succeed. If not, you will be in deep water.

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Larry McMillan is one of the most well-known experts in the options space. He has been a professional for over 30 years. As we repeat often at Wall St. Cheat Sheet, Larry has become a legend by mastering the most basic principles of strategy and risk management. Exotic ideas have come and gone, but Larry McMillan is still at the top of his game.

Background

Larry: I was initially attracted to options because there are many more strategies to use when making trades. As soon as I experienced the benefits of customizing my trades with options, I traded them from that point on. In 1976, I went to Wall Street as an options strategist for a retail firm. I have been a professional ever since.

Advice

Damien Hoffman: What is one of your favorite options strategies for individuals?

Larry: One of my favorites is the pairs trade — also known as the hedge trade. Directional trading can be a lot of fun, but when it’s bad it’s very bad and when it’s good it’s very good.

Damien: Speaking of volatility, what are the basic risk management techniques individuals need to succeed as options traders?

Larry: First, you need an options model so you know what you’re getting into. Otherwise you will overpay for the option and it will eventually come back to harm you. If you understand the implied volatility of your position, you will have a much better chance of profiting.

Second, you need a limit on risk. You must have a hard stop and pay close attention to the position — whether the position is hedged or not. I’ve seen hedged positions lose a fortune. Just think of Long Term Capital Management. They are the perfect example that hedges are protections, but not full guarantees against losses.

Once you set a stop limit, you need to adjust the stop over the life of the position as market conditions change. If you are fortunate enough to have winning positions, you probably want to adjust your stops to lock in profits along the way.

Lastly, new traders must remember that you can’t use one strategy all the time. Things change and if you don’t adapt you will eventually get bitten.

Damien: Larry, you’ve trained a lot of traders. What are some of the most common mistakes you’ve seen over your long career?

Larry: One of the biggest mistakes is trading without an edge. For example, someone may sell put options when the market is high and volatility is very low. Then, of course, when the market falls and volatility explodes you are dead.

Another big mistake is over-concentrating capital into one position. In that case, if the one position goes bad, you can be out of business.

Another big mistake, which is related to what I said about limiting risk, is walking away from positions rather than keeping a close watch on them. I know people who in 1987 who had open positions with no stops and were in Europe on vacation when the market crashed. Unfortunately, they came home to find no money left in their account.

Damien: Larry, thank you for taking the time out of your busy schedule to chat with me.

Larry: My pleasure. Anytime.

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Woman have traditionally been under-represented on Wall Street. The issue has nothing to do with mathematical skills or business prowess. Rather, we have simply held to a somewhat customary expectation that men are more suited for the battlegrounds of high finance.

Now that the web has created a genuinely open community for traders, both males and females are thriving in the meritocracy. One such excellent trader is Anne-Marie Baiynd.

Anne-Marie is a statistics junkie who has expanded her addiction to include technical analysis. She is one of the key presenters at the upcoming 3 Gurus webinar (click here to learn more).

Damien Hoffman: Anne-Marie, how did you get started trading?

Anne-Marie:  I ran a technical recruiting business for many years.  I started from the ground up and built the business to a very competitive level.  I got tired of dealing with the people on both sides of the desk and the hundred hour work weeks.  I was overwhelmed with constant employee issues of kinds you can only imagine, unless you’re in the business.

In July 2005, I bought a block of tickets for my recruiters to attend a Success Magazine seminar.  I accompanied them on a whim.  While there I saw an Investools presentation and I was instantly hooked on the technical aspects of trading.  I sat there thinking:

“OK, finally, you get to use all that math you love at work (beyond addition, subtraction, and percentages).  This is going to be awesome!  Now I know why everyone on Wall Street is a millionaire … this stuff is a piece of cake! Holy cow, I’ll be basking in Monaco before you know it.”  Now as I recollect that, because it is indeed what I thought, I laugh and shake my head saying, “What a DOPE! I was a babe in the woods.”

I immediately signed up for a class with Investools.  Then, with the support of my really wonderful and patient husband (and a sizable loan from him), I started trading live about a week after my account was funded.  After all, why in the world would someone like me need to paper trade?  To say I was a complete idiot would be a gross understatement.  By skipping the paper trading stage, I embarked on a sure fire way to lose copious amounts of cash.

Of course, I only needed about twenty hammers to the face to realize the truth: trading is both an art and science which takes a lifetime to develop.  Moreover, the mind is not built to trade, but must be trained to trade.  The market doesn’t care what you think or how you arrived at your conclusions –  no matter how many degrees you have, how bright you are, or how logical you believe your approach to be.  If you get caught up in being right instead of re-evaluating at necessary points, go ahead and kiss all your funds goodbye.  It takes a lot of trades to go badly before you figure that out.

Along the way, I finally figured out what worked for me.  I learned from the great work of Brian Shannon at Alphatrends, and Peter Reznicek at ShadowTrader.  They taught me the proper way to look at stocks and how to understand the meaning of underlying market trends and movements.

Damien: Do you have any female idols in the trading world?

Anne-Marie:  I do not have any idols because I am basically self taught and don’t read the pundits or anything opinion based in any major news venues unless it’s for pure entertainment purposes.  When I first began trading, I was glued to that guy who comes on CNBC at 6pm Eastern with the crying babies and such — I’ll leave him nameless.  But soon, I figured out he’s just gaming the system for himself.  I haven’t watched business television in 2 years.  I am highly suspect of opinions.

Damien: What is your trading style?

Anne-Marie:  My trading style is based on a combination of things.  I am a swing trader, by and large.  I usually trade the 1-2hr charts, but I also trade smaller time frames if good opportunities arise.  I trade high beta stocks because I am impatient.  They are usually higher priced stocks with good price patterns.  I trade those same stocks constantly because I get a feel for what the chart is going to show next.  I can surmise how those stocks will behave at earnings.  I understand the volatility spikes which are important when trading options — which I spend a lot of time trading.  I used to be all over the map with different stocks. But I needed to focus. I realized — by losing money — my overly-analytical brain paralyzed my trading while trying to understand why a stock was moving. As a result, I would end up entering trades late and leaving early.

I have only a few indicators.  I once had about 7-8 of them. That was ridiculous.  Now I use the slow MACD line, the fast Stochastic Momentum line, and a weighted moving average or two.  I mostly trade slopes and inflection points — so long as they coincide at a price level I’m watching. The convergence usually occurs at the “golden ratio” of a Fibonacci drawing.  I do not trade when my moving averages are flat because this indicates chatter. Trading in a flat market is a great way to give too much money to your broker and the guy on the other end of your trade.

Damien: How does it feel to be a female trader in a male dominated business?

Anne-Marie: Trading is an extremely unnatural business for a woman to be in.  Most women thrive in an environment of certainty.  If not for the absolute support of my husband and family, I would have been long gone from this business.  Real support is the single most important aspect of becoming a successful trader. You must have reinforcement somewhere: family, wife, kids, or whoever.  This is the most brutal business I have ever been in.  However, at the same time, this is also the most rewarding business.  Truthfully, there is no other occupation I would rather have than this one.

Damien: Thank you very much, Anne-Marie.

Anne-Marie: Thank you.

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The chart above “is an intraday minute-by-minute chart of the S&P 500 since the index peaked on January 19th.  As shown, the index has now broken above the downtrend channel that it has been trading in since the peak, which is definitely a positive technical sign.” (Source: Bespoke Investment Group)

Gilbert “Gman” Mendez is the Head Trader at SMB Capital.

The volatility is coming back to the market. Although just not in the way we are used to. This market is punishing those who trade strictly off of old school market patterns and rewarding those with trading skills. Let me explain.

Over time we have found intraday patterns that allow us to stack probability on our side. Here are some common ones:

• We do not buy stocks intraday that have broken long term support and vice versa
• We do not short strong stocks that are consolidating at the highs of the day and vice versa
• If the market gaps up and establishes a tight range on the open it is okay to play the longs on the break of resistance aggressively
• If the market is trending up you should be looking for strong stocks to buy and spend less energy on the weak.

When you possess the knowledge and the market cooperates you can be sloppy with your execution and be often rewarded. As knowledge-based traders you need to have a huge tolerance for pain as the real stops on these plays are often wide. Further, as such trader you can expect to have big daddy swings in PnL, especially when the market is just not cooperating.

One of my traders found the following clip which is quite representative of what a knowledge-based day trader (KBT) — represented by the fancy trick guy — may experience in these sessions. Mother market just waits patiently and quite literally … well I’ll let you watch the clip.

Let me show you a graph of SPY to exemplify what an average day in the market is like with the HFT algos in full force:

The circles above represent areas where a KBT trader may have found confirmation that they are either right or wrong. Let’s talk about them in more detail from left to right

1. This break confirms that the market may go higher after taking premarket resistance with decent volume.
2. This one confirms that the break in 1 was fake. Most would get out. Some with a higher tolerance for pain would have stayed in or even lightened up
3. A new high getting ultra aggressive and chasers to get back in full tier… But there is zero to no follow through after entering and it is all pain from there.
4. Assumes the trader finally threw in the towel and gave up. The longs are now looking at that 5 min flag to get in on the short side.
5. Again market yo-yos to the other side stopping out shorts. The circle highlights a possible flag entry for longs looking to add and those not involved waiting to get in.

As a better exercise I ask you to take a look at any In Play active stock (AAPL, AMZN, GOOG, JPM, GS, etc) and try to trade the “trend” using knowledge based patterns for any day this month. My favorite days to watch your account get slaughtered in amusement so far are Feb 1,3,8,9 … Good luck with that.

So how do we combat these shenanigans? In my opinion the only way to do it is to move onto a skill based system where you are practically trading move-to-move. Yes, it means grinding out money more actively. But if GS is doing it and crushing it, why not join the party? This requires you to be more patient. Be the guy in the video sitting on the sidelines waiting for that trade, and when you see it then crush it … crush it like a grape. Happy trading!

Jon Najarian is one of the most popular options traders on Wall Street. He is a regular anchor on Fast Money and founded the incredibly popular OptionMonster and will be a featured teacher at the upcoming 3 Gurus webinar (click here to learn more).

Jon took the time to chat with me to share how he got started and tips he offers to become a successful trader:

Background

Jon: I began my trading career as a clerk on the Chicago Board of Options Exchange. I had no prior experience because I was only two weeks fresh out of the NFL. In those days you had to learn from a small group of people who employed you. Today is much different with sites like Wall St. Cheat Sheet where investors can get good information.

Damien Hoffman: Jon, how did you and your brother evolve from traders to starting OptionsMonster?

Jon: We started by selling our floor trading operation to Citadel in 2003. Then we developed some proprietary algorithms to collect trading data across all the exchanges so we could comment on it. Once OptionsMonster was rolling, we developed TradeMonster so our users would have a trading platform to make trades in a quick and user-friendly way.

Advice

Damien: Jon, your brother and you have played a large role in bringing options trading information from the exchange members to the investing public. What about options makes them worthy of greater awareness?

Jon: Options are excellent trading instruments because you can keep risk to a minimum. You can also gain leverage without risking your entire account or using margin. They are also used as an insurance policy against open stock positions. All of these benefits helped many investors protect themselves in 2008.

Damien: What two mistakes can options traders avoid to become more successful?

Jon: First, the biggest mistake all traders make is trading without an exit strategy. All traders must have an exit strategy. Whether you are trading options or stocks, you should ask yourself two questions: “What am I going to do if this does not work?” and “What am I going to do if this does work?”

Second, don’t be a pig. For example, if you double your money in an options trade, take half off the table and play with the profits. I’ve seen too many traders watch great gains evaporate very quickly. If you don’t manage your money, you are not addressing the inherent risks and unknowns in the markets.

Damien: I’ve noticed that many great athletes make great traders. As a former NFL player, how did your athletic career help you as a trader?

Jon: If you are trading with a group at a firm, then athletes from team sports know how to excel in that environment. If you are an individual trader, athletes know how to use their discipline to be successful.

Successful athletes got up early in the morning to train and practice no matter how sore they were from the previous day. Great traders have the same work ethic. My days in the NFL have played a huge role in my career as a trader.

Damien: Jon, thanks for taking the time to share how you got started and what you recommend for improving as a trader.

Jon: Anytime, my friend. My pleasure.

To receive additional wisdom from Jon and the other industry leading professionals, learn more about this educational online event or register at http://www.thethreegurus.com/

Tim Bourquin from Trader Interviews recently interviewed five full-time traders about how they approach the markets and find great trading opportunities. The second is former market-maker Chris Farrell …

Stock traders know that getting a feel for how market makers and specialist move shares is critical to seeing the ebb and flow of the market. Chris Farrell is a former market-maker turned at-home trader and has a huge advantage in that he knows exactly how the market makers play the game. In our interview, he talks about how you can use his knowledge to make better trades.

Tim Bourquin: Chris, can you explain your overall philosophy of trading?

Chris Farrell: I always look at the market in terms of, “it is not fundamental and it’s not necessarily technicals that move the market.” It’s supply and demand imbalances and typically what happens, oftentimes in the media, on a day when the market is up, they often say that there are more buyers than sellers and that’s what’s driving the market up. Well, that is not necessarily true.

For a stock to trade, there has to be an equal amount of buyers and an equal amount of sellers or the stock cannot simply trade. So, I view the market basically as a collection of buyers and sellers trying to transact. The market will adjust higher when sellers are able to get a higher price for their stock and it will adjust lower when buyers are able to get a better price for their stock. So, it is a constant process of negotiation that’s going on in every single stock, every second of the day as long as the market is open.

So, within that framework, I look for temporary gaps between where the buyers are willing to buy and the sellers are willing to sell. In other words, a wide gap between where the buyers are trying to buy which is the bid and the sellers are trying to sell which is the ask.

Now, as the markets have become more electronic and as we’ve moved from a market that traded in fractions to a market that traded in decimals, a lot of these gaps between the buyers and the sellers have appeared to narrow. You have to use more tools to view the situation. Now, luckily, there’s technology that is at the disposal of any active trader, which allows you to see the depths of the market and that gives you a more true indication of the supply and demand picture in the stock. The less liquid the stock, the more likely there are to be large gaps between where buyers and sellers are.

Tim Bourquin: How do you make most of your trading profits?

Chris Farrell: That is one of the most important questions in trading, obviously. There’s a concept called “clearing the order book.” That means if you see a large seller in the market, if you are going to buy from that seller, you have to be sure that whatever price you transact at, that your trade clears the order book. In other words, that price is at a point where that seller’s entire order trades.

So, I’ll give you an example. Imagine that the stock closed at let’s say $5 and five minutes before the stock is open, you see in your Level II screen that there’s a seller of 20,000 shares at $4.50. So 50 cents lower than where it closed. When you see that, that is not an indication the stock is going to open at $4.50 just because that seller is trying to sell at $4.50. He’s putting a limit price on it. So he’ll sell for $4.50 but no lower than $4.50. Let’s say there is a buyer of that equal amount of stock at $4.75. So we have a seller at $4.50 and a buyer at $4.75 and the stock closed at $5.

But when you see that, absent any sort of other buy and sell that might be queued up as a market order that no one can see, that stock has a very high probability of opening at $4.75. That’s where that buyer and seller are going to match and if it is for the same share amounts — if they both have the same amount of shares are willing to be bought and sold — that is a market clearing price. The order book will have cleared.

So, once that seller is out of the way, it is likely that stock will bounce back to where it closed the prior day absent other market conditions. So it’s not a guessing game by any stretch of imagination. A lot of this is based on just reading where the buyers are and where the sellers are and determining from that where the stock will open and then whether that large buyer or seller gets filled and is then out of the way. This is exactly how the specialists on the floor have traded for decades.

They basically set the market clearing price and if there are not enough buyers or sellers available, they’ll risk their own capital to help clear that trade and they’re going to do it a price level that’s favorable to them. They’re not in the business of throwing their money away. This explains some of the exaggerated moves that you see, for example, during panic selling where you see stocks just get crushed on the open and then the second they print down there, they’d have a drastic move the other way.

A lot of times it’s based on the fact that the specialist is a large buyer on the open and then people see that print occur. It catches everyone by surprise and they can’t believe it and then it brings bargain hunters in and then the specialist who bought a large block of the stock sells at a lower price level, then feeds it out for the rest of the day and makes some nice trading profit for himself.

If you put buys in that are above where the specialist ends up printing that opening stock, you’re going to buy it with him at his price. It allows you to essentially bet with the house. The specialist is the house. He’s the odds maker. He’s the price setter. So you have to monitor what he is doing at all times.

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Altria Group (MO), the domestic arm of tobacco giant Philip Morris, narrowly missed estimates Thursday morning, reporting an adjusted EPS of $0.39 on revenues of $4.1 billion.  The street had been looking for EPS of $0.40 on revenues of $4.14 billion, but shares still traded up marginally for the day, a day on which the broad market slid greater than 1%.  In a market that has begun selling off on blowout earnings from market leaders, the reaction to MO’s report certainly bucked the trend.

Despite the company’s 6.8% year-over-year growth in profits, cigarette sales fell 11%, ahead of the overall industry pace of 10% declines.  Sales of smokeless tobacco products like Skoal and Copenhagen, which Altria took control of via its 2009 acquisition of UST, saw declines in volume as well.  Considering the ever-present litigation risk and nation-wide price hikes, perhaps Altria’s relatively steady revenue projections (for the intermediate-term, at least) and robust near-7% dividend have helped attract investors as the broad market averages have begun to lose ground.

Since hitting its highs on Jan. 19th, the S&P 500 has lost 6.7%.  In the same period, MO has given up only 3.8%.  Moreover, while the S&P has broken both its 50-day moving average and its uptrend dating back to the March lows, MO has held both, testing and holding its 50-day MA last week.

Overall, I don’t think right now is a good time to be adding to any of your longs, but if you sorely need a place to park some capital, Altria is a safe bet to out-perform during any sustained declines.

Disclosure: No position in MO.