3rd purchase TWM, 100 at 84.47

Sold all HES, 250 at 93.50, $1050 loss

Sold 150 VLO 57.65, $600 loss

Mkt on close buys, 100 CVX and 100 HES

Last Fri, what the hell? and bot 150 HES at close

Last Friday, the markets were down about 1% with the gap higher sold off and for most of the day, we were looking at a 3k profit. Unfortunately, the "black swan" moment happened at 3:30p. For some reason, the markets wiped out all of its losses to finish with a .6% gain in the final 30 minutes of trading.

The difficulty of these markets is that perception can turn without warning. While it is a rumor of a potential $3 billion infusion into one of the mortgage insurers such as Ambac that is potentially the cause for a turnaround, as a trader it is not for you to have that "deer in the headlights look" when a big gain begins to unravel. Even an $84 stop after the TWM rose to 86.50 would have been good and would have prevented today's debacle. With the up one day, down the next, movement of the prior ten days, today or Monday is the first where two consecutive days have finished in the same direction.

Unfortunately for me, we're still caught holding the proverbial cookie jar which has got to be my worse trade in 2008. Whether I was on tilt or something, I bought 150 HES around 97.50 in the thinking that 100 is inevitable. But it really does suck when one was up for the month only to have one bad trade ruin that. Market up 200 points today on no news. Getting pretty sick of not capturing all of these moves.

YTD -6.56%, Month of Feb -1.34%.

2nd Purchase, 275 TWM, mkt on close, around 83.20

Two buys, mkt on close, 150 CVX and 150 VLO

Two and a half hours before release of 2pm Fed Minutes from Jan meeting

As several traders have commented in the past week, we're in a tight trading range that should break either up or down in a few days. Taking the S&P 500 chart for the past three months and drawing lines from the recent tops (lower highs from Dec) and bottoms (higher lows since Jan 23) you get a converging triangle. Meaning: once we break out of the range, the move could easily be plus or minus 10%. It's 50/50 and while in normal years I would be content to be 100% cash, being down more than 6% in the first seven weeks means I have to sometimes take more chances, such as with the TWM position which at the moment is $1k underwater.

At present intraday plus movers are:

Agriculture - MOS, POT

Oil - FWLT, KWK, XOM, CVX

Coal - JOYG, BUCY

Metals - SID, RIO, PCU

Gold - ABX

President's day precedent holds, and a fade of the opening gap helps our position

Before the Stock Trader's Almanac, Martin Zweig was one of the first "Wall Street Week" elves to publish research regarding holiday trading. Specifically, his old notes for President's Day was to purchase the index (such as the S&P) just before the close, and sell the following Tuesday morning. If I recall correctly, his research showed a 90% profitable trade although the data stops around 1987. For 2008, this trade would have generated about 1% on the Dow & S&P had you sold within the first 15 minutes of the opening bell.

Fortunately for me, the markets sold the opening gap higher throughout the day leaving my down about 1 point for the day, considering I was down 2 3/4 at the opening bell because of the double short position.

Noticing last Fri evening that gasoline at the retail level rose over the prior week for the first time this winter should have been a hint of where the action was today. Earlier this afternoon oil officially closed over $100/barrel for the day, which represents a $10/barrel increase in the past four days.

Thus the real winners who were long today were:

Metals - MTL (9.8%), SID (8.4%, new 52 week high), RIO (4.56%)

Oil - DRQ (6%), HES & OXY (4.66%), KWK (4.63%), BRY & VLO (4%), XOM (2.35%), and new Dow component member CVX (1.88%), FWLT (1.68%)

Coal - FCL (9.2%), PCX (6.15%), BUCY (5%), MEE (3.62%), JOYG (3.45%)

Copper - PCU (9%), FCX (5%)

Gold - NEM (5.45%), ABX (4.85%)

Agriculture - POT (3.2%), MON (2.56%), DBA (2%, new 52 wk high)

So the question is whether I want to play both sides and long certain oil service stocks while being ultrashort at least one index? Because of the holiday, the weekly petroleum report is pushed back to Thursday at 10:30a. Maybe I should hope for a down day in oil service stocks on Wednesday, which would give me a chance to have a starter 15k position.

Quiet options expiration, CMG note, and long TWM

CMG recovered from its 93 low from Thur aft hours. It was no lower than 95.60 in premarket and 95.55 at 10:05a so anyone long put options would had to have covered quickly to avoid losing the profit as the stock rose all day to recover back to 104.

The Dow was down 28 points, the other averages down 1/2%. About two minutes into the close, went long 800 shares of TWM at 82. We won't know how this trade does until Tue after the President's day holiday. Best to stay away from the computer until Monday, and then let's get back to work.

Recapping past four days, 100% cash, instincts right but

On Mon 2/11, Dow Jones announced they were changing two components of the DJIA by adding BAC and CVX and removing MO and HON. As Livermore would say, when idiots realize they underperform, they change the rules. I'm wondering why they even removed CVX in the first place since it was part of the Dow until 1999. As for BAC, I'm going to enjoy watching this stock tank as since its down 20 cents from it's Monday close. As for MO being removed, call it the Bernanke put since big money is starting to figure out he's an idiot. I'm thinking the averages are going to miss HON since it was the top performer for 2007 and nobody I know picked it.

No relevant news on Tue with the S&P up a 2nd straight day.

Wed 2/13, FSLR beat earnings, reported 80% increase, stock up 50 points, oh my. closing around 223. This stock was literally destroyed for 20 trading days, and even some newby option dude blogging about their 27% gain on sheer luck having the audacity to ride a Feb 190 call option 90% down before getting the mother of all bounces. Averages up a third straight day.

I attempted to short CMG prior to earnings about 10 minutes before the close BUT there weren't any shares outstanding. I attempted to buy 10 Mar 110 put options at 10 but their were no takers.

Thur 2/14, Valentine's Day "Massacre". I should have listened to my own instincts as Bernanke spoke to Congress. Evidentally what he said wasn't good because the markets have retraced all of yesterday's 200 point gain in the Dow. Best performer TWM, up 4%. (Ultrashort Russell 2000)

CMG just reported and it's down 15 points. Well at least you had the right instincts. Tomorrow is Friday before a 3 day weekend, so I want to at worst short an index to have exposure prior to Tuesday.

Reviewing Thur's trades and last week's recap

Last Thur, we exited QID at a bad price and here's how to correct for next time.

While we were right that CSCO would report bad forward guidance as the QID reached 55 in premarket. The gap higher was faded as an unexpected $31 bid for YHOO from MSFT as buyers reversed the higher QID opening for the next 40 minutes. At this point, one should have set a stop either .25 below yesterday's close since that is where some QQQQ selling materialized.

Usually the 10a-10:15a period is a point that allows a trader to enter because it is a pause before the day's trend reasserts itself. Roughly 45 min later, the QID had dropped to around 53.30 and that is where we should have exited.

Despite the bad trade we made almost .3% last week and stand -5.22% YTD. Pathetic, but its 3% better than the indexes.

Last week, the S&P retraced almost all of the gains -4%, from the prior week +4.7%. There isn't any real economic news this week. On Friday is options expiration. There is an earnings play that I'm thinking about and we'll see how I feel before I take a shot at it. At some point, I am tempted to get back into the options market, but I usually want to play those that are at least one month out. After all those who were lucky enough to own YHOO Feb or Mar calls made 16x their money. But then again, options are difficult because 90% of those who buy options lose money. You can get better odds at table games in Las Vegas.

Sold all QID, 1200 @ 52.30, 200 @ 52

Dow -65, CSCO down 7% afterhours Hurray

Not sure if CSCO's guidance was leaked, but the QID was up over 2.30 on no news. There was weakness in 2007's highfliers as CME dropped 100 points today, RIMM dropped 4 points, and AAPL down 7, and AMZN another 3.5 to a new 52 week low.

After initially dropping .50 before the earnings announcement, CSCO rose .75 before the actual conference call. As CEO, John Chambers spoke, the stock began to slide as he warned of their forward guidance.

Not having access to a terminal, traded QID pretty bad given the circumstances. Ideally, the 2nd purchase should have been around 51.90 and the 3rd around 52.90. A 4th would have gone around 53.90 and the 5th and final one around 54.90. But at least we have two purchases and looking to be a decent day for us shorts tomorrow. I'm a little worried of whether we could rebound to another Fibonacci level but I'll take it day by day and hope there are more negative catalysts to keep the QQQQ moving downward.

2nd Purchase QID, near mkt close 400 at 53.60

Yesterday's 375 point Dowdrop and Witmer right on WHR

Traders used the excuse of a low ISM manufacturing reading to wipe out all of the gains from the first Fed rate cut. But while most stocks were getting sold, one stock from Barron's Roundtable panelist Meryl Witmer, WHR rose 9 points yesterday on earnings guidance and is up another 3 today.

After the bell, CSCO reports earnings, and it would help our 1000 share QID position if their forward guidance is unenthusiastic.

Long 1000 QID at 51

Yesterday's 200 point Dow gain and winners since 1/23

Although AMZN reported bad numbers with the stock down 11 points near the lows, it has since rebounded to within 2 1/2 points after the PPT and prevented the markets from having the worst January since 1990.

The true winners since the Jan 23 low are three stocks: casy plays RIO and SID, and one finance play IBKR (it's a broker i've heard good things about for use as a backup for near direct access ECN's). Now many want to say IBKR sounds like a bucket shop, and essentially, it is, a 2008 version. But I have heard no bad things about their service or their trade executions.

In today's earnings trading, the only winner was ISRG, up almost 50 today. GOOG is the loser down 50 after people finally said "Why are they paying $550 for this?"

It's a time to recharge as I suspect my first opportunity for shorts might be in less than two weeks on an earnings play. We'll see.