Yesterday's Dow move was mindboggling, after being -35 before the Fed announcement, the Dow climbed to +185 in the following 40 minutes after the announcement before some rumor about insurers possibly defaulting on their insurance regarding foreclosed mortgages evaporated the entire game and the Dow closed at -35.
This morning, the Dow opened down another 144 points with the FXP opening at 107 before the PPT stepped in literally within 4 minutes of the open and slowly chipped away at the gap down. It's currently at plus 100 with the FXP now sitting at 102.75. For what its worth in hindsight, unless I was one of at most ten traders, there was no way I could have rode down yesterday's 10 point decline of FXP in 40 minutes, and then ride it up another 10 points in the final hour. Also look at the six month daily chart of the FXI (which is the index on which FXP is based). It almost seems as if the FXI hit a Fibonacci level when FXP touched 108 intraday because it hit this level back on Jan 23rd.
I think the only missed trade is SLV. Because had I taken other shorts or longs, I would be a lot worse than -5.54% for the first month of 2008. Now just because I'm outperforming the indexes, there's no reason to pat yourself when the overall result is a drawdown. When the averages are positive YTD, you must beat at least one mainstream index. When the averages are down, you must finish positive and beat the money market averages.
Thursday, January 31, 2008
Wednesday, January 30, 2008
Possible reversal in final 30 minutes?
With the Dow up as much as 180 points, the gains are now 55 points with less than 30 minutes in the trading day.
While we were fortunate to get out on FXP (third time's the charm and blessed by two angels), don't get overconfident. Incidentally, that ultralong ETF trade you thought of, you wouldn't have gotten the 2 1/2 point gain because you weren't near a computer during that 40 minute period to get out.
SLV is still up 1.40 from the trade point. I think I might have to wait for a setup on a chart, before I can execute another trade. If I do pick something, might want to keep it under 50k so that I don't have as many sleepless nights as with the FXP position.
While we were fortunate to get out on FXP (third time's the charm and blessed by two angels), don't get overconfident. Incidentally, that ultralong ETF trade you thought of, you wouldn't have gotten the 2 1/2 point gain because you weren't near a computer during that 40 minute period to get out.
SLV is still up 1.40 from the trade point. I think I might have to wait for a setup on a chart, before I can execute another trade. If I do pick something, might want to keep it under 50k so that I don't have as many sleepless nights as with the FXP position.
Missed trade, 100 SLW 165.60
Bad thing about work. Couldn't switch to the trade screen with coworkers hovering over my desktop.
Markets initially rallying 3/4% after the FED 1/2% rate cut.
Markets initially rallying 3/4% after the FED 1/2% rate cut.
Two hours before Fed rate decision
We're back to 100% cash. YTD -5.54%. While we traded FXP really bad, we got lucky that it spiked up to 101 at the opening. As Livermore would say, the reason for its move will present itself after the fact.
I am tempted to try a ultralong ETF before the fed rate decision, but for the moment I don't have a tell on what the market perception will be. Historically, the point move that occurs in the 105 minutes after a rate decision is reversed the following business day. But I was more fearful on not losing my profit for a third time and decided it would be better to sit this one out.
I am tempted to try a ultralong ETF before the fed rate decision, but for the moment I don't have a tell on what the market perception will be. Historically, the point move that occurs in the 105 minutes after a rate decision is reversed the following business day. But I was more fearful on not losing my profit for a third time and decided it would be better to sit this one out.
Tuesday, January 29, 2008
For married couples to consider, three laddered term life insurance policies
While I have no need for the product, one of my trusted advisors suggested this might be worthwhile for a married couple under the age of 40.
What it involves is purchasing at the same time three separate term life policies. The first is a 10 year policy. The second is a 20 year policy. The third is a 30 year policy. By laddering the policies, you remove some of the advantage the insurer has over pitching the product to you.
The main reason you have the overlapping coverage is god forbid a spouse dies at a young age. The surviving spouse will be able to survive. As you both get older, the need for the money decreases because they have likely accumulated sufficient wealth during their lifetimes.
The real trick is finding an insurer that is honest. I've already talked about two who are dishonest.
Life insurance is designed either for wealth preservation or to keep the surviving spouse comfortable. It is not meant for investing purposes and you don't need the other attachment riders they want to sell you.
What it involves is purchasing at the same time three separate term life policies. The first is a 10 year policy. The second is a 20 year policy. The third is a 30 year policy. By laddering the policies, you remove some of the advantage the insurer has over pitching the product to you.
The main reason you have the overlapping coverage is god forbid a spouse dies at a young age. The surviving spouse will be able to survive. As you both get older, the need for the money decreases because they have likely accumulated sufficient wealth during their lifetimes.
The real trick is finding an insurer that is honest. I've already talked about two who are dishonest.
Life insurance is designed either for wealth preservation or to keep the surviving spouse comfortable. It is not meant for investing purposes and you don't need the other attachment riders they want to sell you.
Monday, January 28, 2008
Late night notes from Monday's session
Monday's trading recouped all the losses from Friday. Essentially, the last two days of trading didn't exist for the overnight holders. The Russell 2000 has the best chance for a reversal pivot point towards an uptrend. The Nasdaq Composite has the weakest chance because it had the worst two day performance of the major averages and was recovering from a few components reporting disappointing earnings today. AMZN, YHOO, and GOOG have yet to report so they will be a tell for this average.
The FED meeting starts tomorrow and their interest rate decision is expected to be made around 2:15p EST on Wednesday. I'm not sure if its stubbornness or ticker sense since my 875 share position in FXP has returned to its original purchase point. It was somewhat ominous that my losses for January total 8.88%. I'm not sure if that's a Harry Potter reference but it truly sucks.
Earlier this morning our FXP was trading around 97 in the opening fifteen minutes. As a trader, I could have easily taken the 6 points and said thank you. Unfortunately for the second time in as many weeks, easy money slipped away as by the time I looked again a few hours later it was almost six points lower.
It's not a good position when you are stuck and have to depend on the Fed to save you again, and hope they don't change rates in two days. Lots of media chatter saying they'll cut rates another half point and that could truly be devastating to my position. A few people have suggested I cover and take the near scratch. Unfortunately, my stubbornness won't hear it.
Today, agriculture was up, stocks like POT, MOS, and TNH. MOS is up about 20 points or 15% in 3 days. Guess what they say about buying a stock that returns to the 50 day average with an 8% stop and still has a solid uptrend is a worthwhile risk/reward ratio. Too bad, I missed it.
The FED meeting starts tomorrow and their interest rate decision is expected to be made around 2:15p EST on Wednesday. I'm not sure if its stubbornness or ticker sense since my 875 share position in FXP has returned to its original purchase point. It was somewhat ominous that my losses for January total 8.88%. I'm not sure if that's a Harry Potter reference but it truly sucks.
Earlier this morning our FXP was trading around 97 in the opening fifteen minutes. As a trader, I could have easily taken the 6 points and said thank you. Unfortunately for the second time in as many weeks, easy money slipped away as by the time I looked again a few hours later it was almost six points lower.
It's not a good position when you are stuck and have to depend on the Fed to save you again, and hope they don't change rates in two days. Lots of media chatter saying they'll cut rates another half point and that could truly be devastating to my position. A few people have suggested I cover and take the near scratch. Unfortunately, my stubbornness won't hear it.
Today, agriculture was up, stocks like POT, MOS, and TNH. MOS is up about 20 points or 15% in 3 days. Guess what they say about buying a stock that returns to the 50 day average with an 8% stop and still has a solid uptrend is a worthwhile risk/reward ratio. Too bad, I missed it.
Off the board comments of a book, The Complete TurtleTrader by Michael W. Covel
One of the traders recommended I read this book that has been in print since October 2007. The thing they wanted me to focus on which isn't explicitly in the book is the author's opinion: the success of this select group, especially the top six who have a public track record since 1985 was due to applying and understanding the following nine entrepreneur skills.
1) Nonconformists: lower need to conform indicating self-reliance.
2) Emotionally aloof: not necessarily cold to others, but can be oblivious.
3) Sky divers: lower concern for physical harm, but does change with age.
4) Risk takers: more comfortable taking it.
5) Socially adroit: more persuasive.
6) Autonomous: higher need for independence.
7) Change seekers: like novel approaches. This is different than 99% of all other people.
8) Energetic: higher need and / or ability to work longer.
9) Self-sufficient: don't need as much sympathy or reassurance, but they still need to form networks so self-sufficiency need not be taken to extremes.
So if I did a self analysis today, how would I fare:
1) Yes, no explanation needed.
2) Have to say yes. I wouldn't say I'm aloof, but I don't play the social game.
3) Here's a no. Wouldn't sky dive, but agreed in my younger days, I stood up to neanderthals that looked like linebackers.
4) Yes, when you have only one position and it comprises over 40% of your capital, that is risk.
5) That's a no. I'm not persuasive because I tell it like it is.
6) Yes, having indirectly watched entities such as Bank of America and Merrill Lynch go down the wrong ship. I would rather play a lone hand so I can reap the rewards and not watch what NOT to do in life.
7) Another yes, it's not enough to accomplish the goal, it has to be something that no one thought of.
8) I'll say yes. Not a need, but currently have the ability to work longer, at least for fifteen more years.
9) A no. Since I work a day job, that is not self-sufficient.
So it's 6 out of 9. So technically, that's a failing grade. But here's the thing, I can work on being self-sufficient. So my chances of being a better than average trader are in my favor, at least from an academic point of view. The real litmus, is when I can stop working a day job and have enough to not have to look at the markets everyday.
1) Nonconformists: lower need to conform indicating self-reliance.
2) Emotionally aloof: not necessarily cold to others, but can be oblivious.
3) Sky divers: lower concern for physical harm, but does change with age.
4) Risk takers: more comfortable taking it.
5) Socially adroit: more persuasive.
6) Autonomous: higher need for independence.
7) Change seekers: like novel approaches. This is different than 99% of all other people.
8) Energetic: higher need and / or ability to work longer.
9) Self-sufficient: don't need as much sympathy or reassurance, but they still need to form networks so self-sufficiency need not be taken to extremes.
So if I did a self analysis today, how would I fare:
1) Yes, no explanation needed.
2) Have to say yes. I wouldn't say I'm aloof, but I don't play the social game.
3) Here's a no. Wouldn't sky dive, but agreed in my younger days, I stood up to neanderthals that looked like linebackers.
4) Yes, when you have only one position and it comprises over 40% of your capital, that is risk.
5) That's a no. I'm not persuasive because I tell it like it is.
6) Yes, having indirectly watched entities such as Bank of America and Merrill Lynch go down the wrong ship. I would rather play a lone hand so I can reap the rewards and not watch what NOT to do in life.
7) Another yes, it's not enough to accomplish the goal, it has to be something that no one thought of.
8) I'll say yes. Not a need, but currently have the ability to work longer, at least for fifteen more years.
9) A no. Since I work a day job, that is not self-sufficient.
So it's 6 out of 9. So technically, that's a failing grade. But here's the thing, I can work on being self-sufficient. So my chances of being a better than average trader are in my favor, at least from an academic point of view. The real litmus, is when I can stop working a day job and have enough to not have to look at the markets everyday.
Sunday, January 27, 2008
Uncle phones, I said Sell AIG
One of my uncles has a small amount invested in the stock market so its rare when he asks my opinion of specific companies since he does his homework. Tonight, out of the blue, he asks "Buy, Sell, or Hold AIG".
Now from his tone of voice, he didn't want me to look at the charts, he wanted my reflex opinion without thinking. After chatting about the upcoming Super Bowl, I took a look at it using stockcharts.com.
First some quick notes: its a Dow component and it last traded at 53.22. The 10,20,30,50, and 200 day moving averages are downward sloping and the shorter term moving averages are below the longer term ones (200 above 50 above 30 above 20 above 10).
Now let's talk in terms of generalities. I want to think Livermore here. Appraise general conditions. The line of least resistance for the general market is declining. Therefore, if i believe the market is declining, then the only thing I should be long is "Ultrashort ETFs or Regular Short ETFs". If you try to purchase a long against the prevailing market trend, you are making things more difficult than you need to. True, there will be times when your luck runs with you, but why not put the market odds in your favor and choose something where you can improve your chances of a successful trade.
Now absence of any other info, my opinion is the same from a trading perspective. Let's see how this call is one year from now, if either of us remember.
Now from his tone of voice, he didn't want me to look at the charts, he wanted my reflex opinion without thinking. After chatting about the upcoming Super Bowl, I took a look at it using stockcharts.com.
First some quick notes: its a Dow component and it last traded at 53.22. The 10,20,30,50, and 200 day moving averages are downward sloping and the shorter term moving averages are below the longer term ones (200 above 50 above 30 above 20 above 10).
Now let's talk in terms of generalities. I want to think Livermore here. Appraise general conditions. The line of least resistance for the general market is declining. Therefore, if i believe the market is declining, then the only thing I should be long is "Ultrashort ETFs or Regular Short ETFs". If you try to purchase a long against the prevailing market trend, you are making things more difficult than you need to. True, there will be times when your luck runs with you, but why not put the market odds in your favor and choose something where you can improve your chances of a successful trade.
Now absence of any other info, my opinion is the same from a trading perspective. Let's see how this call is one year from now, if either of us remember.
Wallstreets_master, Felix, Meryl, Tells, and Faber recommended my short?
Received a compliment from Wallstreets_master. I forgot the "s and underscore" in his username but its corrected now. I used to be so precise with detail. I can almost here him saying, you should have stayed on third shift so you wouldn't miss the ES sessions with all of us. Nods in agreement.
So let's see down 7.82% in 17 trading days. And catalysts galore this week. Take your pick: there's earnings from AMZN, GOOG, and YHOO. A Fed rate announcement this week.
We're 43% short and 57% cash. Where do we stand? Well obviously we're betting on bad news but for how long is the better question. Part of me says thank you Barron's for having Marc Faber post your only position as a recommendation. Another part says, here's a chance to cover half the position should it spike up tomorrow. My instincts wants me to do both.
Speaking of Barron's, Felix Zulauf's interview was posted. Last time, I forgot to mention Meryl's longs, yes, she's long six companies, but only three are available for purchase since we don't have an account in the U.K. Her three longs for 2008 are MHK, WHR and ARO.
Felix has 4 shorts and 3 longs. The shorts are XLY, Ishares DJ Stoxx 600 Auto & Parts traded in Frankfurt, FXE (it's the easier equivalent), and the British Pound / Swiss Franc (In Swiss I Trust, of course Feliz is Swiss).
His longs are the GLD (its easier than buying the commodity), and March '08 futures contracts for sugar and cotton. Since we can't buy sugar or cotton yet (Hey Proshares or Rydex or IShares or anyone, invent an ETF willya), we're pretty much limited.
Ok, let's attempt to think this through objectively. We know we want to have some exposure whether its long or short before the Fed meeting. We are currently short and we have plenty of cash to cover the trade and go in the opposite direction if we are wrong.
What do we believe are tells to the short term? To me its the reaction of last year's leaders where their longer term charts do not appear broken. I'm talking BIDU, RIMM, and RIO. Yes, casy i was listening during our talks about RIO.
Something that bounced up was agriculture plays such as MON, MOS, CF, TNH.
Something that declined was energy services such as MDR and KWK.
If I were a Fibonocci theorist, does it seem like the averages want to take a leg down just as it has the last few weeks of lower highs and lower lows?
I think we're caught in a dilemma of wanting to be short, but not sure if we have the correct instrument to take advantage of a down move. From a risk averse position, I'm about 375 shares over my recommended weighting. Although, casy has seen me go 100% long in one position before but that was to prove something on a turtle moving play that took a few weeks to play out.
Let's just see where the market opens tomorrow with the Barrons push.
So let's see down 7.82% in 17 trading days. And catalysts galore this week. Take your pick: there's earnings from AMZN, GOOG, and YHOO. A Fed rate announcement this week.
We're 43% short and 57% cash. Where do we stand? Well obviously we're betting on bad news but for how long is the better question. Part of me says thank you Barron's for having Marc Faber post your only position as a recommendation. Another part says, here's a chance to cover half the position should it spike up tomorrow. My instincts wants me to do both.
Speaking of Barron's, Felix Zulauf's interview was posted. Last time, I forgot to mention Meryl's longs, yes, she's long six companies, but only three are available for purchase since we don't have an account in the U.K. Her three longs for 2008 are MHK, WHR and ARO.
Felix has 4 shorts and 3 longs. The shorts are XLY, Ishares DJ Stoxx 600 Auto & Parts traded in Frankfurt, FXE (it's the easier equivalent), and the British Pound / Swiss Franc (In Swiss I Trust, of course Feliz is Swiss).
His longs are the GLD (its easier than buying the commodity), and March '08 futures contracts for sugar and cotton. Since we can't buy sugar or cotton yet (Hey Proshares or Rydex or IShares or anyone, invent an ETF willya), we're pretty much limited.
Ok, let's attempt to think this through objectively. We know we want to have some exposure whether its long or short before the Fed meeting. We are currently short and we have plenty of cash to cover the trade and go in the opposite direction if we are wrong.
What do we believe are tells to the short term? To me its the reaction of last year's leaders where their longer term charts do not appear broken. I'm talking BIDU, RIMM, and RIO. Yes, casy i was listening during our talks about RIO.
Something that bounced up was agriculture plays such as MON, MOS, CF, TNH.
Something that declined was energy services such as MDR and KWK.
If I were a Fibonocci theorist, does it seem like the averages want to take a leg down just as it has the last few weeks of lower highs and lower lows?
I think we're caught in a dilemma of wanting to be short, but not sure if we have the correct instrument to take advantage of a down move. From a risk averse position, I'm about 375 shares over my recommended weighting. Although, casy has seen me go 100% long in one position before but that was to prove something on a turtle moving play that took a few weeks to play out.
Let's just see where the market opens tomorrow with the Barrons push.
Friday, January 25, 2008
MSFT beats, but DOW 12099.30 is a line in the sand
The DJIA has not had a positive weekly gain since Dec 21. The past four weeks has seen the averages close lower each week. At the moment, its 150 points above that point with less than 2 hours in the trading day.
MSFT was up 9% yesterday in afterhours trading, but that euphoria evaporated by mid-day as everyone sold the news. The Dow initially up 75 at the open is now down 150. There's a Fed meeting on Wed and Thur.
At the moment, we're lucky we haven't been stopped out yet, although watching that $85 print at the open could have easily shaken us.
The only real luck factor is that some aren't willing to hold positions over the weekend given there's a chance the Fed doesn't cut rates a 2nd time until the March meeting.
MSFT was up 9% yesterday in afterhours trading, but that euphoria evaporated by mid-day as everyone sold the news. The Dow initially up 75 at the open is now down 150. There's a Fed meeting on Wed and Thur.
At the moment, we're lucky we haven't been stopped out yet, although watching that $85 print at the open could have easily shaken us.
The only real luck factor is that some aren't willing to hold positions over the weekend given there's a chance the Fed doesn't cut rates a 2nd time until the March meeting.
Thursday, January 24, 2008
Yesterday's $9k tuition lesson
A trader must avoid overconfidence in one's ability to prevent the unexpected from impacting one's portfolio. Unfortunately, when one violates that, the market is assured of presenting its lesson.
Yesterday afternoon, at 3pm we were looking at a $10k gain. Then the unexpected occurred, the Dow rallied 250 points and 4 days of gains evaporated in less than an hour.
Looking back, about the only thing we could have done better was auto sell the entire position around 97.50. But the important thing is to not get frozen, which is what happened. Not planning for this contingency didn't help either.
The tape action does not need a reason why its moving in a specific direction. All you have to do is trade what its saying and not concern yourself with the reason for the move. One can always sell and rebuy part of the position at a better price, which is what's happening now.
Although Livermore didn't mind retracing substantial gains if he felt the entire move had not played out, we are not Livermore. It's one thing to have $100 million such as Livermore, but when you have less than .2% of his capital, you don't have the luxury to make that many mistakes before you're out of cash. And when you are out of cash, it's game over.
Yesterday afternoon, at 3pm we were looking at a $10k gain. Then the unexpected occurred, the Dow rallied 250 points and 4 days of gains evaporated in less than an hour.
Looking back, about the only thing we could have done better was auto sell the entire position around 97.50. But the important thing is to not get frozen, which is what happened. Not planning for this contingency didn't help either.
The tape action does not need a reason why its moving in a specific direction. All you have to do is trade what its saying and not concern yourself with the reason for the move. One can always sell and rebuy part of the position at a better price, which is what's happening now.
Although Livermore didn't mind retracing substantial gains if he felt the entire move had not played out, we are not Livermore. It's one thing to have $100 million such as Livermore, but when you have less than .2% of his capital, you don't have the luxury to make that many mistakes before you're out of cash. And when you are out of cash, it's game over.
Wednesday, January 23, 2008
Barron's Roundtable with Meryl Witmer
Each year in January, Barrons magazine has its group of prognasticators give their investment ideas for the coming year. I only follow two of them, Meryl being one of them because the others don't have as good a long term track record. It's interesting that since the posting of her interview, her three picks, MHK, WHR, and AEO are up in the past two days despite the market being red. Guess others are figuring out how insightful she is.
Markets down, but traders are green
With AAPL dropping another 5 points after yesterday evenings 20 drop point, the Dow opened down 210 points, and the QQQQ touched the Monday low before rallying to nearly positive during the first hour. Around 11:30a EST, the QID after opening up 8% consolidated its gain by 2 points before rallying again above its 54.35 opening ask.
Lots of winners from the trade group whether its their longs in QID or SDS, or almost anything short.
At the moment, we're up about 2% today even with the 875 share position of FXP up 8%. We are still down about 3.2% for the first three weeks of 2008, so don't even think you have reason to celebrate.
Lots of winners from the trade group whether its their longs in QID or SDS, or almost anything short.
At the moment, we're up about 2% today even with the 875 share position of FXP up 8%. We are still down about 3.2% for the first three weeks of 2008, so don't even think you have reason to celebrate.
Tuesday, January 22, 2008
Initial reaction, AAPL down 20, applause
Here's to a few traders who I know are short AAPL or long the QID, congratulations. Tomorrow opening is going to be good for all of us.
Hurray, did something right today
With the Dow gapping down 440 points 1 minute into the open, the Dow rallied almost 200 points in the first hour of trading, as the Fed Chairman did a 3/4% rate cut before the bell, and the Dow slowing chopping away at the gap open. At one point during the lunch hour, both the Midcap 400 and Russell 2000 were positive for the day.
In the end, the Dow finished down 128, the Nasdaq down 47, and the S&P 500 down 14. Sometime in the next hour, AAPL reports earnings. Earlier today, AAPL closed well off from the 147.70 lows to finish -5 at 156.75. Hopefully, AAPL doesn't say something positive so that it improves our chance for continued gains in our foreign ultrashort ETF.
YTD -5.27%
In the end, the Dow finished down 128, the Nasdaq down 47, and the S&P 500 down 14. Sometime in the next hour, AAPL reports earnings. Earlier today, AAPL closed well off from the 147.70 lows to finish -5 at 156.75. Hopefully, AAPL doesn't say something positive so that it improves our chance for continued gains in our foreign ultrashort ETF.
YTD -5.27%
Sell 25 FXP market on close around 99
Looks like it will finally close at a 52 week high, so let's do what we wanted to do last Fri, sell just 25 shares so we can say, yes you got lucky, and yes, you're banking something.
Now, this could have been a better trade seeing that we saw it print a 105 bid, 90 seconds into the open and didn't take it. So live and learn.
Now, this could have been a better trade seeing that we saw it print a 105 bid, 90 seconds into the open and didn't take it. So live and learn.
Monday, January 21, 2008
A little luck during the market holiday
Martin Luther King's birthday is a relatively new holiday on the government calendar. Celebrated on the 3rd Monday in January, U.S. stock markets and banks were closed today. For a few days, we were looking very stupid with that add on buy intraday on Friday. Since we were underwater on the 700 share position, we didn't do anything.
Livermore said it does help to have luck on your side. Whether its the traders who were wishing me luck, their prayers were answered as the international markets dropped 4-5% today on no news. This evening, they are down another 4% as we speak which bodes well for our FXP position.
Since we didn't get a chance to sell on Friday, there's a good chance we get to sell 25 shares at the close on Tuesday. As for the remaining 675 shares, we're going to take it hour by hour and see if the buyers step in or whether we can ride it out for a few more days.
Initially, I thought my 2nd sell would be this coming Thursday, but let's see what happens.
Livermore said it does help to have luck on your side. Whether its the traders who were wishing me luck, their prayers were answered as the international markets dropped 4-5% today on no news. This evening, they are down another 4% as we speak which bodes well for our FXP position.
Since we didn't get a chance to sell on Friday, there's a good chance we get to sell 25 shares at the close on Tuesday. As for the remaining 675 shares, we're going to take it hour by hour and see if the buyers step in or whether we can ride it out for a few more days.
Initially, I thought my 2nd sell would be this coming Thursday, but let's see what happens.
Friday, January 18, 2008
Thursday, January 17, 2008
Dow Down 300, Worried about unknowns for Options Expiration
Although we made back some money with our Ultrashort ETF, it took a strong stomach to weather the opening. Having a 91 entry price meant a having a stop just below 81, and watching it open at 87 could have been frightening. Luckily for us, it held at 85.5 about 20 minutes into the trading session and rose throughout the day.
Trading the ETFs is similar to futures trading in that you have to anticipate what the market might do. Most of the women I speak to have an intuitive feel on the daily ebbs and flows of e-mini contracts such as the S&P 500. The only male trader I know who consistently made money trading the indexes was wally or Wallstreets_master.
Now regarding today's action, there were better % movers to take advantage of today's action such as EEV and notice the chart looks better when compared to our FXP.
I find that when things are starting to get better, I'm writing down two different trading plans for the next day's or week's action so that I always consider the counterargument and avoid the potential "deer in the headlights" that occurred earlier this month.
Because its options expiration and the fact the markets are closed on Monday, there's a probability that the Fed Chairman announces a surprise rate cut on Tue before the bell, or even intraday tomorrow. Since I'm a little fearful of having that possibility wipe out two days of gains here's my initial trading thoughts:
1) If the markets gap LOWER for the opening 15-30 minutes and if the FXP is trading around 99, I'm likely to sell the position and take the 8 point profit. Even though it could easily breach 100, I don't think the market will make it that easy. One particular reason is because the FXP has never had a positive gain for seven straight trading sessions. Tomorrow would be day six if it finishes green.
2) Ideally for me, the Dow at the open has at most a 120 point gain on somewhat suspect volume in the opening 30 minutes. This could allow me to temporarily add a few hundred shares to almost any Ultrashort ETF for a one day flip. If the Ultrashort ETFs gap lower at the open but at some point turn green and stay green for 30 minutes, then it increases the chance of holding the position over the weekend. However, its more likely I sell at least 25 shares at the close to lock in something.
Now even though I'm typing my initial thoughts now, the best trait of day and swing traders is too be flexible enough to adjust to what the tape says. Even though its a guaranteed certainty I'll sell 25 shares tomorrow, I could either have 475 shares, or 200 shares, or zero shares by the end of the day depending on the tape action. While I'm aware that the primary trend of the averages is still down, we're coming to the point depending on whatever indicator you're looking at such as Tradestation's T2108 indicator that a short term bounce is imminent. Even if it's a one day bounce, a 300 point Dow move bounce will wipe out more than two day's of gains. Playing the index ETF's means having to be ahead of a potential pivot point to avoid getting killed.
YTD -6.7%
Trading the ETFs is similar to futures trading in that you have to anticipate what the market might do. Most of the women I speak to have an intuitive feel on the daily ebbs and flows of e-mini contracts such as the S&P 500. The only male trader I know who consistently made money trading the indexes was wally or Wallstreets_master.
Now regarding today's action, there were better % movers to take advantage of today's action such as EEV and notice the chart looks better when compared to our FXP.
I find that when things are starting to get better, I'm writing down two different trading plans for the next day's or week's action so that I always consider the counterargument and avoid the potential "deer in the headlights" that occurred earlier this month.
Because its options expiration and the fact the markets are closed on Monday, there's a probability that the Fed Chairman announces a surprise rate cut on Tue before the bell, or even intraday tomorrow. Since I'm a little fearful of having that possibility wipe out two days of gains here's my initial trading thoughts:
1) If the markets gap LOWER for the opening 15-30 minutes and if the FXP is trading around 99, I'm likely to sell the position and take the 8 point profit. Even though it could easily breach 100, I don't think the market will make it that easy. One particular reason is because the FXP has never had a positive gain for seven straight trading sessions. Tomorrow would be day six if it finishes green.
2) Ideally for me, the Dow at the open has at most a 120 point gain on somewhat suspect volume in the opening 30 minutes. This could allow me to temporarily add a few hundred shares to almost any Ultrashort ETF for a one day flip. If the Ultrashort ETFs gap lower at the open but at some point turn green and stay green for 30 minutes, then it increases the chance of holding the position over the weekend. However, its more likely I sell at least 25 shares at the close to lock in something.
Now even though I'm typing my initial thoughts now, the best trait of day and swing traders is too be flexible enough to adjust to what the tape says. Even though its a guaranteed certainty I'll sell 25 shares tomorrow, I could either have 475 shares, or 200 shares, or zero shares by the end of the day depending on the tape action. While I'm aware that the primary trend of the averages is still down, we're coming to the point depending on whatever indicator you're looking at such as Tradestation's T2108 indicator that a short term bounce is imminent. Even if it's a one day bounce, a 300 point Dow move bounce will wipe out more than two day's of gains. Playing the index ETF's means having to be ahead of a potential pivot point to avoid getting killed.
YTD -6.7%
Wednesday, January 16, 2008
Stops blown, from 47% long to 25% short
Just after 10am this morning, all my longs were stopped out for losses.
Now we're long 500 of the FXP at 91. It's the Ultrashort China ETF.
Because we are two days from options expiration, two things could happen: a) the mother of all short squeezes happens and our worst fear is realized, selling at the bottom of the recent downtrend only to have the Dow rally 300 points or b) the Dow drops 70 points per day until the FED meeting on January 31 and slowly stops out the long holders.
Now we're long 500 of the FXP at 91. It's the Ultrashort China ETF.
Because we are two days from options expiration, two things could happen: a) the mother of all short squeezes happens and our worst fear is realized, selling at the bottom of the recent downtrend only to have the Dow rally 300 points or b) the Dow drops 70 points per day until the FED meeting on January 31 and slowly stops out the long holders.
Tuesday, January 15, 2008
One week later, right prediction, markets still suck
My prediction from last week understated the one day pop, as the averages were up almost 1.5%. But the subsequent days afterward erased the entire move and much more even with Mon's up day due to 10% moves in agricultural plays such as MOS and MON.
While the averages were down 2%, the real moves were in the emerging markets as FXP rose 15% as it moves double inverse to the actual index. Even EEV managed an 8% gain.
Earlier today, C finally cut its dividend as I had been stating for several months and INTC getting clobbered 13% afterhours.
So if I think the market continues to decline, I would go long the FXP, EEV, and SRS. If I believe the markets turnaround, I would go long, MOS, MON, KWK, and FXF.
Overseas markets are down as I type, so expect a 1.5% drop at the open. Ironically, I think its an opportunity to fade the gap and buy the gap down and then sell near the close for a one day long. Near the end of the day, I probably would go long the FXP and EEV if they are red for the day.
While the averages were down 2%, the real moves were in the emerging markets as FXP rose 15% as it moves double inverse to the actual index. Even EEV managed an 8% gain.
Earlier today, C finally cut its dividend as I had been stating for several months and INTC getting clobbered 13% afterhours.
So if I think the market continues to decline, I would go long the FXP, EEV, and SRS. If I believe the markets turnaround, I would go long, MOS, MON, KWK, and FXF.
Overseas markets are down as I type, so expect a 1.5% drop at the open. Ironically, I think its an opportunity to fade the gap and buy the gap down and then sell near the close for a one day long. Near the end of the day, I probably would go long the FXP and EEV if they are red for the day.
Wednesday, January 9, 2008
To my future nephew, some negative thoughts about women
At some point, hopefully ten to fifteen years AFTER he earns his graduate degree, a future nephew will meet a woman whom he believes is his equal in marriage. Before you start dreaming about living happily ever after, let me post a few devil's advocate warnings to ensure the woman you marry is NOT the Wicked Witch of the west. Notice I said woman. If by some mistake my nephew believes in something other than monogamy and commitment to one woman, he will be disowned.
1) The first face to face interaction with a woman you've never met, will determine if the relationship will succeed. It does NOT matter if you are interested in her. If she cannot fathom being seen together with you now, what makes you think she'll be interested in you five years from now.
2) If the woman you are dating has ANY of the following tendencies, end the relationship:
a) She will only associate with you if you take her to an exotic locale such as Mongolia, Mozambique, Papua New Guinea.
b) You are constantly sending her on vacations to the country of her choice with her expecting to visit 100 countries in her lifetime.
c) You are sending the woman's parents on vacations to locales such as Australia or New Zealand on business class tickets.
d) She wants a private yoga instructor for daily or weekly house visits.
e) She wants you to purchase expensive exercise or sporting equipment for her home such as an exercise bike.
f) She has you scheduling well known authors or public speakers for her amusement.
g) You are hiring a personal chef to cook her meals daily.
h) She expects one day a week away from you such as a weekend spa getaway with her friends.
The above eight details sound familiar because this is what Erin Burnett, the CNBC anchor and a typical 31-year old woman, from the February 2008 issue of Men's Health stated is what she wants in a man. I have two words for Erin and woman like her which I won't print for language reasons.
Back in September 2007, a 40-something Manhattan employee of J.P. Morgan forwarded this response to the New York Times for a personals ad he saw on Craigslist. I will condense his response for language but its almost something I would say.
The ad was from a 25-year old Manhattan female who was seeking marriage to a Wall Street male who had to have a minimum 500k annual income.
The 40-something male's response:
"I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament.
First, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.
Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why.
Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity... in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!
So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!
So in Wall Street terms, we would call you a trading position, not a buy and hold...hence the rub...marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following.
If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.
Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard tobelieve that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.
By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation. With all that said, I must say you're going about it the right way. Classic "pump and dump." I hope this is helpful, and if you want to enter into some sort of lease, let me know."
Now my future nephew, I'm not saying all women are Mephistopheles BUT ask yourself this question, if you didn't have any of the material things to offer the woman you are dating, would she stand by you.
1) The first face to face interaction with a woman you've never met, will determine if the relationship will succeed. It does NOT matter if you are interested in her. If she cannot fathom being seen together with you now, what makes you think she'll be interested in you five years from now.
2) If the woman you are dating has ANY of the following tendencies, end the relationship:
a) She will only associate with you if you take her to an exotic locale such as Mongolia, Mozambique, Papua New Guinea.
b) You are constantly sending her on vacations to the country of her choice with her expecting to visit 100 countries in her lifetime.
c) You are sending the woman's parents on vacations to locales such as Australia or New Zealand on business class tickets.
d) She wants a private yoga instructor for daily or weekly house visits.
e) She wants you to purchase expensive exercise or sporting equipment for her home such as an exercise bike.
f) She has you scheduling well known authors or public speakers for her amusement.
g) You are hiring a personal chef to cook her meals daily.
h) She expects one day a week away from you such as a weekend spa getaway with her friends.
The above eight details sound familiar because this is what Erin Burnett, the CNBC anchor and a typical 31-year old woman, from the February 2008 issue of Men's Health stated is what she wants in a man. I have two words for Erin and woman like her which I won't print for language reasons.
Back in September 2007, a 40-something Manhattan employee of J.P. Morgan forwarded this response to the New York Times for a personals ad he saw on Craigslist. I will condense his response for language but its almost something I would say.
The ad was from a 25-year old Manhattan female who was seeking marriage to a Wall Street male who had to have a minimum 500k annual income.
The 40-something male's response:
"I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament.
First, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.
Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why.
Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity... in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!
So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!
So in Wall Street terms, we would call you a trading position, not a buy and hold...hence the rub...marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following.
If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.
Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard tobelieve that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.
By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation. With all that said, I must say you're going about it the right way. Classic "pump and dump." I hope this is helpful, and if you want to enter into some sort of lease, let me know."
Now my future nephew, I'm not saying all women are Mephistopheles BUT ask yourself this question, if you didn't have any of the material things to offer the woman you are dating, would she stand by you.
Tuesday, January 8, 2008
Predictions for Wed 1/9/08
It is usually unwise to make predictions because most of the time, they are wrong. We're still 47% long, and we lost another 1/2% today. One of the traders remarked that if the trend keeps up, i'll be broke in 189 trading days.
Historically, the last eight times the QQQQ have dropped eight consecutive days, it has been up on the 9th day by an average of .7%. So if the historical trend is accurate, the Nasdaq Composite should close around 2457 on Wed.
CEG is possibly a utility I missed probably because Cramer likes it for his Action Alerts portfolio.
BPT is not a play until Feb, because its rising because of its pending dividend date (ex-dividend around 1/14). Normally, you purchase it around the 27th of Feb, May, Aug, and Nov because that is usually near the bottom of each quarterly drop due to the big dividend. They pay the dividend about a week after the ex-dividend date
PZE was rising because back on 12/21, rumors were floating that it will be bought out by an Argentine rival.
Here are some guessing closes for tomorrow since I have nothing good to say:
Dow 12677 +88
Nasdaq 2457 +17
S&P 500 1399 +9
Midcap 400 799 +3
Russell 2000 709 +4
Historically, the last eight times the QQQQ have dropped eight consecutive days, it has been up on the 9th day by an average of .7%. So if the historical trend is accurate, the Nasdaq Composite should close around 2457 on Wed.
CEG is possibly a utility I missed probably because Cramer likes it for his Action Alerts portfolio.
BPT is not a play until Feb, because its rising because of its pending dividend date (ex-dividend around 1/14). Normally, you purchase it around the 27th of Feb, May, Aug, and Nov because that is usually near the bottom of each quarterly drop due to the big dividend. They pay the dividend about a week after the ex-dividend date
PZE was rising because back on 12/21, rumors were floating that it will be bought out by an Argentine rival.
Here are some guessing closes for tomorrow since I have nothing good to say:
Dow 12677 +88
Nasdaq 2457 +17
S&P 500 1399 +9
Midcap 400 799 +3
Russell 2000 709 +4
Monday, January 7, 2008
Seven consecutive down days on QQQQ
Stubbornness is a bad trait for swingtraders. We turned red for the year today because we didn't sell our positions last Friday. So now we're stuck. Even if I think the energy positions can turn around at some point, how much pain will you be able to take in order to see it turnaround.
The worst thing is none of the positions have hit a 10% stop, but having one position go from a 4k gain to negative is inexcusable.
Ironically, of the few stocks that are up, one we sold a few days ago.
Healthcare - ESRX, CVD
Utilities - FE
Energy - BPT, PZE
Agriculture - MON
Probe trades are good and bad in that when you are wrong, it reduces your cash position. While most trades have been profitable, they haven't offset the losses on the now 47% long position.
We have this mindset that regardless of what happens, we want to lean on energy. However, this downtrend for the past seven days is costing dollars.
Casy was known to endure some drawdowns but I don't believe he let more than 10% go at any one point. We are nowhere near that point, but what concerns me is that I'll get down 10.1%, sell, and then watch in horror as the stocks I sell recover.
I think its going to be a tough nine more days and I feel I'll be in the position where I might do something crazy such as double down on both my energy longs. I won't go into margin but here's where emotions could be starting to interfere with judgment.
YTD -4.9% (and it only took four trading days, how pathetic).
The worst thing is none of the positions have hit a 10% stop, but having one position go from a 4k gain to negative is inexcusable.
Ironically, of the few stocks that are up, one we sold a few days ago.
Healthcare - ESRX, CVD
Utilities - FE
Energy - BPT, PZE
Agriculture - MON
Probe trades are good and bad in that when you are wrong, it reduces your cash position. While most trades have been profitable, they haven't offset the losses on the now 47% long position.
We have this mindset that regardless of what happens, we want to lean on energy. However, this downtrend for the past seven days is costing dollars.
Casy was known to endure some drawdowns but I don't believe he let more than 10% go at any one point. We are nowhere near that point, but what concerns me is that I'll get down 10.1%, sell, and then watch in horror as the stocks I sell recover.
I think its going to be a tough nine more days and I feel I'll be in the position where I might do something crazy such as double down on both my energy longs. I won't go into margin but here's where emotions could be starting to interfere with judgment.
YTD -4.9% (and it only took four trading days, how pathetic).
Wednesday, January 2, 2008
First trading day of 2008 goes against historical trends
After enjoying the Christmas holidays, we're back after a one week vacation. Recapping what occurred during my hiatus:
On the day before Xmas, markets were uncharacteristically up, but afterwards the following four days including the last day of 2007 were red. Solar stocks continued to climb higher and was the top performing sector for the year.
Markets are trading within a range at present, between 1460 and 1490 on the S&P. Only made one wacky yearend trade of 50 shares of AAPL on 12/31 and at present its looking like a dud. It's difficult to initiate new longs when the overall indexes show short term downtrends. While there are potential one month plays as January is the time for low volume stocks to show momentum, I sense making one trade moves with ETFs could be the better play.
With the Iowa caucuses and election rhetoric in the air for tomorrow, I think the best opportunities are looking at the price and percentage gappers list to see if something wants to establish itself as a front-runner at least for the current week. I don't believe the solar sector will be the best performer this year but that doesn't mean they can't generate decent gains.
We're off to an uncharacteristically red start to 2008, but the same thing happened last month, and we were able to turn that into a 1.9% gain by monthend.
On the day before Xmas, markets were uncharacteristically up, but afterwards the following four days including the last day of 2007 were red. Solar stocks continued to climb higher and was the top performing sector for the year.
Markets are trading within a range at present, between 1460 and 1490 on the S&P. Only made one wacky yearend trade of 50 shares of AAPL on 12/31 and at present its looking like a dud. It's difficult to initiate new longs when the overall indexes show short term downtrends. While there are potential one month plays as January is the time for low volume stocks to show momentum, I sense making one trade moves with ETFs could be the better play.
With the Iowa caucuses and election rhetoric in the air for tomorrow, I think the best opportunities are looking at the price and percentage gappers list to see if something wants to establish itself as a front-runner at least for the current week. I don't believe the solar sector will be the best performer this year but that doesn't mean they can't generate decent gains.
We're off to an uncharacteristically red start to 2008, but the same thing happened last month, and we were able to turn that into a 1.9% gain by monthend.
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