Raise stop on ASEI to breakeven

For those who front ran my post, you're probably in between 69 and 69.30.

For those who got in at the close, you're probably in between 71 and 71.20.

Now that the market has gapped up on President's Bush's comments, raise your stop to breakeven. The stock is trading around 72.30 as we speak so at the worst, you'll have a scratch trade.

It is sometimes better to be lucky than to be smart.

Possible market on close purchase, ASEI and an offtopic healthcare site

This is one of the older casy plays which hit a 52-week high intraday. If the following two conditions occur:

1) The Dow, Nasdaq Composite, S&P 500 are green near the close.
2) ASEI is green near the close.

Then I'll buy 100 shares of ASEI. It opened at 69 and is currently trading just above there after being above 72 intraday.

Often when my normal scans show nothing, I scan the casy plays from the energy and material sectors to see if something is running that is not showing up on a normal chart scan.

For those who believe they can get specialized healthcare outside the U.S., one site that has sought to locate specialists outside the U.S. is planethospital.com. Supposedly for a $395 referral fee, they can setup travel arrangements and specialist appointments. I don't know of their reliability, but it pays to have it saved as a favorite in case you find yourself overseas and needing emergency care that your HMO or PPO doesn't cover.

Historical Precedents and Stock Trader's Almanac

As I mentioned to some of the traders, my 2007 copy of the Stock Trader's Almanac sits in the fireplace as kindling for the winter time. While no one can predict the future with 100% accuracy, there are times when knowing what has been done in the recent past can get you into or out of certain trades.

For example, with the lack of headline news, the almanac states between 1996 and 2006, the average 5-day performance of the averages on the week before the Labor Day holiday are:
DJIA -2.6%, NASDAQ -2.1%, and S&P 500 -2.3%. The Thursday before Labor Day, the market was down 9 of the last 10 years.

While Martin Zweig is known for his calendar and holiday analysis, absence of news, its usually better to rely on the 5 or 10-day intraday timeframes to see if a support or a resistance level is about to be breached.

This is one of the rare days when I am out of sync with the markets as the 90 stocks on my watchlist are all in the red and I did not have a short position to take advantage of today's move.

Trading with a Plan and Luck

Today's 286 point rebound in the Dow recovered three days of declines in the markets. Through sheer luck, we covered all the ultrashorts on the day before. Even sent an email to one of the traders as proof of when I covered. The only tangible explanation I can think of is I treated the ultrashort trades as timed exits. In other words, I treated them like as if I were trading options.

Before I inititated the position, I had already outlined within a few days, the earliest and the latest date I would close the position. See the post from July 27.

The market always prices future events today. The market is always giving signals of when there is a chance for a trend reversal. When you have a profit on a timed position, it is better to be early and close with a profit than to try and extract one extra day when the risk outweighs the reward.

Covering all Short ETFs today

Although it could play out for two more days, I may not have the chance to look at the markets until next Wed, so I have to close the three short ETF positions sometime today by selling the 250 SKF, 100 SRS, and 200 TWM. We're looking at gains between 4-8% on each position pre-tax. Which for me is ok given I sort of got lucky that today was not a follow through day from the prior two days of gains in the market averages.

The main difference between long and short positions is you do not have the luxury of holding a short position forever because it is subject to unlimited losses. Whereas a long position, the most you can lose is 100% of your initial investment.

Added 100 of SKF at 86.10

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Portfolio notes during the -311 Day for the Dow

As everyone saw, both FLIR and CLB got stopped out. CLB was near breakeven, while we rode FLIR for nearly 10 pts on the final 100 shares. Long time holding JOYG sold on the 25th after earnings dropped the stock into a nosedive from 63 to 52. These were the original casy shares that we got in together in March of 2005. It's the last remaining memory of, in my opinion, the best trader I have ever witnessed in the trading room. He always wanted us to make him proud, so should one day, one of us make the cover of a Dow Jones, Time Warner, or McGraw-Hill publication, I'm sure he'll be smiling at us.

When the market was down 150 on the Dow, I initiated three new shorts using the double-short index ETF's of 200 of TWM, 100 of SRS, and 150 of SKF. This was to somewhat mitigate the remaining 4 longs. Although all 4 longs are sitting very close to their stop points, I'm playing the shorts for a quick 5% move before I flip them out.

Contrary to what the news is saying, I believe the past few days is similar to what occurred in the last trading day of February and the following ten days. So if this move plays out the same, the averages should move down another 5% before finding support twice and then rallying again to another new high.

A catalyst for a move down on Friday is the GDP report and as a short, the best scenario is something below 1% growth. As for the likely cover date for the shorts, I'm guessing Fri, Aug 3rd since my best guess on the monthly 401k money being invested is Mon, Aug 6. One of the traders suggested the Wed AM release of CSCO on the 8th could be the catalyst to stop the current downtrend. Her technology calls are spot on, so if anything I might play it indirectly by adding to my AAPL shares or purchasing RIMM.