So I was a bystander again today. Saw DRYS pop and move up almost 10% by the end of day, many other stocks finishing at their highs for the day as well. We finished at the 1390 level, I was in class otherwise I likely would have taken down some puts. We'll see if that would have been a failed trade or a good trade, so far DRYS and FSLR rallied back up today.
Today we actually saw some good results from retailers, obviously that is good news for the market because it shows some of an indication of the health of the consumer, which in turn means the economy. I think this is a step in the right direction. Oil is still the big concern in my opinion, we may even get back to 1400, but until there significant evidence that oil could be on hold or declining I don't think we will go above that. Of course the market could see it differently and a break above 1400 would make me more bullish again.
One interesting thing was seeing bond yields increase and from a technical standpoint it seems to have broken out of a range to the upside, generally bonds increase as people move back into stocks looking for higher returns. The dollar rose and gold declined, generally all good things for the market to go up. The next couple days could be telling, I am not sure when the memorial day driving numbers(not sure the official name) come out but I think that could be a big indicator of where we are headed next. As it will confirm or deny bullish oil in the short term.
As a side note, I am not generally a conspiracy theorist but I sometimes wonder if terrorist cells get paid off under the table as they make attacks on oil refiners at seemingly opportune times to prop up oil cost with fear of speculation. The overall impact seems negligible, just like when the US stopped putting oil into the reserves it did something like free up around 200,000 barrels a day, this attack supposedly hindered output by at most 150,000 a day. By contrast we use in the US alone almost 21 million barrels a day. My point is that stopping oil into the reserve did not make prices decline, so why would this make prices go up? From a general perspective though it is not like it rallied back to highs so this could be a short term reaction up as prices start to fall back down. Only the market knows...for now I'll just sit and wait for time and good setups.
Wednesday, May 28, 2008
Tuesday, May 27, 2008
Forced Break
Well, Friday showed us the return and evidence of a break in up trend. 1390 broke down to 1375 which was my next target had my puts been filled. Can't live by "should haves" though. I ended up not doing anything friday and didn't do anything today. I may be forced to sit out over the next two weeks since I have class from 1:30-4:30 and laptops are not allowed. So making trades at the end of the day as needed would be nearly impossible.
The market rallied today, likely just some relief from oil pulling back below 130 on demand concerns. I think if we see a weaker number than normal from memorial day driving and evidence that gas could decline as usual the market could rally back up. That has yet to be seen though. I am more likely to buy some puts if we hit 1390 again and fail to break it.
AAPL is still going strong, kind of depressing seeing as how I sold out at a significant loss that would be a gain again, of course holding through a 10 dollar downswing with no way of knowing it will rebound would be reckless. There is more evidence of it being correct as both FSLR and DRYS have fallen significantly farther. If oil starts to decline these names could rally again. I honestly cannot see oil dropping below 100 again and more likely would think it stops at 120 if it does decline more in the near future. I think a real fundamental change would have to occur to send it all the way back to 100, if it was going back to 100 though the market would likely be hitting new highs.
So for now I am watching and trying to pick out some stocks I'd like to be in with good setups, maybe I'll sit out for now and watch how thinsg develop over the next couple weeks until class is over, although there still has to be bullish and bearish stocks I can utilize I would prefer to be able to act if necessary and not be stock holding over night. Maybe I'll start attempting to use mechanical stops and see how it goes.
The market rallied today, likely just some relief from oil pulling back below 130 on demand concerns. I think if we see a weaker number than normal from memorial day driving and evidence that gas could decline as usual the market could rally back up. That has yet to be seen though. I am more likely to buy some puts if we hit 1390 again and fail to break it.
AAPL is still going strong, kind of depressing seeing as how I sold out at a significant loss that would be a gain again, of course holding through a 10 dollar downswing with no way of knowing it will rebound would be reckless. There is more evidence of it being correct as both FSLR and DRYS have fallen significantly farther. If oil starts to decline these names could rally again. I honestly cannot see oil dropping below 100 again and more likely would think it stops at 120 if it does decline more in the near future. I think a real fundamental change would have to occur to send it all the way back to 100, if it was going back to 100 though the market would likely be hitting new highs.
So for now I am watching and trying to pick out some stocks I'd like to be in with good setups, maybe I'll sit out for now and watch how thinsg develop over the next couple weeks until class is over, although there still has to be bullish and bearish stocks I can utilize I would prefer to be able to act if necessary and not be stock holding over night. Maybe I'll start attempting to use mechanical stops and see how it goes.
Thursday, May 22, 2008
Back to the Drawing Board
Well, apparently a lot can happen in two days, especially when those two days are the largest drop in the market since february. I have already highlighted my concern about my over bias to the bullish side and apparently I should have acted with more concern because after partially weathering those down days oddly enough on this supposed up day I lost the most. From the opening to the close I gave up my gains for the entire month(what was left) and went into the red.
Am I upset? Hell yes. Should this have happened? No, absolutely not. Is it my fault? Yes.
Like I said before where money is lost there is a lesson to be learned(same can be said with money gained). Pretty much there is something to be learned from each trade.
This problem stemmed from a few things:
1. Giving losses too much room(hoping).
2. Too bullish(not balanced out with puts)
3. Large swings in one day.
I honestly have no idea how the market was supposedly up because none of my positions were, in fact they were all down significantly. AAPL, DRYS, GS, V, were all down huge, if not overall but had a huge range throughout the day.
DRYS was the biggest swing. Going from a +1700 yesterday to -1400. It was down 10% today alone, generally I would not expect such a massive break of trend with no recovery. Waiting till the end of the day (or anything besides the open) just meant further loss.
AAPL fell off a table part way through the day and also had a 10 dollar range. I waited the sell off out though and got out on the rebound, however it had to rebound significantly to even get close to my sell limit. In these scenarios the call options shed value a lot faster than they gain it back so even if say an option was 5.00 when apple is at 178, it sells off then gets back to 178 it could be worth much less than that.
I attempted to sell out of GS yesterday on the break of 180, I only got 1 of the 4 contracts sold. Bad luck because today its continued sell off was helped by a downgrade to "Sell" by an analyst.
My new positions went from sitting at less than my allowed loss to much larger than my allowed loss. However I can't say that for all.
Let's look at why risk management and sell rules MUST BE FOLLOWED. Visa, had I only allowed it my 2% risk, thats 2600 I could have saved. Stupid. FSLR, another big move down, should have signaled an exit a couple days ago, I held, could be another 1100 in my account. ACH, again going by risk alone would be another 1000 back approximately.
AAPL and DRYS, are harder situations because the swings came in a day and originally were not violating rules/trends. However, they don't even matter, I can't plan for those, but the above issues I can. Even with the unexpected moves in DRYS and AAPL, by following rules in the other 3 positions would have meant I was still up 14% after this move down. Since I did not I am now down 4%.
These changes have to be made, if I need to come up with a mechanical solution I will. Ideally I dont' want purely mechanical stops but if I can't do it myself it will be necessary otherwise we can see the result. The problems were being masked by initial gains, which sounds much like my original demise.
Lessons to take away, CUT LOSSES SHORTER. I also need a little more patience for cleaner entries. GS and DRYS are ideal entries, unfortunately those moved large against me to show the break of trend, but generally that is what I want to see to take a trade.
I am almost entirely in cash, taking a break till tuesday and I will reallocate my positions with diversification and precise entries/exits and proper loss management.
Overall, the market is still arguably in an uptrend, 1390 is not violated however I think it could come. If oil keeps going up and inflation rises and jobs decrease, there is no reason for the market to rally at all.
The gains I lost can be made up it will require dedication and application of lessons learned. Possibly a shift to the bearish side, but only once we see that in the charts.
Tuesday, May 20, 2008
Buying the Dip
So today we saw a pretty big down day, Dow down 200 points. I was down about 1%, inline with the nasdaq. The sell off apparently due to inflation worries and higher oil. These are a concern because I think the market is entirely fixed on these two items. With the credit crunch arguably and mostly behind us the new focus are these issues. Hence, I think if oil keeps going up, the market goes down. Wholesale inflation rose twice as fast as forecast at .4 percent, that was core PPI, oddly it was only .2 percent with food and oil included.
If the added oil and commodity costs get passed on to consumers this is not good for the economy or market. In general I think this sell off was necessary, but is concerning because it seems like a perpetual cycle, where once we start to see inflation it will encourage companies to pass along costs and just add to the problem until significant change happens.
I ended up not buying into DRYS for a contract on monday. 1 contract would have been about 1k, and with volatility decay and only a modest expectation of a move up I could at most have made 500 dollars, not a bad ROI however if I am wrong I could have easily lost 500. Even though I am playing with all profit a 1:1 risk to reward is not something to take so I passed. Rightfully so, as it traded down to 96 today. I decided to get back in as it is sitting at horizontal support. If I am wrong I get out with my loss, but I could see it getting back to 110 again if we bounce here, so the R:R is excellent in my opinion. Heavy down volume is a concern but as we can see the trend is still in tact.
I heavily bought this dip to the long side and I am slightly concerned because I did not get any put plays yesterday, CMG was already too far gone and none of the others had broken, they rallied. If we see another heavy sell off I could be caught with my pants down so I am looking for bearish plays. I bought DRYS, AAPL and GS today. AAPL was strong in this down day and has the supposed announcement of the new iphone coming out which should send the stock up, if it breaks 190 I think 200 is the next stop which is my target. GS is close to 180 which has been a very significant level so I should know I am wrong if it violates that line. Even though people seem to be generally bearish on financials GS is a good stock and could see a big move next time we rally. On monday I bought into RIG and ACH as well. FSLR bounced off its diagonal uptrend but finished below 300, although it was also strong today in a down market.
One position I am eyeing is PENN, it sits at 43 with a supposed buyout happening june 15th at 67, logic would dictate that if the deal was going to happen the stock would be sitting right at 67 because there are more people in the know than I am. However, in the odd case it happens I am going to buy some calls. Even if the deal ends up being for only 50 dollars I should make some money and I'll risk the entire premium as 2% of my account so it is just like any other trade. Again the R:R is very attractive and I will take that trade everytime.
The S&P looks like it could pull back to the 1400 level before moving higher. That seems likely unless something happens to drop oil significantly, which is almost a zero probability. Some index puts could help even out my account a bit but is not the most ideal scenario.
If the added oil and commodity costs get passed on to consumers this is not good for the economy or market. In general I think this sell off was necessary, but is concerning because it seems like a perpetual cycle, where once we start to see inflation it will encourage companies to pass along costs and just add to the problem until significant change happens.
I ended up not buying into DRYS for a contract on monday. 1 contract would have been about 1k, and with volatility decay and only a modest expectation of a move up I could at most have made 500 dollars, not a bad ROI however if I am wrong I could have easily lost 500. Even though I am playing with all profit a 1:1 risk to reward is not something to take so I passed. Rightfully so, as it traded down to 96 today. I decided to get back in as it is sitting at horizontal support. If I am wrong I get out with my loss, but I could see it getting back to 110 again if we bounce here, so the R:R is excellent in my opinion. Heavy down volume is a concern but as we can see the trend is still in tact.
I heavily bought this dip to the long side and I am slightly concerned because I did not get any put plays yesterday, CMG was already too far gone and none of the others had broken, they rallied. If we see another heavy sell off I could be caught with my pants down so I am looking for bearish plays. I bought DRYS, AAPL and GS today. AAPL was strong in this down day and has the supposed announcement of the new iphone coming out which should send the stock up, if it breaks 190 I think 200 is the next stop which is my target. GS is close to 180 which has been a very significant level so I should know I am wrong if it violates that line. Even though people seem to be generally bearish on financials GS is a good stock and could see a big move next time we rally. On monday I bought into RIG and ACH as well. FSLR bounced off its diagonal uptrend but finished below 300, although it was also strong today in a down market.
One position I am eyeing is PENN, it sits at 43 with a supposed buyout happening june 15th at 67, logic would dictate that if the deal was going to happen the stock would be sitting right at 67 because there are more people in the know than I am. However, in the odd case it happens I am going to buy some calls. Even if the deal ends up being for only 50 dollars I should make some money and I'll risk the entire premium as 2% of my account so it is just like any other trade. Again the R:R is very attractive and I will take that trade everytime.
The S&P looks like it could pull back to the 1400 level before moving higher. That seems likely unless something happens to drop oil significantly, which is almost a zero probability. Some index puts could help even out my account a bit but is not the most ideal scenario.
Friday, May 16, 2008
Options Expiration
Friday we saw the expiration of options which generally leads to stocks ending at round numbers or slightly below or above likely depending on the outstanding contracts of certain positions. This week ended up being profitable but very volatile which is not ideal. What is ideal is that I am at a new high in my account, I now have a 30% gain in under 1 month back trading. :-) The best thing about this is that again I am following rules and managing risk and still making very nice gains. I can only hope to keep up this pace, however I doubt it will always happen like this.
I sold my EWZ, DRYS and FXI calls at the open after they had gapped up. DRYS has been my best trade so far since being back. Had I held I could have made an extra 500 but I followed my plan of selling if it hit 110 and I locked in over a 100% gain. I considered buying a single 110 call to hold over the weekend into monday the case of a gap up. EXM(another dry bulk shipper) will be reporting earnings before the open monday and DRYS will likely benefit if there is a beat and EXM rallies. I will likely still buy in before earnings after the close, especially if there is a sell off on monday. I don't think the uptrend is over with these stocks and DRYS could see old highs(130) very easily on a good earnings report.
EWZ was getting close to my 100 target and I wanted to lock it in as well since I assumed we would see volatility throughout the day. This actually kept going up and I left money on the table, but overall I cannot be upset. I will wait for a pull back to re-enter. FXI was a wash as I got out with I think a 100 dollar loss but it basically required a move to near my target to break even due to time decay and volatility decay.
I am still holding V, FSLR and SIRF calls. V being the most painful and exception to my rules, which shows why there should be NO exceptions to any rules. FSLR is still only a slight gain for me, it has actually increased by about 4 dollars since I bought calls but time and more so volatility decay has kept it flat. I think it will start moving shortly though and make new highs especially as oil stays at highs. SIRF is again a slight gain, but it is not moving against me so I don't mind holding it.
Looking forward to next week, on monday I will get into new positions and re-diversify. I need to get more tech exposure, I will likely hop into AAPL as I feel it will be propelled back to old highs on news of upcoming products and rumors. I plan on holding a single DRYS contract over earnings, since it will only be risking pure profit and could offer a nice potential reward to the upside. I will need to find some good put plays because all of my old ones broke to the upside(and have continued up). This is why we follow rules, even though it sucks taking a 2% loss, it sucks taking a 10% loss(take V as an example). Cutting the losers short and letting the winners run has worked so far, no reason to change now. :-)
It took restraint to not enter into all my positions today at the close, especially on DRYS, but I figured there is no reason to automatically lose 2 days of time value in hopes of a gap up that doesnt develop. I think we may see a pull back if oil continues its march higher, which it shows no signs of stopping. Downward pressure from oil and commodities could influence next week. I agree in the long run this level of oil is sustainable but I think there is significant additional risk priced in, where supply and demand may be back at the 100 level we have much more fear of an issue happening. It's likely we don't see a major pull back until the end of May when refiners come out of maintenence and step up output.
It's been a great note to end the week on, financially and personally. Now if you'll excuse me I have to get back to studying for my final tomorrow(yes on a saturday). ;-)
Thursday, May 15, 2008
Thursday Turn Around
So today I didn't even look at the market or do anything save for a few glances at stock prices throughout the day. I had a final so I just let the market do what it was going to do and take me along for a ride. Luckily, today was a good ride and took me back up to recoup quite a bit of the lost paper profits from yesterday. I am now back to being up 21% overall.
DRYS made a great move as was expected in the long run. I am hoping it prints 110 tomorrow, if it does I am going to sell all my contracts and buy a new strike on monday to hold over earnings, likely just a single contract.
EWZ came back in full force, the sell off yesterday would have been a great dip buying opportunity, but I couldn't bring myself to take advantage at the end of the day. Both EWZ and FXI Are nearing my targets just like DRYS.
FSLR had a small sell off, I would have liked to buy the dip but wasn't around. With Options expiration tomorrow I am thinking we may see some pinning of stock prices, I'd like to see the pinning of prices higher, but I know that is just wishful thinking. I got out of all my puts on POT, LVS and SGR, which today proved to be correct because all of them continued upwards. This again proves to be a problem because I am totally delta positive. I think I'll wait through OE and then re-position myself on monday with suitable stocks.
Visa remains to be the pain and example of why mechanical trading rules are needed over discretionary. I still feel confident in its direction, but it highlights the need for patience of a better entry. If I had cut this loss off at the usual 2% I would be at my highest levels to date.
We'll see how tomorrow plays out, I'll hope for a bullish day but ultimately I don't think price action tomorrow will mean too much.
DRYS made a great move as was expected in the long run. I am hoping it prints 110 tomorrow, if it does I am going to sell all my contracts and buy a new strike on monday to hold over earnings, likely just a single contract.
EWZ came back in full force, the sell off yesterday would have been a great dip buying opportunity, but I couldn't bring myself to take advantage at the end of the day. Both EWZ and FXI Are nearing my targets just like DRYS.
FSLR had a small sell off, I would have liked to buy the dip but wasn't around. With Options expiration tomorrow I am thinking we may see some pinning of stock prices, I'd like to see the pinning of prices higher, but I know that is just wishful thinking. I got out of all my puts on POT, LVS and SGR, which today proved to be correct because all of them continued upwards. This again proves to be a problem because I am totally delta positive. I think I'll wait through OE and then re-position myself on monday with suitable stocks.
Visa remains to be the pain and example of why mechanical trading rules are needed over discretionary. I still feel confident in its direction, but it highlights the need for patience of a better entry. If I had cut this loss off at the usual 2% I would be at my highest levels to date.
We'll see how tomorrow plays out, I'll hope for a bullish day but ultimately I don't think price action tomorrow will mean too much.
WTF Wednesday
So, even though its a day late I just have to address Wednesday's action. On top of it being one of the worst personal days of my life, the market didn't treat me much better. I got whipsawed all over the place. I was back at near all time highs in my account only to end the day lower than before with my biggest single day loss from being back and one of the lowest levels in my account since the first week.
This did not make sense, everything I have done up until this point to avoid this did not work, diversification, with puts and calls, position sizing, etc just seemed to do nothing. I had a +8% gain in the beginning of the day, and ended up -8%.
How was this possible? Well we had tame inflation data so we rallied, as was expected, everything was good, however my put plays were all violating their trends with strength. So i cut them loose at just over my 2% loss limit around the middle of the day. With about 1 hour left to go all stocks reversed course. my puts on POT ended up back even however, the other two held up so I was right to sell. All my call positions lost all their earlier gains and then some lost even more than the day before. EWZ reversed course from a 1% gain to a 1% loss in an hour. V acted the same, FSLR was up 13 at one point to only end up 3 by day's end, etc.
This was one of the most demoralizing days because I felt like nothing could have prevented this regardless of how well I was setup, I felt like there was no skill involved whatsoever and I am just 100% at the mercy of the market.
Someone on another blog boasted that he had sold earlier in the day because he had an "inkling" this would happen. Basically, what I said was that was complete luck because he could not have predicted it, just like no one else could have who had similar days to myself. What it came down to was he said he was being paranoid, but had 100% gains in his positions. I told him that is great and if I was in his position I likely would have sold as well but nothing I had was at 100%, at most it was up 30% and I wasn't going to trade to take 30% gains and losses, that wouldn't be following my rules or smart. I could just not trade and save the commissions.
In the end, I had to say "oh well" move on and know that I followed my rules and cut my losses short and let my winners go which is how you will be profitable in the long run.
This did not make sense, everything I have done up until this point to avoid this did not work, diversification, with puts and calls, position sizing, etc just seemed to do nothing. I had a +8% gain in the beginning of the day, and ended up -8%.
How was this possible? Well we had tame inflation data so we rallied, as was expected, everything was good, however my put plays were all violating their trends with strength. So i cut them loose at just over my 2% loss limit around the middle of the day. With about 1 hour left to go all stocks reversed course. my puts on POT ended up back even however, the other two held up so I was right to sell. All my call positions lost all their earlier gains and then some lost even more than the day before. EWZ reversed course from a 1% gain to a 1% loss in an hour. V acted the same, FSLR was up 13 at one point to only end up 3 by day's end, etc.
This was one of the most demoralizing days because I felt like nothing could have prevented this regardless of how well I was setup, I felt like there was no skill involved whatsoever and I am just 100% at the mercy of the market.
Someone on another blog boasted that he had sold earlier in the day because he had an "inkling" this would happen. Basically, what I said was that was complete luck because he could not have predicted it, just like no one else could have who had similar days to myself. What it came down to was he said he was being paranoid, but had 100% gains in his positions. I told him that is great and if I was in his position I likely would have sold as well but nothing I had was at 100%, at most it was up 30% and I wasn't going to trade to take 30% gains and losses, that wouldn't be following my rules or smart. I could just not trade and save the commissions.
In the end, I had to say "oh well" move on and know that I followed my rules and cut my losses short and let my winners go which is how you will be profitable in the long run.
Tuesday, May 13, 2008
Up on a Down Day
So, even though I could complain about being up much more during the day than what I finished at(I just did), I have to be happy about being positive in a down or mixed day.
I gained about 1% back today while the Dow and S&P were down. The frustrating thing was seeing my account up 5% at one point. I assumed I would give some of that back but not so much of it. Overall though, things generally did what they should, my calls gained in value and so did my puts.
Except for SGR, which is a thorn in my side, it broke back above 50, which signaled an exit, which I tried to do at the end of the day but did not get filled. When I realized I was not getting filled and tried to correct it the market had just closed and I am now holding it over night. I'll cut it loose tomorrow at the open and hope it doesn't gap up.
My Visa position is testing my patience as I sit with a loss. It sold off hard into the close. I have a feeling we may see manipulation and a pin at 85 for options expiration. Walmart reported today which I thought it was reporting tomorrow. The numbers were good, outlook was cautious, I think the market likes that retailers are still shopping even though its at discount stores.
Tomorrow we get CPI, I feel slightly exposed. I contemplated some front month OTM SPY puts as insurance to a negative surprise. If we get a reading inline or lower than expectations I think we see a rally. If inflation is higher than expected there will be fear of the fed having to raise rates so we may sell off.
I added another bullish position in FSLR. It had a large move today close to all time highs, I feel it will break out and go for a run in the near term.
CPI comes out before the market opens so we'll see how the futures are when I wake up. Oil is still a concern, but the 10 year was up today and the dollar still held.
Lets hope diversification proves to be helpful tomorrow regardless.
I gained about 1% back today while the Dow and S&P were down. The frustrating thing was seeing my account up 5% at one point. I assumed I would give some of that back but not so much of it. Overall though, things generally did what they should, my calls gained in value and so did my puts.
Except for SGR, which is a thorn in my side, it broke back above 50, which signaled an exit, which I tried to do at the end of the day but did not get filled. When I realized I was not getting filled and tried to correct it the market had just closed and I am now holding it over night. I'll cut it loose tomorrow at the open and hope it doesn't gap up.
My Visa position is testing my patience as I sit with a loss. It sold off hard into the close. I have a feeling we may see manipulation and a pin at 85 for options expiration. Walmart reported today which I thought it was reporting tomorrow. The numbers were good, outlook was cautious, I think the market likes that retailers are still shopping even though its at discount stores.
Tomorrow we get CPI, I feel slightly exposed. I contemplated some front month OTM SPY puts as insurance to a negative surprise. If we get a reading inline or lower than expectations I think we see a rally. If inflation is higher than expected there will be fear of the fed having to raise rates so we may sell off.
I added another bullish position in FSLR. It had a large move today close to all time highs, I feel it will break out and go for a run in the near term.
CPI comes out before the market opens so we'll see how the futures are when I wake up. Oil is still a concern, but the 10 year was up today and the dollar still held.
Lets hope diversification proves to be helpful tomorrow regardless.
Monday, May 12, 2008
Diversification
Well, after another crappy day on friday I ended up making back a couple percent today and also took the opportunity to diversify my account. I now have 5 call positions and 3 put positions. I am approximately 65% delta positive. This should insulate me more from down days while helping my bullish stance on up days.
RIMM was a big mover today, it broke out past a new high in the morning and I wanted to hop on board but waited for a pullback that never came. Visa got hammered for a while but came back. This is a discretionary position that I feel will work out but still don't know if exceptions are good(obviously conviction doesn't trump rules).
EWZ finally started back up and I took the opportunity when it was at support friday to add to my position that I had missed initially. I would like to see a move to 100.
I bought calls on SIRF, there is heavy call volume and open interest on the June 7.50 and 10 dollar calls. For .60 I bought 10 contracts of the 7.50 because that is still my 2% risk tolerance, and it could pay off big to the upside if there are people betting with more knowledge than I have(which is what I am assuming).
FXI showed some signs of life today, which I am hoping will start trading up with EWZ.
Dry bulk shippers were huge today so my DRYS position finally became profitable and I am hoping it will run back to old highs and I can add with dips along the way.
In a related note I bought puts on POT, as the dollar strengthens commodities should weaken and POT is hitting hard resistance at 200, it seems to move quite a bit so if people start selling it could fall quite a bit. I am hoping for it to fall back to 175 or so otherwise I'll exit with my 2% loss. LVS continues to slowly break down but I am looking for a more drastic move to hopefully come soon.
SGR was a new put play along with POT, looking to ride it back down to 40 hopefully, or exiting with a break back above 50. Even though afterhours doesn't mean much usually, SGR was up more than it was down today, but there doesn't appear to be any news so we'll see.
These are exactly the type of plays I am looking for, relative strength or weakness, so I can make money on puts on up days and money on calls on down days because the stocks continue their trend regardless.
I think I may hop on board the Q's again once we have a pull back since I just realized I am not long any tech right now which is a big mistake. I think we could see some good action weds if Walmart reports a good quarter, but tomorrow may lack conviction, but of course I really have no idea. At this point I have 2/3 of my capital at work with 1/3 to help if needed. I feel decently diversified. I'd like to get long the dollar still, which is still bullish but in a different way.
With M&A appearing to come back in that is a good signal for the credit markets and stocks IMO, meaning I may want to get long GS again. We'll see how it goes, either way I hope I am diversified enough to do well and not get caught again like I did last week.
RIMM was a big mover today, it broke out past a new high in the morning and I wanted to hop on board but waited for a pullback that never came. Visa got hammered for a while but came back. This is a discretionary position that I feel will work out but still don't know if exceptions are good(obviously conviction doesn't trump rules).
EWZ finally started back up and I took the opportunity when it was at support friday to add to my position that I had missed initially. I would like to see a move to 100.
I bought calls on SIRF, there is heavy call volume and open interest on the June 7.50 and 10 dollar calls. For .60 I bought 10 contracts of the 7.50 because that is still my 2% risk tolerance, and it could pay off big to the upside if there are people betting with more knowledge than I have(which is what I am assuming).
FXI showed some signs of life today, which I am hoping will start trading up with EWZ.
Dry bulk shippers were huge today so my DRYS position finally became profitable and I am hoping it will run back to old highs and I can add with dips along the way.
In a related note I bought puts on POT, as the dollar strengthens commodities should weaken and POT is hitting hard resistance at 200, it seems to move quite a bit so if people start selling it could fall quite a bit. I am hoping for it to fall back to 175 or so otherwise I'll exit with my 2% loss. LVS continues to slowly break down but I am looking for a more drastic move to hopefully come soon.
SGR was a new put play along with POT, looking to ride it back down to 40 hopefully, or exiting with a break back above 50. Even though afterhours doesn't mean much usually, SGR was up more than it was down today, but there doesn't appear to be any news so we'll see.
These are exactly the type of plays I am looking for, relative strength or weakness, so I can make money on puts on up days and money on calls on down days because the stocks continue their trend regardless.
I think I may hop on board the Q's again once we have a pull back since I just realized I am not long any tech right now which is a big mistake. I think we could see some good action weds if Walmart reports a good quarter, but tomorrow may lack conviction, but of course I really have no idea. At this point I have 2/3 of my capital at work with 1/3 to help if needed. I feel decently diversified. I'd like to get long the dollar still, which is still bullish but in a different way.
With M&A appearing to come back in that is a good signal for the credit markets and stocks IMO, meaning I may want to get long GS again. We'll see how it goes, either way I hope I am diversified enough to do well and not get caught again like I did last week.
Wednesday, May 7, 2008
Fake Out
Well, the last paragraph was very telling about my exposed bias to the bullish side. It ended up kicking me right in the gut. I am still up 17% overall but gave back nearly 7% over the course of the day, which is unacceptable.
Obviously the market does not follow my expectations. My assumption or hope of a rally into the close did not happen, the opposite happened and we had a sell off, apparently under the fears about maybe the economy not recovering and rising oil.
This is where a mechanical trading system would come in handy where I could set my exits for either a profit or a loss then just let it go. I would have been stopped back out of both FXI and BIDU today. BIDU broke its trend that was holding so nicely earlier in the day. I came back to find the profits I had previously banked on my V trade gone. DRYS held its previous support level but gave up all gains and turned into a loss just below my limit.
We will see how things go tomorrow because we broke back through 1400 today on the S&P, it did hold 1390, but a close below that would signal a failed break out. In my opinion there is not a reason to completely change stances on the market, and sell offs do occur in a bull market but I can't say we are in one yet, especially if support fails tomorrow.
Time to go shopping for some puts to balance myself out. Obviously I'd rather buy some puts on an up day with downtrending stocks going back up to resistance, but maybe there are some break downs. Not to mention index puts if we go through the 1390 level.
It's never fun to see gains throughout the day then by end of day your watchlist says "you have no gains to display". Oh well, tomorrow is another day and we'll see what happens.
Obviously the market does not follow my expectations. My assumption or hope of a rally into the close did not happen, the opposite happened and we had a sell off, apparently under the fears about maybe the economy not recovering and rising oil.
This is where a mechanical trading system would come in handy where I could set my exits for either a profit or a loss then just let it go. I would have been stopped back out of both FXI and BIDU today. BIDU broke its trend that was holding so nicely earlier in the day. I came back to find the profits I had previously banked on my V trade gone. DRYS held its previous support level but gave up all gains and turned into a loss just below my limit.
We will see how things go tomorrow because we broke back through 1400 today on the S&P, it did hold 1390, but a close below that would signal a failed break out. In my opinion there is not a reason to completely change stances on the market, and sell offs do occur in a bull market but I can't say we are in one yet, especially if support fails tomorrow.
Time to go shopping for some puts to balance myself out. Obviously I'd rather buy some puts on an up day with downtrending stocks going back up to resistance, but maybe there are some break downs. Not to mention index puts if we go through the 1390 level.
It's never fun to see gains throughout the day then by end of day your watchlist says "you have no gains to display". Oh well, tomorrow is another day and we'll see what happens.
Positive Progress
Sorry about the lack of updates(not that anyone reads this). It's been a busy week for me for school and work. While I was away, my account decided to increase in value, which is ideal. Yesterday which was mostly a down day, I actually gained 3%, mostly thanks to V.
I actually sold V today when it was close to 90, assuming we may take a breather after this fantastic run. It may end up like my AAPL where it just keeps going, but oh well. Never hurts to take a profit and I can always get back in if the trend is still strong or find something better altogether. I also exited my WFR postion, I broke even on that trade, which is sort of disappointing seeing as how I was up 1k at one point. But I gave it the opportunity to go back down and it seems to be showing strength and breaking the down trend so I decided to cut it loose. If I can keep selling for profits and breaking even on losers that's ideal, however it will not be very likely to happen that often.
I decided to buy the dip in FXI, although I am slightly concerned about the fact that it gapped down so much. But, it is close to some support so I have managed risk and will exit if needed. I also decided to buy the dip in BIDU, it was resting at diagonal support so I decided to buy a call and will exit if the trend is broken.
I bought some DRYS, after it broke out monday. I like obviously the break out and the fact that it is an old favorite of the stock market. I have no evidence to support this but a well known name could benefit from extra people piling in assuming past performance, which makes me more money. :-)
I am now up about 24%. Not too bad in 2.5 weeks. The most exciting part about it is I am sticking to my rules and not taking excessive risk and I am still getting nice returns. I bought this dip today on some stocks, I need some bearish plays though since my one put play is done. Not sure why the sell off today in the market, could be that we stay in a range until we get more data but I hope we see some buying into the close to set things up for tomorrow. In writing that, I realize I am too biased to one side because even though I try to pick stocks that are strong even on down days, or weak on up days(for puts) I should not care what the indices do. I am thinking of getting long the dollar since it seems like there is much more upside potential than downside and it will be good diversification.
I actually sold V today when it was close to 90, assuming we may take a breather after this fantastic run. It may end up like my AAPL where it just keeps going, but oh well. Never hurts to take a profit and I can always get back in if the trend is still strong or find something better altogether. I also exited my WFR postion, I broke even on that trade, which is sort of disappointing seeing as how I was up 1k at one point. But I gave it the opportunity to go back down and it seems to be showing strength and breaking the down trend so I decided to cut it loose. If I can keep selling for profits and breaking even on losers that's ideal, however it will not be very likely to happen that often.
I decided to buy the dip in FXI, although I am slightly concerned about the fact that it gapped down so much. But, it is close to some support so I have managed risk and will exit if needed. I also decided to buy the dip in BIDU, it was resting at diagonal support so I decided to buy a call and will exit if the trend is broken.
I bought some DRYS, after it broke out monday. I like obviously the break out and the fact that it is an old favorite of the stock market. I have no evidence to support this but a well known name could benefit from extra people piling in assuming past performance, which makes me more money. :-)
I am now up about 24%. Not too bad in 2.5 weeks. The most exciting part about it is I am sticking to my rules and not taking excessive risk and I am still getting nice returns. I bought this dip today on some stocks, I need some bearish plays though since my one put play is done. Not sure why the sell off today in the market, could be that we stay in a range until we get more data but I hope we see some buying into the close to set things up for tomorrow. In writing that, I realize I am too biased to one side because even though I try to pick stocks that are strong even on down days, or weak on up days(for puts) I should not care what the indices do. I am thinking of getting long the dollar since it seems like there is much more upside potential than downside and it will be good diversification.
Saturday, May 3, 2008
A Push Is A Win
As they say in Vegas, "A push is a win." Meaning when you tie the dealer in blackjack you don't make any money but more importantly you don't lose any. This week was a push. I am flat compared to last week so I am still up 15% overall since starting back.
I can't be too upset, because of course I could be losing money. However its hard to see the winners I was holding that I cut loose keep making more highs. GS broke 200, so I may get back in, AAPL has yet to really take a breathe so I am not in that but plan to when it does. NVDA is working out nicely so far and I am waiting for a pull back in EWZ to get my full position on.
Visa finally had a pullback, I actually doubled my position in V. I am currently slightly below my 2% loss, in the longer term I don't see any reason for V to pull back much more because as the economy and consumer sentiment gets better spending will increase which is all good for Visa. Visa was getting unloaded though on friday fairly heavily, which I assume is profit taking, it seemed to find support around 82 but I'll have to watch it and cut it loose if necessary.
I still don't have all my capital at work. In fact, I have only 1/3 of it in trades right now. I will be looking to add positions and diversification next week on monday. The more trades I have on the greater chance I have of making money, however I can never decide if I want to put that much out there at once. I'd have to say as a general rule I'd like to have 20% available at any given time if necessary so I still have a lot of head room to add trades.
The good news is that we came down and held 13,000 and 1400 on the Dow and S&P so I think we are poised to move higher. We may be slightly overbought here and could trend sideways for a little while but if there are some good earnings next week and microsoft takes over yahoo it could be good reason to rally. I will need to be on the look out for bearish trades because I don't want to get too leveraged one way. Maybe I can hedge with some index puts if necessary. I'll do some research this weekend and try and get setup
I can't be too upset, because of course I could be losing money. However its hard to see the winners I was holding that I cut loose keep making more highs. GS broke 200, so I may get back in, AAPL has yet to really take a breathe so I am not in that but plan to when it does. NVDA is working out nicely so far and I am waiting for a pull back in EWZ to get my full position on.
Visa finally had a pullback, I actually doubled my position in V. I am currently slightly below my 2% loss, in the longer term I don't see any reason for V to pull back much more because as the economy and consumer sentiment gets better spending will increase which is all good for Visa. Visa was getting unloaded though on friday fairly heavily, which I assume is profit taking, it seemed to find support around 82 but I'll have to watch it and cut it loose if necessary.
I still don't have all my capital at work. In fact, I have only 1/3 of it in trades right now. I will be looking to add positions and diversification next week on monday. The more trades I have on the greater chance I have of making money, however I can never decide if I want to put that much out there at once. I'd have to say as a general rule I'd like to have 20% available at any given time if necessary so I still have a lot of head room to add trades.
The good news is that we came down and held 13,000 and 1400 on the Dow and S&P so I think we are poised to move higher. We may be slightly overbought here and could trend sideways for a little while but if there are some good earnings next week and microsoft takes over yahoo it could be good reason to rally. I will need to be on the look out for bearish trades because I don't want to get too leveraged one way. Maybe I can hedge with some index puts if necessary. I'll do some research this weekend and try and get setup
Thursday, May 1, 2008
"You've Arrived, How Lovely!"
So it finally happened today. After the market did some thinking overnight and decided they liked the fed's stance enough to assume they will be on hold, we rallied. And as you can see by the below chart of the SPY, we finally broke and finished above 1400 on the S&P500. This should mean we go higher.(click the pic to enlarge)
I basically exited all but one position today. I did leave profits on the table but they reached my targets and I sold just as planned. The dilemma I had is now that they were reaching my targets, the S&P was breaking 1400 which meant there should be no stopping them now. I followed my rules, knowing I will have more opportunities and I plan to buy back in on dips of pretty much anything, such as AAPL, GS, RIMM.
I had to exit with losses too, SLB was a bust, I exited in the middle of the day before the close which made me lose more than I could have, but you never know. Apparently they are putting the oil services in with commodities and oil because it sold off hard. VIA broke back above 39, plus I wanted to exit because it was too illiquid, only lost 350, but still sucks. I cut ACH loose too because it fell below 42, I think it finished barely above it but I didn't like that it didn't participate in this rally, even with the FXI making gains. Plenty of other China stocks I can get into, but of course I am sure it will gap up tomorrow, haha. I need to work on getting slightly closer to my exit on my entries, because with decay I ended up losing more than my 2% on both ACH and SLB, in fact it was about 5% total combined, not good.
I entered a few new trades. I still have my WFR puts, which rallied today back to diagonal resistance, I considered doubling down but decided not to. I will need to learn to do this to really help my profits though I think. My new trades were June 90 calls on Visa(V), June 95 call on EWZ(brazil ETF) which only got 1 contract filled, then promptly went up, wish I had my full load on, oh well. Last was June 22.5 calls on NVDA.
Overall I ended up about 2.5% on the day. I finally broke above the resistance level in my account of 30k, however I gave that back when I took a day trade on the Q's with some puts. It was successful in that I had a plan and traded it and got out with a small loss of 200 when it showed me it still had strength and didn't want to fall.
It goes without saying I don't know what will happen tomorrow, but I am thinking maybe we see some profit taking, and I partially hope so as it will allow me to get into some other stocks that have ran up lately. If the S&P pulls back to 1400 I am going to buy some calls on the SPY I think. The tough thing will be keeping bearish plays to help balance my bullish bias. I am hoping this signals the start of the next bull market because that should make trading a bit easier and options cheaper in general.
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