Thursday, June 28, 2007Once More into the Breach
Well, I'm glad we got that bit of business out of the way!
The stock market did its usual spastic freak-out the moment the Federal Reserve Statement was issued. First it lurched down. And then up, big time. And then down again. And it spent the rest of the day generally heading south. It wasn't a plunge, by any stretch, but it certainly nuked a very healthy rise in equities into oblivion.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoQhKBJT9NI/AAAAAAAADEE/LhjWTNaD4s0/s400/0628-%24fed.jpg
Looking at the candlestick chart of the IWM (which is the ETF for the Russell 2000), you can see a picture-perfect shooting star. My feeling is that tomorrow will be a down day, and we can get back to the business of shorting this market.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoQhExJT9II/AAAAAAAADDc/6_JEbVNFkG4/s400/0628-%24iwm.jpg
Colgate (CL) is a relatively stable/"no surprises" stock that might be worth acquiring puts against.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoQhFBJT9JI/AAAAAAAADDk/GpFgOH_bK1s/s400/0628-cl.jpg
Coventry Health (CVH) appears to have failed to break out of a normally bullish pattern, which is bearish. I'm short the stock.
[ 本帖最后由 hefeiddd 于 2009-4-28 07:51 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 07:53 编辑 ]
Coventry Health (CVH) appears to have failed to break out of a normally bullish pattern, which is bearish. I'm short the stock.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoQhFRJT9KI/AAAAAAAADDs/q0qhw_ft1v8/s400/0628-cvh.jpg
I've mentioned Jet Blue (JBLU) for the bulls out there. I stand by this position. Maybe this former high-flier is getting its act together after many embarrassing fumbles.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoQhFhJT9LI/AAAAAAAADD0/ycr7WMD7eBY/s400/0628-jblu.jpg
I bought puts on MCK today based on a small head and shoulders pattern plus a falling-away from a Fibonacci fan.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoQhFhJT9MI/AAAAAAAADD8/Ra539n5ObuA/s400/0628-mck.jpg
Oils are looking pretty good for put/short opportunities too. I bought puts on OXY just before today's close.
[ 本帖最后由 hefeiddd 于 2009-4-28 07:54 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 07:57 编辑 ]
Oils are looking pretty good for put/short opportunities too. I bought puts on OXY just before today's close.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoQg3hJT9DI/AAAAAAAADC0/etW7EebtWFI/s400/0628-oxy.jpg
Same story with Southern Copper (PCU).
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoQg3xJT9EI/AAAAAAAADC8/dyhWjKoRA2Q/s400/0628-pcu.jpg
Potash puts are fairly heavily traded, thus the bid/ask spread isn't atrocious. I picked up some of these today (as with all the other trades, well after the Fed craziness).
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoQg4BJT9FI/AAAAAAAADDE/KR0LlxnuwnA/s400/0628-pot.jpg
...and the same for Schlumberger (SLB).
[ 本帖最后由 hefeiddd 于 2009-4-28 07:58 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 08:01 编辑 ]
...and the same for Schlumberger (SLB).
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoQg4RJT9GI/AAAAAAAADDM/r59GwucENz4/s400/0628-slb.jpg
.....and Exxon (XOM).
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoQg4xJT9HI/AAAAAAAADDU/-ujivG-B8G0/s400/0628-xom.jpg
I stopped trading Research in Motion (RIMM) ages ago, since the stock is just too weird for me to understand. Congratulations to those long the stock (and, even moreso, long the calls). RIMM had oh-my-God earnings after the close today and, last time I checked, was up 12%. Poor old can't seem to live this one down.
at 6/28/2007 49 insightful comments
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Labels: clf, cvh, iwm, jblu, mck, oxy, pcu, pot, slb, xom
[ 本帖最后由 hefeiddd 于 2009-4-28 08:02 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 08:03 编辑 ]
Wednesday, June 27, 2007Lying in Wait
This isn't some weird crackpot organization (or a crackpot blog writer). This is a fairly sober group of individuals. Take note.
The $VIX, as expected, absolutely plunged today. I'm not sure - no one is - what the market's reaction to tomorrow's forthcoming GDP report and Fed Announcement is going to be - - but it's possible that all the excess in the $VIX got squeezed out today. For myself, I think I'm going to keep most of the powder dry until well after the Fed announcement, which always throws the market into a bizarre spasm.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoLHkxJT9BI/AAAAAAAADCk/HqTVW-gf-lE/s400/0627-%24vix.jpg
I've tried to emphasize in the chart below the pivot points of the Russell 2000. Just to be clear, the fact that today's is circled doesn't necessarily mean I think the buying is over. But it's a help visual aid in any case.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoLHghJT88I/AAAAAAAADB8/4ukJTyKmZvU/s400/0627-%24rut.jpg
As you probably know by now, the Russell is my favorite index for option purchases. It was especially strong today. At this point, I'd say 840.02 is a good stop-loss level.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoLHgxJT89I/AAAAAAAADCE/ejgZHiitQSE/s400/0627-%24rutcandle.jpg
The S&P 500 also had a good day for the bulls. I've drawn the downward-sloping pennant that I believe is confining the market action these days.
[ 本帖最后由 hefeiddd 于 2009-4-28 08:04 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 08:06 编辑 ]
The S&P 500 also had a good day for the bulls. I've drawn the downward-sloping pennant that I believe is confining the market action these days.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoLHgxJT8-I/AAAAAAAADCM/3LR1AeXcBxE/s400/0627-%24spx.jpg
Now it just wouldn't feel right if I didn't offer my JCP chart of the day. One reader commented I should get out of those puts. Well, earlier today, I did. I don't think the fall has exhausted itself, but I'd rather take profits now and re-enter the puts after a retracement. If this stock pushes its way back to the neckline, I'm going in big-time again.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoLHhBJT8_I/AAAAAAAADCU/MfbMeD1Am0g/s400/0627-jcp.jpg
I'm long Micron (MU) now. It won't be a long-term hold, I don't think. But this is a nice little bullish chart for now.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoLHhRJT9AI/AAAAAAAADCc/7kVnFzLMQcw/s400/0627-mu.jpg
Let's enjoy a little George. See you tomorrow.
at 6/27/2007 28 insightful comments
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Labels: $vix, jcp, mu
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[ 本帖最后由 hefeiddd 于 2009-4-28 08:06 编辑 ]
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[ 本帖最后由 hefeiddd 于 2009-4-28 08:08 编辑 ]
Tuesday, June 26, 2007When It Seems Easy, Feel Queasy...
I began this blog over two years ago, and I think that it has made me a better trader. Having to step up to the podium each day and offer up opinions (which are subject to scrutiny, disparagement, and future review) makes me think long and hard about the market. And the occasional public floggings I have received have imbued with me a healthy dose of humility that I think is essential to profitable trading.
Trading profitably has become far too easy recently for my liking. If bearish trades start becoming like shooting fish in a barrel, I know it's time to take profits. There have been times in the past.......and this is very common among traders.... when easy profits encourage more trading. And the tide starts to turn against you. So you pile on more. And the losses start to pile on. And, before you know it, all your fantastic profits from the last downturn are M.I.A. I really don't want to go through that again.
So as the trading day ended, I was kicking myself for having such a substantial position of puts on the Russell 2000 in place. There are some areas in my life where "irresponsibly large" is welcome, but options positions is not one of them. Let's just say I hope I don't wake up to a huge gap-up in the indexes. It could happen.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoGFnwmb1-I/AAAAAAAADBU/aSmxhKaezhM/s400/0626-%24usasevenstages.jpg
The basis for my nervousness.......besides my own angst........is the $VIX. Just take a look as this multi-year graph. For ease of viewing, I have circled peaks and troughs. We have certainly had $VIX levels higher than the present one, but let's face it, this is pretty peak-y. As I said: I'm nervous.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoGFnwmb1_I/AAAAAAAADBc/A1j_hnTA-KA/s400/0626-%24hansblixdigsvixandchicks.jpg
The Russell 2000 is below its supporting trendline, but this trendline isn't horribly significant. In other words, I don't put a heck of a lot of weight into the fact that it is broken. I'm glad it's broken, to be sure, but there's still a fair amount of support at these price levels.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoGFoAmb2AI/AAAAAAAADBk/_labhfCj8bY/s400/0626-%24rut.jpg
One way to look at the market is that, for the past month or so, we've been caught in a trading range, and we are at the bottom of that range now. I've highlighted the range area on the S&P 500 daily graph here. I do not think we would break into new highs from here, but we might wind up with a triple top or at least partially retrace our way back up near the former highs.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoGFoAmb2BI/AAAAAAAADBs/d5w_9NW79Wo/s400/0626-%24spx.jpg
One could look at the market another way........it is pretty easy to lay out a massive rounding top. Just look at the intraday chart of the S&P 500, where I've embellished it with probably one of the worst arcs drawn in human history. (I am not much of an artist).
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One could look at the market another way........it is pretty easy to lay out a massive rounding top. Just look at the intraday chart of the S&P 500, where I've embellished it with probably one of the worst arcs drawn in human history. (I am not much of an artist).
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoGFoQmb2CI/AAAAAAAADB0/AadqjUIBff8/s400/0626-%24spxintraday.jpg
Returning to the $VIX, however, the zoom upward has been swift. And if the market settles down and starts marching upward again, the premium values built into options are going to shrivel up faster than Strom Thurmond's johnson on a chilly southern evening.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoGFVwmb15I/AAAAAAAADAs/47CN8rkES6w/s400/0626-%24vix.jpg
OK, a few stocks. Stocks like CROX! I have, as I've mentioned before, lost some cash on buying CROX puts before. Fool that I am, I gave it another go today. My puts are slightly profitable. I was inspired by an article this week in Barron's. They say that easily 20% of this stock's value could be blown away just by right-sizing it to its industry. Plus, I think it's a fad.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoGFWAmb16I/AAAAAAAADA0/2h1FuSjLtFI/s400/0626-crox.jpg
One similar shoe fad which is already "post-bust" is Heelys (HLYS), those obnoxious shoes that kids wear with the wheel on the heel. As you can see, the stock is doing poorly.
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One similar shoe fad which is already "post-bust" is Heelys (HLYS), those obnoxious shoes that kids wear with the wheel on the heel. As you can see, the stock is doing poorly.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RoGFWAmb17I/AAAAAAAADA8/g9REa-aICxc/s400/0626-croxhlys.jpg
I hate to mention JC Penney every day, but this continues to do beautifully. I've highlighted my price target. The puts I bought on this are up huge.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoGFWQmb18I/AAAAAAAADBE/YCjVlZvFQu4/s400/0626-jcp.jpg
Vulcan Materials (VMC) has a plainly defined range which seems to be breaking down. I'm short this, and it's got a nice ways to fall to the trendline.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoGFWQmb19I/AAAAAAAADBM/Un2456g8t3g/s400/0626-vmc.jpg
at 6/26/2007 40 insightful comments
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Labels: $rut, $spx, $vix, crox, jcp, vmc
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Monday, June 25, 2007Oh, Baby...........
I'm feeling a terrific sense of control over this market (at last). Recently, I've been doing extremely well. Even with intraday trading, I'll buy calls at just about the bottom, sell them at just about the top, then buy puts, and then ride those all the way down. I'm rarely this "in synch" with the market, but it's been a good feeling.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RoBhegmb10I/AAAAAAAADAE/UBvvqYd_LTM/s400/0625-%24abbybaby.jpg
I noticed that Barron's this week features Blackstone's CEO on the cover, pointing out that a massive public offering of the largest private equity partnership clearly signals the peak of these beasts. I couldn't agree more. Oh, let's check in to see how the public's investment in the two-day old Blackstone has been faring.......
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoBhewmb11I/AAAAAAAADAM/JZLnHPUco-8/s400/0625-%24bxrocks.jpg
Of course, the big news today is that today's bounce from last week's downside action completely evaporated. The Dow surged 120 points higher (and I profitably closed out some calls I bought earlier in the day, then gobbled up a huge number of puts), then the entire gain by blown to smithereens. As you can see from the Russell, the medium-term trendline is now broken.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RoBhewmb12I/AAAAAAAADAU/i_Ew-DqmDmY/s400/0625-%24rut.jpg
About half an hour before the close, I sold all my puts (DIA and $RUT), since I felt the selling was - - at least very short term - - overdone. Here's the S&P 500.....
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RoBhfAmb13I/AAAAAAAADAc/-ivXWaJfNpM/s400/0625-%24spx.jpg
In a broad sense, I think things have changed. It's been horrible awaiting the change, but I think it is finally here. In the broadest view, I think we have witnessed the passing of the Mother of All Double Tops.
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