Archive for the ‘Market Talk’ Category
Thursday, April 24th, 2008
Ok, the market has confirmed it’s up move and it seems that everything seems to be turning as credit spreads have eased and most financial reports are largely being ignored. We have to now reset all the resistence levels as the previous resistance has become support. Here they are:
DOW 13200 Nasdaq 2500 SP 1410
Those aren’t exact figures but around there. So there’s 2-4% upside left I think. I’m current become slight more inclined to be long but I am still very very cautious. I’ve taken up most long global positions. Value Click looks tempting to me but I decided against it as it has earnings on May 6th and I hate that earnings game. I’m still very high on commodities as the world still ramps up on production and modernization. It’s a very very long term story but the food crisis is also here to stay. As the world gets modern, we waste more food. It’s just what happens. Too much money chasing the same amount of food. But alway pick up protection for your trades…either covered calls or just putts. I’m still very negative on COF and GRMN. But since then my friend has convinced me about the negatives of Game Stop which is everyone’s all time favorite. But the possibility of downloading games directly to consoles instead of going through retailers is a very real possibility. Cutting out the middle man is disastrous to retailers but especially GME!!! But it’s a long term trade but with just one single announcement that stock is dead meat.
Disclosure: I’m currently long RIO, TRA and short COF
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Tuesday, April 15th, 2008
You know it’s bad when my own father says he’s going to retire in China because our dollar is falling to the dumper and the worst thing is that my dad doesn’t even follow the economy. But it’s not good and there is still a lot of pain to come but for the short term, the market seems to be in a range. I’m a little hesitant to be in the market right now until a direction has been confirmed. As of right now the markets are rather flat.
My Valero position is down but net wise, I’m up by selling calls and buying them back when the stock drops and selling them when it rises. It’s somewhat of a insurance to lock you gains without selling the stock. It works well but just don’t go crazy. As for the shorts on Garmin and Capital One, they have made me a hefty amount of money. My Citibank putts were sold at a slight loss as I saw it rise to $25 before coming back down to $22. Horrible trade…should have been a little better but I was thinking of doubling down but I always learn never to double down on short term trades. At the advice of Pete Najarian, I bought some Wachovia putts last Friday and made a killing yesterday. Thanks Pete! You’re the best. Someone bought $8M worth of options last Friday. I had to trust that type of conviction. I’m going to probably sell my Valero position after this week with options expiration and I”m holding SPG putts for protection and I’m slight up on those so I may just take my profits and just reposition myself after this week. It’s good to refresh yourself and not get caught up with your positions. Doing that is the path of least resistence and good traders look for the edge. None of my positions have any edge.
I’m looking at getting in Apple perhaps before it’s new phone launch or Terra Industries because it’s a agriculture play that has more room to run with a 10% short interest. Another Pete Najarian suggestion that I looked into. Of course I will be selling calls into both of these. Apple has about $10 call profit while Terra has bout $4 with at the money calls. So usually, I try to get in low then when it rises to a good point, I sell my calls for protection. If it falls, I locked in my profit and get to keep the stock while I hedge with some putts to maintain further gains. I’m trying to keep it simple now but I’ll update everyone more soon. I think today will end flat or slightly negative by the way.
I currently hold Valero long and SPG shorts.
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Wednesday, April 2nd, 2008
I got into Valero and Tesoro last week and both are up double digits as well as selling calls on them has increase profits significantly so I’m winding down the trade now. They have ran more than the market but not more than the financials which seems a little over done to me.
My suggestion is that the financials are not at a bottom yet. I was short Citibank through putts which have lost value the last couple days but it was a safe hedge so the loss was more than offset by the refiner trade.
I think the next trade may be shorting gold related stocks when they rally a little bit. I should have thought of this before but didn’t even come to mind. What a dope! But I still need more research.
As for the market, it’s been a nice rally but be aware of this Friday’s jobs report that may ruin everything as all the markets are headed toward resistance again but slight higher though which may signify bottom but I believe it’s a fake rally. Not all the earnings have been marked down yet especially with a recession coming. I will write a post about inflation soon. The resistance levels are as follows:
DOW - 12,800 S&P - 1,420 NAS - 2,440
They are getting close so buy those putts for safety. Selling calls at this moment doesn’t seem worth while as volatility is down.
Btw, I had a comment about the Nymex trade which I did take a small loss because I’ve been selling $3 calls for the six months that I was holding it. Almost $20 in profit so that lowered my risk but I still managed a loss. Yes it was a bad trade for one huge reason. There was no edge on the trade as all the information as available and not catalyst but I still think if the market wasn’t spiraling to it’s death, the deal would have gone through at plus $140.
Good luck trading.
Currently holding: Long VLO, Short GRMN, C
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Monday, March 24th, 2008
Ok people, remember we’re in a BEAR market and don’t get too into the euphoria. A lot of money is in the side lines and they are still waiting so calm down. The run in financials is probably a nice sign as well as the run in technology today. But hold those horses and keep that cash as it doesn’t seem like the big money are in yet. There may be some window dressing as we move toward the next quarter but we should probably take this opportunity to sell what losses we have recovered on our longs or sell to keep our profits because the financial crisis is not over. Here are a few reasons:
1. European banks will slowly reveal more damage as they should come clean as well.
2. Banks with large lines of credit loans will see large losses as those loans are based on extended values of homes that will reach peak default status within the next 6-12 months. Expect more write offs.
3. Consumer spending will dry up more as credit cards are being used up and cannot be refinanced with lines of credit. Expect more defaults and write offs.
4. Although there is more liquidity, lending standards are more strict and that is not going to change anytime soon so consumers and businesses still don’t have the money although the institutions that lend are in better shape. But less lending equals lower profits and revenue.
So sells the rips and buy the dips. It’s ripping so at least start selling.
Currently: Holding NMX out of money calls and COF in the money putts. Net short.
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Tuesday, March 11th, 2008
It looks like the federal government and the central banks around the world are weary of the decreasing amount of wealth in consumers in the United States. The decrease in real estate equity is one factor. The decrease in stock value is another factor. The decrease in income as opposed to inflation is another. Of course the slowing job market is a major one. With the decrease in property tax revenues a lot of states who are already in financial problems are cutting jobs especially in government services such as educations and social services. So now it’s eventually going to lead to a business slow down as we have to lower work force and spending which creates the downward spiral we call a recession . So now we’re all pretty much hoping on the recession bandwagon, the central banks have to attempt to slow the crisis. With their move to exchange liquidity in the market by exchanging treasurers for mortgage back securities, it tremendously allows banks and business to use their deadweight securities as collateral to borrow against. This is pretty much more significant than any rate cut at this time as it’s a credit and liquidity issue.
I think the bears do have something to think about with today as a starting point as the solutions start to appear in the market. Although the long term problems are not gone by any means, in the short term, there seems to be a few catalyst to push the market up to 12500 or so before another downturn. The catalyst include investment bank earnings and the fed meeting next week. There will probably be momentum going into these catalyst so it’s good to be quick on the long side or not in the market at all. I took off all my shorts last Friday and I’m long NMX and FCX but unfortunately, I did ride the punishment yesterday on the FCX as all the material stocks got punished but it looks like today will probably go back to positive and I’ll probably start taking off the position as the market rises slowing into the end of the week. But once again, good luck people and trade well.
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