Financial Markets dont get any crazier than this. The high volatility intraday movements can make any trader break into a sweat. I closed down most of my options positions and just started trading outright stocks to cut down on the volatility. A good litmus test of whether you are trading the right size for your portfolio is if you can sleep peacefully at night with open open positions in your portfolio. I definately could not with this market volatility, so 2 weeks ago i cut down my trading size and number of positions in my portfolio till things calm down a little.
As promised, here's the second part to my Recession-proof stock theme - Pawn Shops! One in particular that i own and love the business model of is First Cash (FCFS). They own 900 pawn shops across the US and some 200 odd Payday loan type of places. In an economy this bad with higher cost of living prices everywhere, CPI, PPI going through the roof, people will eventually downgrade on their shopping expeience to pawn shops which provide more affordable "not brand new but will do" items. Also, with people struggling to make ends meet with the higher living costs (food, oil, etc) they will be looking to pawn more of the stuff they dont use around the house at these places. The pawn shops literally buy these goods at pennies on the dollar and i believe a fair amount of people cant afford to reclaim them back specially in this environment. Their other business (money leanding) needs no introduction. They offer extremely short term loans (1-2 weeks) with a ridiculous interest rate of ~200%. Ofcourse the people that actually borrow from them can barely afford to pay back the principal, let alone the interest charges thus creating a visicous circle of being forever in debt.
FCFS is already a big core holding of my portfolio which i bought in around $15 and is now up to $20 netting me a 33% on my investment in 2 weeks. I sold some today around $20 to lock in some gains but will probably buy again on a pullback to $17 area.
Also bought GS calls yesterday and flipped them at close today after GS rallied $15 today. Bought more SHLD calls, TSO stock, XOM stock and LVS stock today
Wednesday, July 16, 2008
Wednesday, June 18, 2008
Recession Time!!!
As i predicted in my last post on Friday 13th, we did get a follow through rally in the NASDAQ early this week. But also like i said this rally was nothing more than a short covering rally so treat it like one.
Today was a confirmation of how bad this market is. Banks still need tons of capital to re-liquify themselves (Morgan this morning, Lehman, UBS, etc). The regional banks are in even worse shape and you can see it in stocks like NCC, etc.
Now for the recession story: I have reiterated it countless times on this blog: high gas, high food prices, no jobs, low home equity = Recession!!! and i made my first recession play today.
Since recession isnt something that you can time through option plays (like earnings) and usually takes 2-3 years to get over, i will limit my recession trades to only stock trades. My first pick is Devry University (DV). I have been itching to get long this stock and just got filled on my limit order of $58.7 this morning. With so many people jobless, one of the biggest fallback option for them is to go back to school to either better themselves in their industry or switch industries. Ofcourse a lot of them will choose to go for MBA's from top tier schools but i believe a large percentage of the unemployed population will choose cheaper, faster degrees from universities like Devry. These people have the same problems we all face (see recession problems above) + NO INCOME. They will try to maximise their continuing education potential while finding the cheapest alternative. This is where DV steps in. Real cheap degrees ($25,000) compared to a $150,000 MBA. Even if 20% of the people looking to go back to school choose DV instead of top MBA school, its a huge bump in their revenue stream. Also, Devry and Apollo group are the only 2 leaders in this field.
I will keep posting in series about Recession stocks, so look out for Part 2 soon
Today was a confirmation of how bad this market is. Banks still need tons of capital to re-liquify themselves (Morgan this morning, Lehman, UBS, etc). The regional banks are in even worse shape and you can see it in stocks like NCC, etc.
Now for the recession story: I have reiterated it countless times on this blog: high gas, high food prices, no jobs, low home equity = Recession!!! and i made my first recession play today.
Since recession isnt something that you can time through option plays (like earnings) and usually takes 2-3 years to get over, i will limit my recession trades to only stock trades. My first pick is Devry University (DV). I have been itching to get long this stock and just got filled on my limit order of $58.7 this morning. With so many people jobless, one of the biggest fallback option for them is to go back to school to either better themselves in their industry or switch industries. Ofcourse a lot of them will choose to go for MBA's from top tier schools but i believe a large percentage of the unemployed population will choose cheaper, faster degrees from universities like Devry. These people have the same problems we all face (see recession problems above) + NO INCOME. They will try to maximise their continuing education potential while finding the cheapest alternative. This is where DV steps in. Real cheap degrees ($25,000) compared to a $150,000 MBA. Even if 20% of the people looking to go back to school choose DV instead of top MBA school, its a huge bump in their revenue stream. Also, Devry and Apollo group are the only 2 leaders in this field.
I will keep posting in series about Recession stocks, so look out for Part 2 soon
Friday, June 13, 2008
Some relief today
I've been busy this last week and havent made any trades this week. This market is too hard to trade and i prefer to sit on the sidelines protecting my capital and wait till the dust settles. It might have settled for a short time today. Today felt more like a short covering rally than actual buying. Nonetheless, shorts will take a couple of days to finish covering which might prolong this rally a little more. Lehman reports earning before market opens on Monday. If Lehman says anything remotely positive about the economy/ mortgage writedowns/ their balance sheet/ heck even the weather...this market will have a HUGE GREEN day. I assume the shorts wanted to cover incase anything like this happens and hence the rally all day today.
I bought a very small amount of calls on Cognizant Technology (CTSH) today. I've been eyeing this company for a while and finally pulled the trigger today. Indian software companies seem to be on a rebound here after selling off for almost a year. I actually also bought stock in Wipro Technologies on the Indian market last week.
Remember, the key in this market is to protect you capital so you can trade another day.
I bought a very small amount of calls on Cognizant Technology (CTSH) today. I've been eyeing this company for a while and finally pulled the trigger today. Indian software companies seem to be on a rebound here after selling off for almost a year. I actually also bought stock in Wipro Technologies on the Indian market last week.
Remember, the key in this market is to protect you capital so you can trade another day.
Thursday, June 5, 2008
Short term change in Sentiment
I think we are having a short term change where people are closing out shorts and going long. This market is very strong today and i dont think we will have a selloff today like we did yesterday. DUG is performing poorly but AGU and STX are holding up my portfolio.
Tech looks very strong and i might add some here
Tech looks very strong and i might add some here
Wednesday, June 4, 2008
Duggy DUG
Got filled on a limit order mid-day to buy more DUG. Lets hope it starts working its magic here
No Conviction in the market today
This market is rising steadily but its seems like it is doing so without a strong conviction of the direction. I'm am looking at getting into some tech plays but not sure which one yet. Someone mentioned AAPL yesterday going into the developers conference. I might look into buying some AAPL calls for a quick play of this conference. I'm almost 100% sure they will announce the new 3G phone Iphone there because AT&T just asked its store employees not to take any time off between June 15-June22....hmmmmmm
Stock might perform well after the announcement and also after AT&T reports first week sales data
Stock might perform well after the announcement and also after AT&T reports first week sales data
Tuesday, June 3, 2008
Obama's In
Obama's in and the market didnt like that 1 bit...as you can tell. I believe out of the 2, hillary was more pro-capitalism and hence the selloff. Sold more TSO right when selloff start to lock in gains and bought more DUG. I think we see a major selloff in the coming days.
TSO update
Sold more of my Aug 30 calls into the morning strength. After the Fast Money pump last night...i knew we would open higher because of the retail traders buying in...sold to them!
Monday, June 2, 2008
Solid Trading Day
Bought more TSO calls and stock at the open...TSO shot up like a rocket today...a little too fast even for me....even though i have huge positions in TSO and am very happy today, parabolic moves like this make me nervous. These huge percentage moves happen when a market is trading on emotion rather than fundamentals and as anyone trading will tell you...emotions swing both ways and just as fast. I took some profits in TSO at close to lock in some gains.
Sold my BIDU put for a small profit too.
Bought more DUG today
Long: TSO calls and stock, DUG, STX
Sold my BIDU put for a small profit too.
Bought more DUG today
Long: TSO calls and stock, DUG, STX
Friday, May 30, 2008
TSO and STX update
Finally did it...Bought more TSO today..i think the refiners are just starting their great run
Stx had a monster 5% move today and i bought more on the pullback mid-day....my dollar average cost for STX is $21 now.
Stx had a monster 5% move today and i bought more on the pullback mid-day....my dollar average cost for STX is $21 now.
Thursday, May 29, 2008
TADA...The top in Crude Oil is in
Today was a huge bearish reversal in the crude markets. Crude oil was down $4 and i believe it will continue down in the coming weeks. Also a great day for DUG. Even though i just have 25% of my original position left, i will probably buy more DUG tomorrow. OIH was under heaving distribution today too. Once we exhaust the dip buyers in crude and OIH (probably by next week), its off to the races for DUG and TSO.
Shorted some BIDU today through puts. However, DELL reported after close and the stock is up 10% on the earnings release. DELL might be able to carry the NAZZ on its shoulders tomorrow which will inturn take up BIDU and hence to hedge my put risk for tommorow i bought stock in BIDU after hours.
Long: DUG, Bidu stpck, STX, TSO (and itching to pull my finger to buy more)
Short: Bidu puts
Shorted some BIDU today through puts. However, DELL reported after close and the stock is up 10% on the earnings release. DELL might be able to carry the NAZZ on its shoulders tomorrow which will inturn take up BIDU and hence to hedge my put risk for tommorow i bought stock in BIDU after hours.
Long: DUG, Bidu stpck, STX, TSO (and itching to pull my finger to buy more)
Short: Bidu puts
Wednesday, May 28, 2008
Hard Disk Play
Bought a small position in Seagate Tech. (STX) today at $20.55. Its competitor, Western Digital (WDC) is breaking to new highs while STX has lagged severly. I'm playing this solely from a pair-trade standpoint
Crude Oil and Refinery Dynamics
Sold 75% of my DUG position at 29.2 this morning. There seems to be heavy resistance in 29-30 area and i wanted to lock in my gains incase DUG heads back down again. I still believe that the market will continue downwards in the coming weeks which will take the Oil Service stocks down too. I will buy DUG again if it convincingly breaks upwards over 30 and the OIH breaks below support at 206.
Refiners are starting to look like a great play soon..not yet though. The refiners have finally managed to pass on $4 gas to consumers. When the price increase is steady like it has been recently, consumers are less affected by sticker shock and gradually accept the higher prices. In cases where there is a sudden spike in prices (after Katrina and Rita in 2005...with $4 price at the pump), consumers are affected with "sticker shock" which affects demand drastically.
Once crude oil prices start falling, the refiners will be able to maintain these high prices for a while thus improving their margins. Refiners make a profit on the "Crack Spread" which simply put is the difference of their raw costs (barrell of crude oil) - the price they charge at the pump. Thus is crude prices fall, it'll improve their crack spread margins.
I'm seeing some good action in VLO (Valero), SUN (Sunoco) and TSO(Tesoro) today. However, i'm not fully convinced now's the time to buy refiners yet but it will be soon.
Refiners are starting to look like a great play soon..not yet though. The refiners have finally managed to pass on $4 gas to consumers. When the price increase is steady like it has been recently, consumers are less affected by sticker shock and gradually accept the higher prices. In cases where there is a sudden spike in prices (after Katrina and Rita in 2005...with $4 price at the pump), consumers are affected with "sticker shock" which affects demand drastically.
Once crude oil prices start falling, the refiners will be able to maintain these high prices for a while thus improving their margins. Refiners make a profit on the "Crack Spread" which simply put is the difference of their raw costs (barrell of crude oil) - the price they charge at the pump. Thus is crude prices fall, it'll improve their crack spread margins.
I'm seeing some good action in VLO (Valero), SUN (Sunoco) and TSO(Tesoro) today. However, i'm not fully convinced now's the time to buy refiners yet but it will be soon.
Thursday, May 22, 2008
No fun in the sun
All solar stocks (FSLR, ESLR, SPWR, SOLF) took a nose dive today as no buying interest showed up for these names. Just last week these names were the momo-guy's favorite plays but no more. My puts that i bought on FSLR yielded me a quick 76% profit in a day and i sold all of them at the end of day since its gonna be a long weekend and maybe the momo-guys still love them and start buying them again one last time. Either way, its hard to argue with a 76% return in 1 day and i dont want to be greedy.
My DUG purchase yesterday worked out ok today too. The OIH (Oil Services ETF) is starting to break down too and i'm noticing chinks in the armor. One big tell was yesterday (Wednesday) when oil rallied $5 on the day but Exxon (XOM) reversed direction hard. The price movement of DUG is inverse to the OIH so when stocks like Exon, Conoco, Chevron start breaking, DUG rallies.
My DUG purchase yesterday worked out ok today too. The OIH (Oil Services ETF) is starting to break down too and i'm noticing chinks in the armor. One big tell was yesterday (Wednesday) when oil rallied $5 on the day but Exxon (XOM) reversed direction hard. The price movement of DUG is inverse to the OIH so when stocks like Exon, Conoco, Chevron start breaking, DUG rallies.
Wednesday, May 21, 2008
TIIIMMMBBBERRRRRRR!!!!
The last 2 days proved what i was talking about...the rally over the last few weeks was very weak with no institutional buying to support it. On Monday, we had a huge intraday reversal that was a clear signal to the end of the rally and time to get out of longs. On tuesday, my NYX position started selling off and i took my 13% loss and got out of my defined stop loss. NYX was down another $2 today.
Covered my MA short i put on monday for a little profit. Oil was up $5 today which looked like capitulation of the shorts. I added to my DUG position (short oil) today and shorted FSLR at $286
Covered my MA short i put on monday for a little profit. Oil was up $5 today which looked like capitulation of the shorts. I added to my DUG position (short oil) today and shorted FSLR at $286
Tuesday, May 20, 2008
Stopped out of NYX
I got stopped out of NYX this morning when it broke through its 20-day moving average. The market feels like its rolling over again. We had a huge intraday reversal yesterday when we failed to break through the 200 day MA on the S&P. I got put on a short MA(Mastercard) position yesterday right before close. I still like NYX prospects but if the market rolls over right now its taking NYX down with it.
Monday, May 19, 2008
NYX
Bought calls options on NYX on the dip this morning when its traded down to $70.05. 70 still held as new support and hence the buy.
Saturday, May 17, 2008
Owning a piece of American history
Yesterday i bought a tiny slice of american history. I bought stock of one of the oldest institutions in America...The NYSE (NYX). NYX broke out of resistance at 70 on May 6th after it reported earnings. The earnings call mentioned that the NYSE/Euronext merger was going well and that they have realised only a fraction of the costs in savings so far. This is definately good news since this market held down the NYX stock for all of this year and 2007 on the belief that the merger wasnt going as well as planned. However, Euronext has seen its highest average trading volume last quarter as well as the NYSE (3.06 billion). The stock broke out of resistance at 70 on high volume and has had a textbook low volume pullback to test the breakout. I bought some tock at 71 yesterday. This struck me as a very low risk/high reward strategy. The stock breaking down below 70 on high volume presents a quick exit.
Wednesday, May 14, 2008
And we rally on....
The market is in rally mode again today. I still dont trust this rally and will bail out at the first sign of breaking but you have to respect the trend for now. Yesterday i bought another dry bulk shipper after i sold off my remaining position in DRYS. I bought calls for DSX (Diana Shipping). DSX has moved considerably less in the last month compared to DRYS and both of them do the same exact business. I felt the risk/reward was better with DSX at this point than DRYS which has run up a little too fast for me to buy anymore. DSX reported a nice quarter this morning (no suprise due to the recent surge in dry bulk shipping rates) and both these stocks are rallying off the report.
I also sold my national aluminum stock last night at 500RS which i had bought for 450Rs a few days ago. The Indian stocks move in huge multiples which is great if your on the right side of the trade but probably feels a thousand knives stabbing you if your wrong. I have yet to experience that pain since i have made only 2 trades in the indian market so far but i have no doubts that i will soon be caught on the wrong side and experience that wonderfull feeling.
I also love the fact that i can now get my trading fix every 7 hours instead of having to wait an entire day. The indian stock market opens at 11.20 pm CST and closes at 4.30am CST.
Current Longs: DSX, DUG, TSO, Hero Honda
I also sold my national aluminum stock last night at 500RS which i had bought for 450Rs a few days ago. The Indian stocks move in huge multiples which is great if your on the right side of the trade but probably feels a thousand knives stabbing you if your wrong. I have yet to experience that pain since i have made only 2 trades in the indian market so far but i have no doubts that i will soon be caught on the wrong side and experience that wonderfull feeling.
I also love the fact that i can now get my trading fix every 7 hours instead of having to wait an entire day. The indian stock market opens at 11.20 pm CST and closes at 4.30am CST.
Current Longs: DSX, DUG, TSO, Hero Honda
Monday, May 12, 2008
Market Update
The resilience of this market amazes me. In the face of $125 oil, this market just doesnt seem to let up. Everyone knows by now how the high oil prices are adversely affecting consumers. How the high rice, wheat, corn prices are causing the average joe to pay more at the grocery store. We also know that the declining value of homes is reducing the "wealth effect" that everyone felt 3-4 years ago. Then why does the stock market act like everythings fine???
One key fact in last month's rally is that the rally has occured on very low volume. This tells me that big money isnt rushing back into the market to put their money to work just yet. I sold off the rest of my DRYS calls today for a 160% profit. It was time to cash in those gains there.
I believe this recent rally is starting to loose steam and we might head back down again. I just dont have enough conviction to start buying again and it hurts when i see this market go up everyday and i calculate my missed opportunities. But i have to stick with my conviction and not enter a position half-heartedly. Sometimes the hardest trade to make is none at all!
I executed my first trade in the Indian Stock market tonight. I have been watching the market for the last couple of months to understand the dynamics and felt confident enough to pull the trigger today. I bought some shares in an Automobile company called "Hero Honda" at 800Rs and an Aluminum manufacturer called "National Aluminum" at 450 Rs. Hero Honda just broke through its old trading range on good volume and i see it going higher.
Long: DUG (Short oil ETF), TSO, Hero Honda, Natl. Alum
One key fact in last month's rally is that the rally has occured on very low volume. This tells me that big money isnt rushing back into the market to put their money to work just yet. I sold off the rest of my DRYS calls today for a 160% profit. It was time to cash in those gains there.
I believe this recent rally is starting to loose steam and we might head back down again. I just dont have enough conviction to start buying again and it hurts when i see this market go up everyday and i calculate my missed opportunities. But i have to stick with my conviction and not enter a position half-heartedly. Sometimes the hardest trade to make is none at all!
I executed my first trade in the Indian Stock market tonight. I have been watching the market for the last couple of months to understand the dynamics and felt confident enough to pull the trigger today. I bought some shares in an Automobile company called "Hero Honda" at 800Rs and an Aluminum manufacturer called "National Aluminum" at 450 Rs. Hero Honda just broke through its old trading range on good volume and i see it going higher.
Long: DUG (Short oil ETF), TSO, Hero Honda, Natl. Alum
Wednesday, April 30, 2008
Bad days coming again!
I think we are headed back down again soon...watch out for your long positions
Tuesday, April 22, 2008
DRYS
My DRYS (Dryships) trade worked out really well today. We finally broke through the resistance line holding us back since Nov 2007. The stock was up $9 today (12%) and i had to stick with my discipline on this. I sold half of my calls today for a 75% profit in 5 days. I still think it goes higher but with a profit like that you have to take some off the table.
Having said that i still love DRYS. The Baltic shipping index which measures the day rates for the dry bulk carrier ships are moving away from their all time lows. To give you an idea of the difference: The shipping rates for 1 ship is $90,000/day. Last year in November the rates were $180,000/day. This cut in shipping costs is already reflected in most of the dry bulk shipping carrier stocks. I want to add more to my DRYS position and will once the stock pulls back a little more more where it closed today (around 78-79)
Having said that i still love DRYS. The Baltic shipping index which measures the day rates for the dry bulk carrier ships are moving away from their all time lows. To give you an idea of the difference: The shipping rates for 1 ship is $90,000/day. Last year in November the rates were $180,000/day. This cut in shipping costs is already reflected in most of the dry bulk shipping carrier stocks. I want to add more to my DRYS position and will once the stock pulls back a little more more where it closed today (around 78-79)
Friday, April 18, 2008
Thursday, April 17, 2008
Times are a changing....
So MER reports a bad quarter today and stock ends up $2.50 for the day....same thing happened with UBS and LEH couple of weeks ago. I think the market is starting to price in all negetives here and is starting to look ahead. After the bell today, GOOG blew out the numbers and the stock is trading up $72 as i write. This tells me that a lot of shorts were caught leaning the wrong way and were blown out of the water today. Tech is starting to gain institutional favor again and i will definately need to close out my RIMM short tommorow.
I did some buying of calls today in TSO(Tesero)- a refiner. With peak driving season looming around the corner, the refiners are going to have to start upping the crack spread pricing. The $115 oil will translate into over $4 in gas by Memorial day. With cracks spreads near their lows right now ($9) the only way for refiners to start printing money in their peak demand season is by increasing the crack spread.
Also bought calls for DRYS(DryShips) - with the Dow Jones Transportation Index (DJT) close to highs, the railroad stocks (CSX, NSC) at all time highs, i think the dry bulk carriers are going to start ramping up. DRYS is a leader in the bulk goods shipping business and hence my buying calls in DRYS.
MA looks like it could take off its high at $232. If i start seeing heaving institutional buying of MA, i'm closing out my short position and going long right away.
Only big looming "IF" right now if Citigroup's quaterly report tomorrow morning. If C doesnt say anything too bad, i really believe we will be out of the woods for the shorter term. We also need to take out the overhead resistance at 1390 in the S&P(which we are very close to right now). GOOG's earnings should definately help the S&P tomorrow. Lets see what the market tells you tomm.
I did some buying of calls today in TSO(Tesero)- a refiner. With peak driving season looming around the corner, the refiners are going to have to start upping the crack spread pricing. The $115 oil will translate into over $4 in gas by Memorial day. With cracks spreads near their lows right now ($9) the only way for refiners to start printing money in their peak demand season is by increasing the crack spread.
Also bought calls for DRYS(DryShips) - with the Dow Jones Transportation Index (DJT) close to highs, the railroad stocks (CSX, NSC) at all time highs, i think the dry bulk carriers are going to start ramping up. DRYS is a leader in the bulk goods shipping business and hence my buying calls in DRYS.
MA looks like it could take off its high at $232. If i start seeing heaving institutional buying of MA, i'm closing out my short position and going long right away.
Only big looming "IF" right now if Citigroup's quaterly report tomorrow morning. If C doesnt say anything too bad, i really believe we will be out of the woods for the shorter term. We also need to take out the overhead resistance at 1390 in the S&P(which we are very close to right now). GOOG's earnings should definately help the S&P tomorrow. Lets see what the market tells you tomm.
Sunday, April 13, 2008
Same Shit...Different day
Consistant with a bear market, right when you think the market is turning and becoming a buy, it'll drop just as fast. Like i have said before, a bear market does damage by wearing you out as a trader rather than just drop consistently.
We once again hit resistance at 1390 in the S&P and dropped 250 points on Friday. This market has been trading in the 1390-1180 range over the last 3 months. A significant buy/sell signal will only be generated once we break through one of these resistance/support levels. Until then, stick to trading small size and book your profits fast as usual.
Positions: Short MA, RIMM
We once again hit resistance at 1390 in the S&P and dropped 250 points on Friday. This market has been trading in the 1390-1180 range over the last 3 months. A significant buy/sell signal will only be generated once we break through one of these resistance/support levels. Until then, stick to trading small size and book your profits fast as usual.
Positions: Short MA, RIMM
Wednesday, April 2, 2008
LEH, UBS, LVS, MA and PS3 (Playstation 3)
So i realize its been a while since my last update but i have a perfectly valid excuse for that. I just bought a new PS3 last week and it has been taking up pretty much all of my free time. I must say though: It totally lives up to the hype and i personally was blown away by the graphics on some of these games. I'm currently playing "Army of Two" and "Motorsport", both of which i highly recommend to anyone with a PS3. Also, the blue-ray picture quality is absolutely out of this world. Just signed up with Netflix and cant wait for my first shipment of Blue-ray movies to come in.
On to the markets.....I do believe yesterday was a reversal in the market sentiment (atleast for a short time). As a trader you have to be able to process new information as it comes in and be willing to change your opinions based on this new information rather than just sticking with your old theories. Monday evening Lehman (LEH) announced that they needed more capital (liquidity crisis like BSC?) and were offering $4 billion worth of convertibles thereby diluting existing shareholder value. The market sold LEH off after hours monday but yesterday the market took it to the moon. If LEH had done this same thing the week of BSC going bust, i believe the market would have taken LEH out to the woodshed and beaten it down like a red-headed stepchild......but something changed and now the market welcomed the capital infusion. Also, Monday night UBS reported $19 BILLION in writedown and the market took UBS up 5% tuesday...WTF!!!
This is what i mean by processing new information and acting on it. I was admittedly very bearish on the market but after seeing the market reaction to these big news i am starting to waver a bit. Although until i see sustained institutional buying i'm still not too optimistic on the market but i am definately less bearish than i was last week. I still have my RIMM, RTH and MA puts on. Infact in the 400 point rally yesterday i even added to my MA puts because of the poor price action in MA. I believe even if the market does rally considerably in the future weeks, MA will be left behind.
I bought my first set of calls yesterday in a loooooong time. I bought June 80 calls for Las Vegas Sands(LVS). For those that havent heard of LVS, it is the biggest casino operator in the world owning prime properties such as Venetian, Venetian Macau and others in Vegas. I saw solid price action, good institutional buying all day in LVS. The calls i bought were trading at $700 yesterday and are trading at $900 today. Sold half of them today for a 28% profit...still holding on to the remaining half.
Short: RIMM, RTH, MA
Long: LVS
On to the markets.....I do believe yesterday was a reversal in the market sentiment (atleast for a short time). As a trader you have to be able to process new information as it comes in and be willing to change your opinions based on this new information rather than just sticking with your old theories. Monday evening Lehman (LEH) announced that they needed more capital (liquidity crisis like BSC?) and were offering $4 billion worth of convertibles thereby diluting existing shareholder value. The market sold LEH off after hours monday but yesterday the market took it to the moon. If LEH had done this same thing the week of BSC going bust, i believe the market would have taken LEH out to the woodshed and beaten it down like a red-headed stepchild......but something changed and now the market welcomed the capital infusion. Also, Monday night UBS reported $19 BILLION in writedown and the market took UBS up 5% tuesday...WTF!!!
This is what i mean by processing new information and acting on it. I was admittedly very bearish on the market but after seeing the market reaction to these big news i am starting to waver a bit. Although until i see sustained institutional buying i'm still not too optimistic on the market but i am definately less bearish than i was last week. I still have my RIMM, RTH and MA puts on. Infact in the 400 point rally yesterday i even added to my MA puts because of the poor price action in MA. I believe even if the market does rally considerably in the future weeks, MA will be left behind.
I bought my first set of calls yesterday in a loooooong time. I bought June 80 calls for Las Vegas Sands(LVS). For those that havent heard of LVS, it is the biggest casino operator in the world owning prime properties such as Venetian, Venetian Macau and others in Vegas. I saw solid price action, good institutional buying all day in LVS. The calls i bought were trading at $700 yesterday and are trading at $900 today. Sold half of them today for a 28% profit...still holding on to the remaining half.
Short: RIMM, RTH, MA
Long: LVS
Tuesday, March 25, 2008
Sentiment Turning?
Over the last few days we've had a pretty significant rally. The market pundits are out in full force on CNBC all day long now calling the "Bear Sterns Monday" a bottom in the markets. I dont buy that. Firstly, with higher commodity costs due to inflation(avg. household grocery bills and gas costs have risen significantly), lower home values and the decrese in the USD have started taking its toll on the US population. This was reflected is the US Consumer Confidence data reported this morning. From Bloomberg:
"US consumer confidence has fallen to a five-year low, according to the closely watched Conference Board report. Its index of consumer sentiment fell this month to 64.5, its lowest showing since March 2003.
The situation was even worse regarding the Conference Board's forward-looking expectations index, which fell to 47.9, the weakest performance in 34 years. "
I feel this is just the tip of the iceberg. The full pain hasnt yet percolated through the system. As for trading, I have just made 1 trade in the last 2 days. Since i dont believe in this rally, i'll give it a little more room to run before i start shorting aggresively. However, if over the next few days if i do see a lot of market action that points to institutional buying, i'll change my views and probably go long the market. However, i dont see anything resembling that yet.
I shorted Mastercard(MA) through puts today around 225. I see the buying pressure in the stock starting to ease and selling starting to kick in. However, i do expect the stock to churn around a bit before breaking down.
As for my other shorts RIMM and RTH, they are down a significant amount. I have just 1 put each left now which are very minimal sizes. Both the puts are longer term (Oct 08 expiry) so i've held on to them.
"US consumer confidence has fallen to a five-year low, according to the closely watched Conference Board report. Its index of consumer sentiment fell this month to 64.5, its lowest showing since March 2003.
The situation was even worse regarding the Conference Board's forward-looking expectations index, which fell to 47.9, the weakest performance in 34 years. "
I feel this is just the tip of the iceberg. The full pain hasnt yet percolated through the system. As for trading, I have just made 1 trade in the last 2 days. Since i dont believe in this rally, i'll give it a little more room to run before i start shorting aggresively. However, if over the next few days if i do see a lot of market action that points to institutional buying, i'll change my views and probably go long the market. However, i dont see anything resembling that yet.
I shorted Mastercard(MA) through puts today around 225. I see the buying pressure in the stock starting to ease and selling starting to kick in. However, i do expect the stock to churn around a bit before breaking down.
As for my other shorts RIMM and RTH, they are down a significant amount. I have just 1 put each left now which are very minimal sizes. Both the puts are longer term (Oct 08 expiry) so i've held on to them.
Friday, March 21, 2008
Rise of the new Bubble?
I am currently researching what the next potential bubble is cause by the FED's massive cutting of rates and have a few ideas. In the 90's when the Fed had cut interest rates to an all time low, we had a massive bubble in the form of new IPO's (lead by cheaper financing) of .dot com companies. Ofcourse, we know how that ended.
In 2002-03 with lower interest rates again, we had the formation of our currently deflating housing bubble. Ofcourse, we all know how that is ending now.
So with interest rates starting to fall again, what do you guys think will be the next bubble? I think if we can identify it, we can all get in early on the next bubble and maybe make a penny or two off it in the next year :) We have all wondered at some point how we would have made real good money in the prior 2 bubbles if we only had the means when it happened (i.e. knew more about trading and had more disposable income to put into the market in 1999 so i could have ridden amazon.com to $400, knew more about the housing market and actually bought a house in 02-03 and ridden it for a 70% gain, etc) I think by having a blueprint ready, we can act swiftly if and when we do see the next bubble emerge.
As for my thoughts: I think the next bubble is in commodity prices. All the commodities have risen to all-time inflation adjusted highs (Oil, Gold, Wheat, etc). Also i do believe the USD is bottoming out right here and will start rising once the market realises the FED is coming to an end with the rate cuts. Over the next few days, I will be researching how to start playing the USD through currency ETF's and also look into shorting OIL and GOLD. I am very confident that oil will CRASH this year in to the $65-$75 range from $110/barrell by the end of 2008.
Any thoughts/comments on what the next bubble can be? I am very interested in hearing new ideas.
In 2002-03 with lower interest rates again, we had the formation of our currently deflating housing bubble. Ofcourse, we all know how that is ending now.
So with interest rates starting to fall again, what do you guys think will be the next bubble? I think if we can identify it, we can all get in early on the next bubble and maybe make a penny or two off it in the next year :) We have all wondered at some point how we would have made real good money in the prior 2 bubbles if we only had the means when it happened (i.e. knew more about trading and had more disposable income to put into the market in 1999 so i could have ridden amazon.com to $400, knew more about the housing market and actually bought a house in 02-03 and ridden it for a 70% gain, etc) I think by having a blueprint ready, we can act swiftly if and when we do see the next bubble emerge.
As for my thoughts: I think the next bubble is in commodity prices. All the commodities have risen to all-time inflation adjusted highs (Oil, Gold, Wheat, etc). Also i do believe the USD is bottoming out right here and will start rising once the market realises the FED is coming to an end with the rate cuts. Over the next few days, I will be researching how to start playing the USD through currency ETF's and also look into shorting OIL and GOLD. I am very confident that oil will CRASH this year in to the $65-$75 range from $110/barrell by the end of 2008.
Any thoughts/comments on what the next bubble can be? I am very interested in hearing new ideas.
Thursday, March 20, 2008
And We're Back Up Again....
This is exactly what i meant yesterday when i said you have to be extremely nimble in a bear market and book your profits fast. The DOW is back up big again (240 points as i type). It seems more of a short covering rally before a long weekend to me that actual buying, but its a rally nevertheless. Although BIDU continued its downfall today (down $12), i did not want to risk losing my gains yesterday and so i closed out the position. As you can see, its very hard to accumulate profits in this market unless you make day trades or extremly short term trades, which is the strategy i'm currently using. You will have plently of time to build your long-term positions once the volatility subsides and the market bottoms. For now though, you have to stay nimble and "faster than the ticker" :)
Wednesday, March 19, 2008
DAMN it feels good to be a Gangstir!
So as predicted, DOW was down big today (300 points). Along with the DOW, down came BIDU. BIDU fell by $25 today and i closed out my put position 2 mins before close for a 38% profit (in 1 day). I still feel BIDU could go much lower, but since i had such a nice profit in it i wanted to lock it in. For all you know, the DOW could rally 500 points tommorow and i would have given up all my gains.
Remember: We are in the middle of the bear market. Trade small sizes and lock in your profits quickly cause they could be taken away from you just as fast as you got them.
Remember: We are in the middle of the bear market. Trade small sizes and lock in your profits quickly cause they could be taken away from you just as fast as you got them.
Shoutout
I want to give a shoutout to my upcoming trader buddy, Sahal. On Monday, he mentioned he wanted to buy LEH into the panic and i believe he would have too if his brokerage account was open. He definately would have made out good the next day.
Everyone knows the age-old adage on Wall Street: Buy when there's blood on the streets. On Monday, after the BSC news hit, the streets were filled with blood and guts all over the place. You do make the fastest money when there's blood on the streets but its also the hardest time to click on that "BUY" button!
Everyone knows the age-old adage on Wall Street: Buy when there's blood on the streets. On Monday, after the BSC news hit, the streets were filled with blood and guts all over the place. You do make the fastest money when there's blood on the streets but its also the hardest time to click on that "BUY" button!
Fed's Crisis Management Tactics
So i'm sure you all have heard the BSC news. $2/share!!! Talk about a firesale! JPM makes out like a knight in shining armor for saving BSC at the same time snatching up the deal of the decade. Make that 9 decades (thats how old BSC is). As this deal was being put together over the weekend, the fed steps in with a discount rate cut too. Anyone else notice how the Fed acts at crucial market times only. We were about to take out the Jan 22 '08 lows on Monday which would have triggered another MASSIVE round of selling (DOW 10,500 anyone?) but ofcourse the fed steps in sunday night with a cut followed by another 75 basis on Tuesday. Does anyone still think Mr. Bernanke isnt a puppet for Mr. Wall Street?? I dont blame him at all though...with so much of the entire country's wealth and economy tied up in the financial markets (think everyone's 401K), Ben's gotta do what Ben's gotta do..hand out free money.
I still believe we are headed lower. Theres only so much that band-aid and smoke and mirrors can fix. At some point you do need to go in for surgery if the pain is too bad...and i strongly believe it is.
As i have emphasized before, we are still in a bear market where you will get sharp rallies. This is my first real bear market that i am trading in and learning along the way. The rallies in a bear market seem to be much more vicious and fast than bull market rallies..go figure. But thats the way it is, and you have to learn to deal with it.
I got stopped out of half my short positions last week in the 400 point rally. We had another 400 point rally yesterday but i didnt close out my leftover shorts yet. I still think we go lower but things are looking a little rosy for a while right now. I might add more shorts once i see the buyin pressure ease a bit.
I have also mentioned that i doubt anyone besides day trades are making good money in this market. You just cant hold onto a position longer than 1-2 days here. If anyone reading this is making profits, please let me know. I would like to learn a thing or two from you. This is the same reason why people consider bear markets bad, because of the vicisous rallies. Otherwise it would be as simple as shorting everything under the sun and sitting on it for 6 months.
I did make 1 trade yesterday. I shorted BIDU. In such a strong market like yesterday and with the NASDAQ rallying 4.5%, BIDU acted very very poorly. If a 400 Point rally cant get any buyers into BIDU, i dont know what can. This tells me that when the DOW does drop hard one day (and it will soon), BIDU will get crushed. Ofcourse, if i do see some strength in BIDU over the next few days, i'll happily close out my short position for a small loss.
Current positions: Short: RIMM (puts), BIDU(puts), RTH(puts)
Long: ALJ
I still believe we are headed lower. Theres only so much that band-aid and smoke and mirrors can fix. At some point you do need to go in for surgery if the pain is too bad...and i strongly believe it is.
As i have emphasized before, we are still in a bear market where you will get sharp rallies. This is my first real bear market that i am trading in and learning along the way. The rallies in a bear market seem to be much more vicious and fast than bull market rallies..go figure. But thats the way it is, and you have to learn to deal with it.
I got stopped out of half my short positions last week in the 400 point rally. We had another 400 point rally yesterday but i didnt close out my leftover shorts yet. I still think we go lower but things are looking a little rosy for a while right now. I might add more shorts once i see the buyin pressure ease a bit.
I have also mentioned that i doubt anyone besides day trades are making good money in this market. You just cant hold onto a position longer than 1-2 days here. If anyone reading this is making profits, please let me know. I would like to learn a thing or two from you. This is the same reason why people consider bear markets bad, because of the vicisous rallies. Otherwise it would be as simple as shorting everything under the sun and sitting on it for 6 months.
I did make 1 trade yesterday. I shorted BIDU. In such a strong market like yesterday and with the NASDAQ rallying 4.5%, BIDU acted very very poorly. If a 400 Point rally cant get any buyers into BIDU, i dont know what can. This tells me that when the DOW does drop hard one day (and it will soon), BIDU will get crushed. Ofcourse, if i do see some strength in BIDU over the next few days, i'll happily close out my short position for a small loss.
Current positions: Short: RIMM (puts), BIDU(puts), RTH(puts)
Long: ALJ
Friday, March 14, 2008
Quick Update
So the lack of buying pressure i mentioned 2 weeks ago in GS was true. The big boys were staying away from buying the brokers because of concerns regarding their liquidity. A week after i said right here that GS lacked institutional buying support and i was going to bail out of my long position for a small loss (5% i think), Bear Sterns (BSC) announced a liquidity problem. The big boys (hedgies, mutual funds, etc) who execute margin trades with the desks at these brokers probably figured something was amis and stayed away. Friday turned out to be BSC's worst nightmare with 50% of the market cap being shaved right off the stock price. The news that JP morgan and the Fed might inject capital into BSC to alleviate the liquidity concerns did more harm that actually ease investor concerns. The main reason for this, i believe is, that investors are now starting to rethink how bad the subprime problem is, if Bear needs emergency liquidity injection. Ofcourse, these concerns spread across the other brokers (LEH,GS, MER, etc) and took them down too.
Also, the market has been very frustrating to trade lately. Earlier in the week we had the 415 Dow rally which automatically triggered my stop loss points for FSLR and MON and got me out. I usually use traling stop losses for exactly these types of instances where i can protect atleast some of my profits in a reverse move. I tooks off 75% of my DUG position too yesterday at a stop-limit order price of 39.7. My average price for the DUG position was 36.5.
Evene though i have barely made 2-3 trades in the last 2 weeks, just watching the market action is frustating me and i can imagine what its doing to people actually trading it. There just seems to be no follow through in either direction (>2-3 days) and i doubt anyone is really making any decent money in this market except intraday traders. If you are feeling just as frustrated with this market as i am, i think your best bet is to step back and do nothing until things calm down a little.
Also, the market has been very frustrating to trade lately. Earlier in the week we had the 415 Dow rally which automatically triggered my stop loss points for FSLR and MON and got me out. I usually use traling stop losses for exactly these types of instances where i can protect atleast some of my profits in a reverse move. I tooks off 75% of my DUG position too yesterday at a stop-limit order price of 39.7. My average price for the DUG position was 36.5.
Evene though i have barely made 2-3 trades in the last 2 weeks, just watching the market action is frustating me and i can imagine what its doing to people actually trading it. There just seems to be no follow through in either direction (>2-3 days) and i doubt anyone is really making any decent money in this market except intraday traders. If you are feeling just as frustrated with this market as i am, i think your best bet is to step back and do nothing until things calm down a little.
Friday, February 29, 2008
The walls are closing in!
As i mentioned in my last post, we had rallied too far, too fast. It was time to take profits. I reiterate: WE ARE STILL IN A MASSIVE BEAR MARKET! I sold my last long SNE the same day at 49.50 to lock in a 18% profit. Its sold off $2 since then while the DOW has sold off 300 points since wednesday's post. If you have any profits on the long side better make sure you cash them in fast since this market can turn at the drop of a hat.
My only positions now are all shorts. I'm short MON, FSLR, RTH, RIMM. Oh, i did add DUG to my account yesterday (Its a short oil etf) so i'm short crude oil through that.
Happy Trading...i'm out for 2 weeks.
My only positions now are all shorts. I'm short MON, FSLR, RTH, RIMM. Oh, i did add DUG to my account yesterday (Its a short oil etf) so i'm short crude oil through that.
Happy Trading...i'm out for 2 weeks.
Wednesday, February 27, 2008
No Light an the End of the Tunnel?
So we have rallied 600 points in the DOW straight in the last 4 trading sessions. I think its time to take a breather. We are bumping into overhead resistance now. As i said earlier, i still firmly believe we are in a strong downtreanding bear market. But you will get intermediate rallies like the one that just happened, to take advantage of. I think at this point all the good news have been priced in the market (Ambac, MBIA ratings held steady).
As for my positions, I got out of all my FWLT on Monday since it was reporting Tuesday morning before open. As i predicted, any company that puts out bad numbers/guidance in a bear market is taken out to the woodshed. Same thing happened to FWLT. The stock is down 25% since it reported earnings.
Also took off my GS long position for a very small loss(4%). I still love the company's long-term prospects but there just doesnt seem to be an institutional money flowing into this stock. The DOW's had a very strong rally and GS has essentially just traded in a range around its pivot point. Imagine what will happen to GS if the DOW drops 300 points in a day. It will be slaughtered! If big money isnt buying, there is no reason for you to jump the gun and get long here.
Only long i own here is Sony(SNE). Have a 18% gain in the stock so far but am willing to jump ship quickly to protect my profits if the market turns hard. I think with HD-DVD out of the picture, the lagging 2007 Playstation 3 sales will see a huge boost in 2008. People will be buying the PS3 eagerly bcause you get the Blu-Ray player (now that the format wars are over) and video game system bundled into a nice $400 package. I just bought myself one earlier this week for the same reasons and i believe many others will follow suit!
I'm am also mostly closing out my positions since i'll be travelling out of the country for the next 2 weeks. It's hard enough sleeping everynight with big positions on, let alone travel without access to instant quotes :)
As for my positions, I got out of all my FWLT on Monday since it was reporting Tuesday morning before open. As i predicted, any company that puts out bad numbers/guidance in a bear market is taken out to the woodshed. Same thing happened to FWLT. The stock is down 25% since it reported earnings.
Also took off my GS long position for a very small loss(4%). I still love the company's long-term prospects but there just doesnt seem to be an institutional money flowing into this stock. The DOW's had a very strong rally and GS has essentially just traded in a range around its pivot point. Imagine what will happen to GS if the DOW drops 300 points in a day. It will be slaughtered! If big money isnt buying, there is no reason for you to jump the gun and get long here.
Only long i own here is Sony(SNE). Have a 18% gain in the stock so far but am willing to jump ship quickly to protect my profits if the market turns hard. I think with HD-DVD out of the picture, the lagging 2007 Playstation 3 sales will see a huge boost in 2008. People will be buying the PS3 eagerly bcause you get the Blu-Ray player (now that the format wars are over) and video game system bundled into a nice $400 package. I just bought myself one earlier this week for the same reasons and i believe many others will follow suit!
I'm am also mostly closing out my positions since i'll be travelling out of the country for the next 2 weeks. It's hard enough sleeping everynight with big positions on, let alone travel without access to instant quotes :)
Monday, February 25, 2008
Its Rally Time!
So we ended up getting our rally (200 point in the Dow) that i talked about on Friday. In the last 2 days we have rallied about 450 points in the DOW which is a monstrous rally by any standards. We were down 150 on Friday when we got the AMBAC news and ended up +100 for the day (250 point rally) and another 200 points today.
Unfortunately this doesnt change a thing and we still are in a major, downtrending bear market. You will get significant rallies within the bear market that if you are fast enough to play will help you next a little extra on the side. But by no means am i turning wildly bullish on the markets..yet.
I sold all my Foster Wheeler (FWLT) calls i bought on Friday right at the close today for a 30% profit over 2 days. That is a very nice profit specially for holding the position just for 2 days. FWLT also reports tomorrow morning and though i believe it will blow away the numbers both on the top as well as bottom line (specially because of the 7.2 billion infrastructure contract it got from Qatar last november), anything less than the most optimistic guidance going forward will crush the stock price in this bear market. So i'm sitting fat and happy on my 30% gains.
Over the weekend, Fox Street Journal printed a negetive article about the brokers especially GS saying the recessionary environment will lead to less M&A activity for these guys in 2008. No Shit Sherlock! Why else do you think GS is off 35% from its highs? Because its trading arm isnt making money? The GS traders were the only ones on the street shorting the hell out of the subprime CDO market last Fall when the rest were still infatuated with the *guaranteed* cash flows these instruments provided every month. I still believe in GS, after all these are the same guys that personify the "Masters of the Universe" phrase.
"In Goldman Sachs We Trust"
Unfortunately this doesnt change a thing and we still are in a major, downtrending bear market. You will get significant rallies within the bear market that if you are fast enough to play will help you next a little extra on the side. But by no means am i turning wildly bullish on the markets..yet.
I sold all my Foster Wheeler (FWLT) calls i bought on Friday right at the close today for a 30% profit over 2 days. That is a very nice profit specially for holding the position just for 2 days. FWLT also reports tomorrow morning and though i believe it will blow away the numbers both on the top as well as bottom line (specially because of the 7.2 billion infrastructure contract it got from Qatar last november), anything less than the most optimistic guidance going forward will crush the stock price in this bear market. So i'm sitting fat and happy on my 30% gains.
Over the weekend, Fox Street Journal printed a negetive article about the brokers especially GS saying the recessionary environment will lead to less M&A activity for these guys in 2008. No Shit Sherlock! Why else do you think GS is off 35% from its highs? Because its trading arm isnt making money? The GS traders were the only ones on the street shorting the hell out of the subprime CDO market last Fall when the rest were still infatuated with the *guaranteed* cash flows these instruments provided every month. I still believe in GS, after all these are the same guys that personify the "Masters of the Universe" phrase.
"In Goldman Sachs We Trust"
Sunday, February 24, 2008
Panera Bread's "Community Friendly" Business Model
I was over at Panera Bread this afternoon grabbing lunch and noticed something really strange. All the tables at the restaurant (around 20) were occupied. Under normal circumstances, this would seem as a picture perfect scenario exept around 17-18 of these tables were occupied by "campers", people who ordered their 1 sandwich meal and hover around for another hour or so typing away on their laptop using Panera Bread's free wireless Internet acess.
The wireless internet model has worked great for Starbucks which is primarily a "stop-n-go" location where the majority of the customers just want to get their coffee and leave. But the same successful model doesnt seem to translate well in a "sit-down" type of establishment.
Since i live just half a block away from this Panera Bread location, noticing the lack of empty tables, i decided to take my lunch to-go. But i wonder how many potential customers were turned away after noticing the lack of seating. I understand that this free wireless internet policy will defiantely foster some brand loyalty. The next time i want to eat and get some work done on my laptop, my first choice will be Panera Bread. I also understand the potential for marginal purchases, after clicking away on my laptop for an hour i might buy another drink or a cookie/brownie. But for practical purposes i will assume these incremental purchases to be very minimal for Panera Bread's revenue after purchasing their initial meal.
I really doubt that the pro's (brand loyalty, incremental purchses) outweigh the loss of revenues from turning away potential customers in that hour or two. Panera Bread's (PNRA) stock price is also hovering around its 52-week low. Ofcourse, i have no real figues to back up this observation (qoq same store sales, etc.) but it certainly seems that Panera's community friendly approach is biting them in the ass.
If anyone else sees the other side of the coin, please comment.
The wireless internet model has worked great for Starbucks which is primarily a "stop-n-go" location where the majority of the customers just want to get their coffee and leave. But the same successful model doesnt seem to translate well in a "sit-down" type of establishment.
Since i live just half a block away from this Panera Bread location, noticing the lack of empty tables, i decided to take my lunch to-go. But i wonder how many potential customers were turned away after noticing the lack of seating. I understand that this free wireless internet policy will defiantely foster some brand loyalty. The next time i want to eat and get some work done on my laptop, my first choice will be Panera Bread. I also understand the potential for marginal purchases, after clicking away on my laptop for an hour i might buy another drink or a cookie/brownie. But for practical purposes i will assume these incremental purchases to be very minimal for Panera Bread's revenue after purchasing their initial meal.
I really doubt that the pro's (brand loyalty, incremental purchses) outweigh the loss of revenues from turning away potential customers in that hour or two. Panera Bread's (PNRA) stock price is also hovering around its 52-week low. Ofcourse, i have no real figues to back up this observation (qoq same store sales, etc.) but it certainly seems that Panera's community friendly approach is biting them in the ass.
If anyone else sees the other side of the coin, please comment.
Friday, February 22, 2008
Change of market sentiment???
The last half hour of the trading day proved to be the shorts worst nighmare. Feeling giddy from tearing the longs a new one all week, they were all set to end the week on a high note.....until Charlie Gasparino from CNBC burst their bubble.
Hopefully Ambac should get some much needed capital infusion this weekend and be able to keep its triple-A rating. Ofcourse, the masters of the universe(I-bankers, PE) who will be providing the much needed capital to Ambac will have throughly scanned all of ABK's assets, balances, debts, etc. I want to say the market is gonna view this very favorably next week. Hey, if its good enough for the masters of the universe, its good enough for me...atleast for the next week.
I did a little bit of buying today. Bought some FWLT calls early morning. The Contruction and Engineering/Oil Drillers/Commodity sector has been looking really good last week. I believe $100 oil will really spur some big construction projects. 75% of FWLT's business is international, so the growth is already in place. I also bought some Goldman Sachs(GS) calls into the closing rally. The momentum in the financuials should be strong next week, provided the deal completes without problems this weekend.
Covered half of my Monsanto(MON) puts today into the rally. The Agriculture(AG) sector has been acting like the Tech sector in late 1990's. Its where the momentum players have been having their day in the sun. Shorting the AG sector looked like a great idea early last week after the market's bounce back from the Jan 22 lows, specially since that bounce actually just felt like a short covering rally. But now, if we get a substantial rally off the Ambac news specially with soooo much money just sitting on the sidelines and people itching to get back into some of their favorite stocks after they have been beaten down mercilessley this year(AAPL, GOOG, MA, GS, POT, MON), being short MON would feel like standing in front of the freight train!
Current positions:
Long GS, FWLT, ALJ, SNE, MSFT
Short MON, FSLR, RIMM, RTH
Looking forward to seeing how the market acts next week.
Hopefully Ambac should get some much needed capital infusion this weekend and be able to keep its triple-A rating. Ofcourse, the masters of the universe(I-bankers, PE) who will be providing the much needed capital to Ambac will have throughly scanned all of ABK's assets, balances, debts, etc. I want to say the market is gonna view this very favorably next week. Hey, if its good enough for the masters of the universe, its good enough for me...atleast for the next week.
I did a little bit of buying today. Bought some FWLT calls early morning. The Contruction and Engineering/Oil Drillers/Commodity sector has been looking really good last week. I believe $100 oil will really spur some big construction projects. 75% of FWLT's business is international, so the growth is already in place. I also bought some Goldman Sachs(GS) calls into the closing rally. The momentum in the financuials should be strong next week, provided the deal completes without problems this weekend.
Covered half of my Monsanto(MON) puts today into the rally. The Agriculture(AG) sector has been acting like the Tech sector in late 1990's. Its where the momentum players have been having their day in the sun. Shorting the AG sector looked like a great idea early last week after the market's bounce back from the Jan 22 lows, specially since that bounce actually just felt like a short covering rally. But now, if we get a substantial rally off the Ambac news specially with soooo much money just sitting on the sidelines and people itching to get back into some of their favorite stocks after they have been beaten down mercilessley this year(AAPL, GOOG, MA, GS, POT, MON), being short MON would feel like standing in front of the freight train!
Current positions:
Long GS, FWLT, ALJ, SNE, MSFT
Short MON, FSLR, RIMM, RTH
Looking forward to seeing how the market acts next week.
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