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

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.

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

Duggy DUG

Got filled on a limit order mid-day to buy more DUG. Lets hope it starts working its magic here

Bought AGU

Bought some shares of AGU for a quick trade in the fertilizer sector

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

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!

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