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.

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

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.

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.

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

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.

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.

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.

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

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