Friday, March 30, 2007

Anatomy of a Possible Breakout Chart: EWZ

Based on the annotations to this chart of EWZ, I would be a buyer on a high volume break of $50, or a low volume pullback to $$47. The key to this chart is not only the support and resistance levels, but the pickup in volume. This indicates institutional interest. The stock has moved to the old highs on higher volume than the original ascent.

Amazing Chart: SBGI

I've been holding SBGI for about a week now. My original post was more focused on recent price action. However, if we back the chart up to the last 6 months, we will see one of the most beautiful looking charts one could ever hope to find.

The stock started its uptrend in October. Since that time, it has rarely fallen below the 10 day moving average. That's insane. Even the big correction couldn't slow this bad boy down. SBGI is like Kobe Bryant: you can't stop it, you can only hope to contain it.

I'm looking to add more on any tags of the 10 day moving average. I'm following the theory of my post correction QID trades: keep on doing it until it until it no longer works.

Thursday, March 29, 2007

Today's Trades: TZOO, HOKU

I sold 500 shares of TZOO at $37.51 (entry at $36.47) for a $520 gain (+2.9%).

I bought 500 shares of TZOO at $36.28. I like the pattern, but did not think today's up move could sustain itself. It still seems to be staying within the breakout range. I also am holding another 500 shares with an entry price of $37.72.

I bought 1000 shares of HOKU at an average price of $6.11. The stock looks like it has broken out of a trading range and may challenge the breakout high at $7.50.




Wednesday, March 28, 2007

Today's Trade: TZOO

Boy, I wish I would have held on to SMSI a little longer. Hindsight's twenty-twenty, but maybe I violated my "micro-managing" rule that I just posted yesterday. Still, it did make a nice profit, so I'll try to let it go. The stock might become attractive again on a pullback to $18.

I've added another 500 shares of TZOO at $36.47. I really like the way the stock is pulling back to the breakout out point. I'm going to place a stop just under $36.
I would like to add some energy, but I need some sort of pullback to justify an entry.

Tuesday, March 27, 2007

Patience, Trading and Profitability


I stumbled across this article on patience and trading via Trader Mike's links. Although it may seem like basic stuff, it speaks about an issue that has been one of the toughest for me to master. The basic message is you must be patient with your entry points and give your positions time to work for you.

I know it sounds like a basic principle. However, it's been a tough one for me to master. I can't count the number of times I've spent all evening researching my watchlist and identifying the perfect entry points, only to jump the gun the next morning and enter before my entry point is hit. Inevitably, the stock will end up reaching the entry point I originally identified, take time to get to my buypoint, and take even more time inching higher.

There's likely a very good reason that I identified a certain entry point, most likely a pullback to breakout level or a trendline tag of support. By succumbing to my emotions, I've ignored logical analysis, lowered my rewark to risk ratio, and actually created a longer and more frustrating hold time. If I would have just waited for the buypoint, I'd actually already have a nice profit by the time the stock moves back up to my original buy point. If the stock went the other way, I would end up with a smaller loss.

A good trader must also exercise patience once in a position. I've wrote about this before, about how important it is to let your positions work for you. Just as with entry points, there is a logical reason for setting your stop just below support levels. By "micro-managing" your trades, we usually end up losing out on big gains.

One way I combat the urge to micro-manage is by taking partial profits as they come. It keeps me in the game if there is a big move, locks in a small profit and feeds my basic emotional needs.

I know it's tough to be patient, but by gettting a handle on my entry points and allowing my positions to work for me, I've become much more profitable.

Monday, March 26, 2007

Today's Trade: SMSI and TZOO

I sold my remaining 500 share of SMSI at $17.98 (entry at for a $15.96) for a $1,010 gain (+12.6%). I entered on an NR7 pullback to the breakout point. My exit was timed at recent highs, although I do think this stock has the potential to breakout to new highs.


I also bought 500 shares of TZOO at $37.72. I originally was looking to enter on a slightly deeper pullback, around the breakout point at $36. However, it looks like a high and tight flag pattern is forming, so I'm willing to get in early.

Watchlist Stock Notes

Here are a few stocks I'm watching along with my notes for entry on each stock:

OEH: pb 57-58.50
TZOO: bp 36-37
GES: pb 40-41
ROCM: pb 19-20
RIO: bo 38.10
CF: pb 40
VDSI: pb 17-17.50
CCOI: bo 25
TTWO: pb 22-23
RVSN: 23-24
IFS: pb 29
ADBE: pb 42-42.25
SMSI: now
CLF: pb 61-62
STLD: pb 40-41

I am also watching 30 energy stocks, which I posted yesterday.

Sunday, March 25, 2007

Sector Spotlight: Energy - Part 1

Energy stocks having been on fire. While it's too early to tell, I suspect we may be in the midst of resuming a multi-year energy bull market. I certainly don't want to miss the boat if this is true, so I skipped my usual Saturday nap (after playing tennis or basketball) and reviewed over 300 energy charts. Here are the top 30 energy stocks that I will be watching in the near future, along with my entry point notes (pb means pullback and bo means breakout).

Oil Drillers:
PDE - pb 30
ATLS - pb 54
GSF - pb 60 or bo 63
HP - pb 29
RIG - pb 80 or bo 83
ESV - pb 52
ATW - pb 52
PKD - pb 9

Oil Refining:
SVN - pb 69-70
HOC - pb 57-58
HES - bo 56
WNR - very extended
DK - pb 17

Oil Pipelines:
KMP - pb 51
TPP - pb 42-43
PAA - pb 56

Oil Equipment:
SPN - pb 32
SII - pb pb 44-46
NOV - pb 67-72
CAM - pb 58
GMRK - pb 40
TESOF - pb 22

Major Oil:
TOT- now, trendline tag
E - now, trendline tag
XOM
CVX

Independent Oil:
COG - pb 65
DVN - pb 64

In the coming days, possibly tomorrow or Monday, I'll post some of the better looking charts.

Friday, March 23, 2007

Trades: SBGI, CELG, VDSI, SMSI, RIG

Yesterday, I sold 500 VDSI at $18.24 for a $285 gain (+3.2%). I am still holding 500 shares.

Yesterady, I sold 500 SMSI at $16.42 for a $230 gain (+2.9%). I am still holding 500 shares.

Today, I sold CELG at $54.90 for an $830 gain (+3.0%).

Yesterday, I bought 500 RIG at $80.30 and sold today at $82.30 for a $1000 gain (2.5%). I got lucky on this one.

I bought 500 shares of SBGI at $15.23. The trade is detailed below.

The RIG Trade:
As just about everybody has over the past week, I have been watching oil drillers very closely. While there have been nice moves, very few were trading around support or resistance levels. RIG is one of the exceptions. It formed a "W" double bottom formation and was nearing resistance of this formation at $80. I placed a limit order at $80.10 Wednesday night.

When I checked quotes about a half hour after the market opened Thursday, I saw that the stock was trading at $80.79 without gapping up and assumed I was in at a good price. However, when I checked my portfolio, it wasn't there! For some reason, my order had not gone through. I was royally pissed, as I saw a lot of potential for this trade. As a last ditch effort, I placed a limit order at $80.30 and hoped the stock would pullback. I checked again in the afternoon and saw that it was trading close to $82, and just assumed it never pulled back. It wasn't until much later in the day I realized it had pulled back for a very short period and I did get in at $80.30. My bad mood instantly reversed itself.

SBGI has printed two NR7's in a row (lowest range day in the last 7 days) and is nearing near term highs at $15.50. The stock has been under accumulation during the recent consolidation of its gains as well. This is an early entry before breakout, which I sometimes do if the stock looks really good technically and prints an NR7.

Quicky Watchlist

Here is my watchlist for Friday. All stocks are longs and most are breakouts for which I'm waiting pullbacks.

TZOO, JOSB, GES, GMRK, ROCM, TESOF, CMG, DXPE, RIO, STLD, CF, VDSI, WFR, EWZ, TTEC, CECO, RTI, PRKR, QID, QLD, SBGI, DISCA,CCOI, TTWO, RVSN.

I made a few trades today that I will post tomorrow (VDSI, SMSI, QID, EWZ,RIG, CELG).

Wednesday, March 21, 2007

Trades and Vanity Performance Stats

I sold 1000 shares of QID at an average price of $53.86 (entry at $55.50) for a $1640 loss (-2.9%).

I covered 200 shares of AAPL at $92.05 (short at $90.10) for a $395 loss (-2.1%).

I covered 500 shares of STLD at $41.08 (short at $39.08) for a $1000 loss (-5.1%).

I sold 200 shares of VLO at $61.87 (entry at $60.24) for a $326 gain (+2.7%).

I bought 500 shares of CELG at $53.24.

I bought 1000 shares of VDSI at $17.67.

I bought 1000 shares of SMSI at $15.96.

I hope to detail the three current trades tomorrow with charts.

When I got home I was feeling depressed about the today's losses. One of my trading buddies helped put things in perspective by telling me to take a look at all of the trades I had made leading up to today. So I did :) I've compiled some vanity stats to help pick me up.

Since the February 27 sell off, I have made 24 trades (excluding the three trades I made today that I am still holding). Here is how I did:

  • Win Rate: 71% (17/24)
  • Total Gains: $13,962
  • Average Gain: $821

  • Loss Rate: 29% (7/24)
  • Total Losses: $4,029
  • Average Loss: $575

  • Total Gross Profits: $9,933
  • Profit After Commissions: $9,597
In 23 days, I made $9,597 as a part-time trader. Meanwhile, I made $5600 as a full-time worker. Trading Rocks!

Okay, I feel better now. Feel free to curse and throw tomatoes at the screen in disgust over my vane behavior.

To review all of my trades, go to the "Trade" label below.

Crazy Day!


This is me in a nutshell today. Of course I would have one of my busiest days at work on the same day as the stinkin' fed announcement! I made a bunch of trades that I will update tonight. If you guessed I was stopped out of QID, you are correct, sir. Ah well, the QID stategy was fun, and profitable, while it lasted. Time will tell if we should start using the same strategy with the QLD (leveraged long Q's).

Tuesday, March 20, 2007

Chart: HAL

HAL (Halliburton Co.) wiped out a month's worth of gains on an insane amount of volume. However, it did not knock out any major resistance points and handles the 50 day MA quite well. Take a look at the tail the stock printed as the stock briefly dipped below the moving average. There seems to be strong support at that level.

While I always watch HAL, I won't touch it unless it does on of two things. Either it :

  • breaks near term resistance at $32.50, or
  • drops into the $28-29 range.
There's a lot of support in the $28-29 range, so this area would present a good buying opportunity. Shorter term traders could place a stop just under this range, while longer term traders could do so under the next level of support at $26.50. Note that this area could also provide another good buying point.

For the bears out there, I currently do not see a good, *low risk* short setup. You'll have to wait until price by volume support is broken at $28.

Trade Updates: QID, VLO, HAL, LEH, STLD, AAPL

I was stopped out of my 350 share position of HAL at $30.44 for a $388 loss (-3.7%).

I sold 350 shares LEH at $72.71 for a $231 gain (.9%). The total gain for the 700 share position was $696 (+1.4%). I was hoping for a bigger gain, and decided to bail on the trade because I think the bounce might be over.

I bought 500 shares of QID at $54.46. I've been waiting for QID to near support. Let's see if it holds.

Along with the QID position above, I am also long 200 shares of VLO, 500 more shares of QID, short 200 shares AAPL and short 500 shares STLD.

Monday, March 19, 2007

Bullish Chart: JOSB

While my post after the market close reaffirmed my bearish stance, I am finding more and more solid long setups. The health care sector is smokin', with stocks like HRT and ROCM leading the way.

In this market environment, the only longs I'm willing to trade are stocks with high volume breakouts over major resistance levels. This is not the time for me to bottom dwell or buy support. It's just too risky right now. Yeah, some of you can make money playing the bounces of down trending stocks, but that's not my game.

Take a look at JOSB. Here we have the perfect example of a high volume breakout over major resistance. I have a list of about 20 stocks that have made this type of move over the past few days. I am looking for low volume pullbacks to support (prior resistance) for entry. If the stock keeps climbing, I cross it off my list (parabolic moves are too high risk for me right now).

Freshly Squeezed

Days like today tend to turn smack talking bears into nervous nellies with itchy trigger fingers. This gives rise to a nice little stock market pop that makes everybody wonder if we really have seen th worst of it and bottomed. Maybe we have, though I seriously doubt it. More likely, what we have today is a good old fashioned short squeeze.

Take a look at the Nasdaq chart below. If today's price bar had been wide ranging, closed near the high, pushed through 2400 and been on high volume, I would be rethinking my game plan. As we can see, that's not what happened. Instead, we got a weak little pop on below average volume, which is certainly not cause to change our market stance.


If you are holding shorts and feeling a little pressure, look away and do something totally non-market related. Let your stops work for you. You placed them where you did for a reason. Covering now could just lead to trading yourself out of a good position.

If you are wrong, and we are in the midst of reversing, big deal. After all, you prudently managed your risk-reward and position sizes before the trade; so a few losing trades ain't gonna kill ya. You did do that, right?

Sunday, March 18, 2007

Monday's Gameplan and a Look at Some Energy Plays

Not much has changed for me heading into this week. I still plan to short strength and cover weakness. Much of the market is looking oversold, so I won't initiate anymore shorts until I see a decent sized bounce.

I am interested in watching for longs in energy, especially oil drillers and refiners. I still have a long position in HAL, and will be looking to buy VLO if it tags it's 20 day moving average.

I will also keep a close eye on XLE, the energy ETF. It has tagged it's 200 day moving average and could put in a nice bounce.


Take a look at TSO. This oil driller has a really nice looking long setup, which has been a rarity in this market. I may buy a tag of the middle bollinger band.

Friday, March 16, 2007

Was John Lennon an Atheist?


Today I watched a DVD I've been meaning to check out for quite some time, U.S. v. John Lennon. What a brilliant movie about a brilliant man. It left me wondering why there are no John Lennon types today, considering the parallels between the Nixon and Bush administrations. The best radical entertainers my generation has are the Dixie Chicks and Kanye West. As Gore Vidal said, "John Lennon equals love, and Nixon and Bush equal death", so where is today's Lennon to combat Nixon's Bush? Vidal at his best, eh? On the flip side, Gordon Liddy was at his worst, which in his mind would mean his best.

Anyway, I've always wondered whether or not John Lennon was an atheist. An hour of internet searching did little to answer my question. Opinions about him are strong on both sides, and I didn't find any interviews that definitively answer the question.

If we look to a primary source, his songs, it seems John Lennon was an atheist. Take a look at the lyrics to God and Imagine.

God:
God is a concept,
By which we can measure,

Our pain
, I'll say it again,
God is a concept,

By which we can measure,
Our pain,
I don't believe in magic,
I don't believe in I-ching,

I don't believe in bible,

I don't believe in tarot,
I don't believe in Hitler,
I don't believe in Jesus,

I don't believe in Kennedy,

I
don't believe in Buddha,
I don't believe in mantra,

I don't believe in Gita,
I don't believe in yoga,
I don't believe in kings,
I don't believe in Elvis,
I don't believe in Zimmerman,

I don't believe in Beatles,

I just believe in me.

Imagine is not quite as definitive, as it points to religion rather than god. However, I think the key line is "brotherhood of man."

Imagine there's no countries
It isn't hard to do

Nothing to kill or die for

And no religion too

Imagine all the people

Living life in peace
Y
ou may say that I'm a dreamer

But I'm not the only one

I hope someday you'll join us

And the world will be as one

Imagine no possessions

I wonder if you can

No need for greed or hunger

A brotherhood of man


If anybody has any comments, opinions, or a definitive answer, please leave a comment or e-mail me at SinghJD1@aol.com

Strong Chart: BOLT

BOLT has one of the better looking bullish charts that I've been able to find. Take a look at the increased money flow, which indicates institutional interest. I'd be hesitant to enter, as the stock is a bit extended. A low volume pullback to support would be an ideal entry.

Tell Us Something Mr. Market

Heading into options Friday, I don't have much that's new to say. Right now, it looks like we're in the midst of a low volume dead cat bounce that will likely lead to another thrust down. However, we wont' have a true tell until the recent lows are eclipsed or upper resistance is broke on high volume. Until then, I will continue to trade within the ranges, selling and shorting strength while buying and covering weakness. The only meaningful sector not playing this game is energy.

Thursday, March 15, 2007

Trade: Playing the Lehman bounce

Investment banking stocks such as LEH and MS have been crushed over the past couple of weeks. It's always risky to go counter to a strong downtrend, but I think LEH is a low risk bounce setup right now. LEH almost broke down below to strong areas of support: the 200 day moving average at $72.21 and price support at about $70. Notice what happened when the stock broke down; it immediately reversed itself and printed a long, long tail. This is a sign that the stock is oversold, holding at resistance, and is in for at least a short term bounce.

I bought 700 shares of LEH at $72.05. This is a short term play. I would not be surprised if the stock retests these lows. I already sold half of my position at $73.38 for a $465 gain ( 1.8%). I'll let the remaining 350 shares ride for a few days and place a stop at my purchase price, which is just under the 200 day moving average.

For those considering placing a trade here, it might be too late. Note that RSI and stochastics have moved out of oversold territory.

Wednesday, March 14, 2007

Chart: Analyzing the Nasdaq Composite

Wow, that was some fakeout we saw today. Once the Nasdaq broke down below 2350 and the recent low, I was sure we were headed for a retest of the 200 day MA. Now I'm not so sure. The Naz (and other indexes), printed quite a powerful candle today on good volume. Take a look at the chart:


At this point, it's a really tough to call technically. We have stochastics that hit the overbought levels on a low volume pullback (bearish) and now looks to be headed to oversold territory. This would suggest that there is more room to go down, possibly to the 200 day MA. However, RSI could be printing a higher high. Another bullish signal is the fact that the Naz printed a "long tailed" candle at a strong resistance point.

I'm going to hold on to my QID (short 2X Q) position for the time being, and may add to it if it drops to the $54-55 range on *light volume*. Volume is the key. If we bounce on light volume, we're probably just setting up for more downside. However, if we bounce on strong volume, we may have just printed a bottom, at least for the time being. Only time will tell.

Another update: QID and HAL

I bought 350 shares of HAL at $31.55.

I bought 500 shares of QID at $56.64.

See the last post for the rest of today's trades.

Trade Update: QID, VLO, AAPL, SSRI, STLD

I sold 1000 shares of QID at $57.21 (entry at an average price of $55.55) for a $1660 gain (+3.0%).

I covered 500 shares of SSRI at $29.79 (entry at $32.24) for a $1225 gain (+8.1%).

Yesterday I went short 500 shares STLD at $39.08.

I am still long 200 shares VLO and short 200 shares of AAPL.

Today's bounce doesn't look like it will hold. I plan to establish more short positions on strength and buy more QID. As I stated before, I'll keep shorting strength and covering weakness until this simple strategy stops working.

Sorry for the late and sparse updates. I've been swamped both at home and work the past few days. I hope to post a ton of charts in the coming days.

Tuesday, March 13, 2007

Trades: AAPL and VLO

Today I shorted 200 shares of AAPL at $90.10. Sunday night's post explains the setup.

Yesterday I bought 400 shares of VLO at $60.24. I sold 200 shares today at $61.29 for a $210 gain (+1.7%), and am holding on to the remaining 200 shares. I'll post a chart later today.

I am looking to buy oil related on weakness and possibly short brokers such as GS and LEH.

Sunday, March 11, 2007

New High Failure Trade and AAPL

One of my favorite short plays is the "new high failure" trade. There are three elements to this trade:

1) That stock makes a new high
2) RSI peaks at a lower level than the previous high
3) Take a short position if and only if the stock dip below the previous high

The recent failure of AAPL is a good example of this setup. The stock broke out to new highs in January. Many breakout traders saw this as a sign to jump on the Apple bandwagon. However, the fact that RSI peaked at a lower level than the November high was a warning sign. While not a signal to short, it was a warning that the stock should go on the "new high failure" watchlist. The optimal entry was few days later, when th stock gapped down below the old highs.


With so many stocks way below old highs, there are not many "new high failure" plays setting up right now. However, there are a number of stocks bouncing up to the old high resistance level. I will be watching this level for short entries. Maybe we can call this a "double" or "bounce" failure. For example, AAPL is inching up to the old high level on declining volume. If the stock fails at this level, which is likely, we could see another leg down.

Friday, March 09, 2007

Today's Trade: SSRI

I've been eying metal related stocks for a short, and SSRI (Silver Standard Resources, Inc.) seems to be rolling over for a retest of last week's lows. More than a few elements make this an attractive short.

1. The low volume pullback seems to be stalling right at resistance.

2. The two day RSI made a lower high and seems headed down to oversold levels.

3. Stochastics seems to be losing momentum and ready to turn.

I went short 500 shares of SSRI at $32.24. I will likely place a stop in the $33-34 range with an initial target of $29.50.
I've also had my eye on some steel stocks, but all the acquisition talk in that sector has me a little gun shy.

Thursday, March 08, 2007

It's a Small World - ETF Style

It's amazing how similar almost every single market looks, whether we are talking sectors or countries. Let's take at some country ETFs.

I'll start off with Brazil, since EWZ is one of my favorite trades. It is not surprising that we see a death defying drop followed by a low volume pullback into resistance that works off the oversold conditions that occurred last week.

Now let's look at the U.S., via the S&P 500. I can analyze this chart by cutting and pasting what I wrote above. I'm not gonna even bother to annotate the chart.

Malaysia- ditto

Singapore- control c, control v

Let's move on from Asia and go to Europe. France - cut and paste

Every chart I find is going to be more of the same.

If you think this bounce is just a pause before the next leg down, you can basically take your pick of just about any country, index or sector. It makes no difference. As you all know, I've been using QID as my current "go to" trading vehicle, but I could very well pick from many legit choices.

{If you were linked here from another site, please check out the rest of my site}

Quality, Trading and Bruce Lee


My dad used to tell me never to do anything "half-assed." Bruce Lee put it more eloquently:

I have found, after much soul searching, that deep down what I honestly value more than anything else is quality; doing one's best in the manner of the responsibility and craftsmanship of a number one.

The reason I bring up this quote is because of the "half-assed" nature of my recent VLO trade. I spotted the divergences, resistance levels and low risk entry, so I decided to jump right in. While it was low risk, and I still feel the stock is going to fall, I don't consider it a quality trade because there were a plethora of better setups out there that I ignored. Furthermore, when stalking divergence trades, one of my rules is that I always wait for confirmation of the divergence. So the small loss isn't what bugs me, it's the fact that it was a crummy trade.

Today's Trades: VLO and QID

I covered my 400 share position in VLO at $60.21 (entry at $59.06) for a $460 loss (-1.9%).

I bought 500 shares of QID at $55.23. I now have a 1000 share position in QID. Today's gap up has the look and feel of a "fade the gap" short squeeze type of rally. I doubt we will see a meaninful bounce. On the chance that there will be more strength in the coming days, I am setting a loose stop just under the 50 day MA, around $53. The next thrust down could come any day now, and I'd like to be in position when it happens.

Wednesday, March 07, 2007

Today's Trade; VLO and QID

I've traded these stocks so much that past few days, they feel like family. I bought 500 shares of QID at $55.86. I've been trading in 1000 share blocks, but I'm not sure that there won't be more of a bounce in the Q's, so I'm keeping the position size small. If we see QID drop down in the $54-55 range, I'll probably buy some more.

I've been trading VLO on the longside, as oil stocks have held up well over the past two weeks. However, today I went short on the big move up because it is moving right into resistance. Take a look at the resistance point on this chart:


I also noted that RSI and stochastics have dropped, creating a short term negative divergence.


I went short 400 shares of VLO at an average price of $59.06. While I never recommend that readers piggyback on my trades, I emphasize this point today. VLO has been acting strong, so this is a risky trade. I would not be surprised if the stock moves up. Therefore, I am using a hard stop above the $60 resistance level and going with a slightly smaller position size.

Trade carefully.

Get Ready to Short the Bounce

Hopefully this bounce can last another day or two. I will use market strength tomorrow to deploy a few short plays. A lot of sectors are setting up the same way, so I'll stick to QID and a few select sectors and stocks. Financials, commodities (not oil), tech and China stocks head my list of short plays off bounces.

I like QID here or if it falls into the $54-55 range.


MS looks good on strenght into resistance. It would require a loose stop above the recent gap level.

Tuesday, March 06, 2007

Losing My Flow and Today's Trades

I panicked. As I watched QID gap down this morning, I could feel myself losing my flow. All the Zen stuff I write about went out the window. As my highly developed flight reflex kicked in, Mister Self Awareness (that's me) was thinking like a four year old being chased by the boogie man. In the time it would take Bruce Lee to unleash a lightning quick combination of punches and kicks, I had pulled up my trading screen and was ready to click on the "sell" tab.

Then, for some reason, a moment of clarity came over me and I remembered something I had blogged about last month. Before placing a trade, I like to ask myself what an expert or someone I respect would think if he or she was watching me. I then imagined what you would think of me right now. I heard a voice say, "this guy's trading like a coward. I can't believe I read this damn fool." Feeling royally embarrassed, I took a step back and decided to wait for the expected bounce that I like to preach about. Of course, the bounce came, and I was able to unload my position for a small gain, in the process saving myself money and embarrassment. Thanks guys.

I sold 1000 shares of QID at $56.69 (entry at $56.50) for a $190 gain (+.33 gain).

I sold 300 shares of VLO at $57.22 (entry at $55.60) for a $486 gain (+2.9%).

I currently am 100% cash, although that could change soon. I may by QID on weakness.

Monday, March 05, 2007

Tuesday and Off Topic Stuff

There isn't much new to report with regards to my strategy going into Tuesday. I plan to try to unload my QID position into strength, and possibly repurchase on weakness, as I did today. You know the saying: keep striking while the coal is hot. Until this strategy ceases to work, I'll keep at it.

I do think there will be a market bounce, although I can't predict when it is going to come. Ideally it would have already started, but Mr. Market don't play that way. It's taking longer because everybody is looking for it. Once everybody gives up, that's when the bounce will come.

I can't wait for the bounce. I plan to twiddle my thumbs until the bounce reaches resistance levels, and then will deploy some more shorts. Till then . . .

Off topics:

It's too bad UFC is not reported in mainstream sports pages. What Randy Couture did this weekend was nothing short of amazing. At almost 44 years old and coming out of retirement, he won back the heavyweight belt by dominating a man 14 years his junior and who outweighed him by a good sixty pounds.

I was walking on cloud nine after my beloved 49ers signed cornerback Nate Clemons. Ashlie Lelie could be a shrewd pickup as well, if he finally lives up to his unlimted potential.

Heroes might be the best show on television. Tonight's episode was no exception. The Spiderman 3 preview was great as well. I can go on NBC.com to view 7 more minutes of the movie, but I don't want to know too much going into the movie.

Is the way "we" perceive the world reality? A fly's compound eye allows it to detect things we can't. A dog can hear sounds that don't exist, as far as we're concerned. Snakes can "see" heat. Is the world as we see it, or is it just a construct of our perceptions, developed through our evolutionary "needs"? These are the types of questions I find myself asking after reading a collection of essays and biographical infomation on Phillip K. Dick and Richard Dawkins God Delusion.

Yes, I'm keeping up with my New Year resolutions. It's been tough and enjoyable making time to read a book a week. Next up is Rousseau's Dog, by David Edmonds, recounting the antagonism that developed between two great philosophers, Jean-Jacques Rousseau and David Hume.

I watched Hollywoodland this past weekend, starring Adrien Brody and Ben Affleck. Pretty good, although I wish they would have come to a conclusion about George Reeves death. At any rate, I gave in a 4/5 stars on the netflix rating system.

Today's Trade: QID and VLO

I sold 1000 shares of QID at $57.98 (entry at average price of $55.23) for a $2750 gain (+5.0%). Over the weekend I placed a sell limit order at $57.50. My thinking was if the market opened weak, there would be a bounce later in the day where I could re-enter.

Everything went according to plan, and I bought 1000 shares of QID at $56.50.

As you can see from my QID trades over the past few days, I am selling spikes up and buying dips. In market terms, that means shorting into strength in the Nasdaq and covering on weakness.

I also bought 300 shares of VLO at $55.60. Take note of the small position size. The stock is not as strong as it was, but has entered an area of price support.

Sunday, March 04, 2007

Watchlist Notes

Here are a list of stocks that I am tracking.

QID: buy pullbacks, support at $53-54
DDM and QLD: use if playing market bounce (2X long indexes)
XLE: R=59, stop at $54
VLO: R=59, stop at $55-56
STLD: watch 36 support
EWZ: at support? watch shortable bounce to R
EWT: same
LEH: same
AKAM: same
NVEC: nice long chart
Also watching these strong stocks.

Speaking of strong stocks, check out this smokin' refiner, WNR.

Saturday, March 03, 2007

What Correction? More Stocks Ignoring the Market Tumble



Here are eight fantastic looking charts of stocks that ignored last week's slide (OATS, STTX, LFG, TXU, AE, KCP, EGLT, LDG). Most had some sort of good news event. While they look tempting, I would not enter blindly. Watch support and resistance very closely.

Trading Links

Pay attention to the December Low Indicator.

Yo, where's the flow?

Is it luck or smarts?

Was the bounce short covering?

Da Perma Bear is very happy (read all his recent posts).

Chillin' after the meltdown.

Volatility and some trippy charts.

Takeover Targets.

Cramer and Altucher discuss short squeeze candidates (video).

Cramer says Goldman is a bargain.

Respect the art of a bear raid.

Fitzpatrick's short play.

A measure of integtrity.

What happens after big down days?

The funniest (and most foul mouthed) trader in the blogosphere.

Buffet's letter to shareholders.

Top ten myths about correction 2007

Friday, March 02, 2007

Chart: STLD

Steel has been one of my favorite sectors over the past few months, with STLD being the trade of choice. Notice that the 50 day MA and the gap level converge at the same point. It will be interesting to see if the stock can hold above this level ($35.75-36). If the bulls can't hold the line, I can see the stock dropping down to $33.

Today's Trades: VLO and QID

I sold 300 shares of VLO at $57.90 (entry at $56.90) for a $300 gain (+1.7%). I still like the stock, but in this market enviroment I'm going with shorter hold times and quick profits. I reserve the right to re-enter.

I bought another 500 shares of QID at $55.25. I wanted to enter this morning when the stock was trading around $55.65, but decided to place a limit order at $55.25. My thinking was that the bulls would mount a push that would likely fail. Luckily we had some weakness (or strength in the Q's), and I got in at $55.25.

So currently, my only position is 1000 shares of QID (2X short QQQQ).

Thursday, March 01, 2007

Some Good Looking Charts (and a fight clip)

I haven't been able to find too many good looking charts on the long side. However, I do see a ton of nice looking charts for short setups that just need a little bigger bounce. Here are five stocks that look darn good in any market: SMSI, AKS, LDG, FDG and VLO.



For all you UFC fans, here is a preview of this Saturday's match between Randy Couture and Tim Sylvia. Party at the Spec's place!

E-Mails that Concern Me: The Market is Fine!


I've received a good dozen e-mails telling me that the worst is over, the panic was and still is a perfect time to buy (one reader told me he is going "all in" on margin) and that the 97 and 87 panics are examples we can use as reference. My guess is most of these e-mailers have been taking there cue from the talking heads on CNBC and print media. Here is why I don't buy it; the thesis that the worst is over.

1. This market is a new beast. In '87 and '97, we weren't dealing with the proliferation of hedge funds, ETFs, program trading, Internet trading (at least at it's current level), etc.

2. In both '87 and '97, there had been a decline leading up to the fall. This market is strikingly different in that it came out of nowhere, halting a sustained uptrend. There is still a lot more that could be worked off.

3. Markets that the economy has been relying on, such as the housing market, are on the brink of disaster.

4. The global economy is more important than ever, and so are commodities. What happens if China and India get hit so hard that the demand for commodities decreases?

5. Small sample size. Two panics are not enough to base a trading theory.

6. Margin. Margin. Margin.

These are just a few of the reasons I'm not jumping on the "all's clear" bandwagon. I'm not saying that the worst is not over. Maybe it is. However, I am saying that we need to wait and see how things unfold. Watch support and resistance. Until support and resistance levels are in place, we're just guessing. I know I sound like a broken record, but right now we've should be making either low risk trades or trades with small positions size (you can use bigger positions if you balance it with lower risk, a.ka. tighter stops). Go ahead and indulge yourself with a trade or two that supports your theory. I'm cool with that. In fact, I've got two trades on right now (QID and VLO). However, make sure to go about it in a prudent manner.

I know I may be coming off preachy. Sorry guys, but these e-mails freakin' scare me.

Trade Update: QID, QID (not a typo) and VLO

I sold 1000 shares of QID at $56.55 (entry at $53.82) for a $2730 gain (+4.8 %). To be honest, I probably would have held on if it was not for the fact that I had a limit order in place overnight. So I re-entered a few minutes ago.

I bought 500 shares of QID at $55.21. I still think the market has more downside momentum.

I sold 300 shares of RL at $85.45 (entry at $87.10) for a loss of $495 (-1.8%). So much for retail holding up.

I bought 300 shares of VLO at $56.90. My reasons are two fold. First, as a small hedge agaist my shorts. Second, I like the way oil services stocks have held up. If you look at VLO's chart, it looks like a typical pullback after a runup, which is opposite of the plethora of charts that look downright ugly.



Currently my only positions are QID and VLO. This week, I have incurred $3541 in losses and $5675 gains for a total gain of $2134.

I'm thankful that I made it out alive (so far). However, there should me more tough trading days ahead. It's not the time to take big risks or become complacent.