Tuesday, July 31, 2007

Stock Market Meltdown


As I discussed in the Virtual Office link, the market is currently in meltdown mode.

If you are a daytrader or a swing trader it doesn't really matter why the market is melting down, you're just happy to see some volatility again.

But I have to say, while I had a nice day, the morning completely sucked and I gave back a good chunk of change when it looked like the market was going to bounce at around 2:45.

If you haven't noticed, 2:45 is a very important time... Everyday, at 2:45 the market moves and I don't know why. If someone does know, please fill us all in via the "comments" section.

So it was a wild day of trading with big gains but also big losses. Such is trading when the stock market is a volatile beast.

My best stock of the day was AG.




I got short at 10:21 when it looked like the market was weakening and the stock couldn't recapture the highs of the morning. It worked out to be the perfect time but unfortunately, I covered most of the shares somewhat early, in the mid $38 level. The rest I covered just around $37.50. I made over $1200 in the stock.

My second best stock, ITU, was at one point, a huge winner for me that I gave a lot of money back on during the 2:45 squeeze.



At around 1:45 I noticed that UBB another large Latin American bank stock, was getting smacked around. I took a look at ITU and saw it still trading up. With the market just beginning to melt, I started getting short. I got heavily short (for me) and sold about 2500 shares between $47 and $46.80. The stock dropped quickly to $46.50 and then bounced back up to the $46.80 level. Then, it dropped hard to the "unched" level on the day. I covered some here, but not enough and the stock ripped back over $46.50. This is where I screwed up, covering most of my position.

In retrospect, this was a boneheaded move. The problem was that I had a lot of trades on and at that particular time, I was getting squeezed in most of them. I didn't even take a look at the chart... I just covered and made only a little on my initial trade. The stock dropped from here on out, and I got short again, but with a smaller position.

My worst trade of the day deserves a little attention because it had me getting back into a very bad trading habit, revenge trading.



I bought VNO at the open on the strength of all the "interest rate sensitive" names however, I never got a report back from the NYSE. The stock traded up over $107 but then back down to $106.75. I called my company to get some report and they said the NYSE was just crazed and not getting all reports back quickly. True story. Anyway, they called down while I waited on hold and got my report. When I got the report, I immediately sold at $106.80 and lost the 20 cents on my 400 share purchase. No big deal.

However, take a look at that next 5-minute bar... the stock spiked up to $110! Man was I pissed! So, what'd I do? I bought... and the stock plummeted down to $108. I churned the stock for the next half hour, angrily, sometimes making and sometimes losing but always trading angry. I lost over $300 in the stock before I realized that I was trading like a drunk and took the stock off my screen.

We will see what tomorrow brings. I'd love for you to share your stories on the day. Feel free to fill us in via the comment section. Days like today are fun to talk about.

Here's the stats:
P&L, $6147
Best, AG,
$1241
Worst, VNO,
-$301

shares traded, 99,600
30 stocks traded, 19 winners, 11 losers
354 total trades

20 comments:

artha said...

Sorry, but I have nothing original to say except for "Great job!"

Do you use scans to find your trades? Or do you keep a watchlist?

Also I was wondering what you majored in college?

Thanks!

mOOm said...

I did great in the morning but then lost much more in the afternoon. For some reason I was trying to go long... You seem to do great on these sort of days. I did well yesterday. Our performance seems to be negatively correlated :)

Dinosaur Trader said...

artha,

No scans. Each morning I do some "research" and add or delete stocks that I watch. I have about 120 on my screens... not too many.

Lately, I haven't been changing the stocks much. I have the solars, the agricultures, the latinos, the brokers, the oils... I keep them in groups based on their sector.

I majored in English.

-DT

Dinosaur Trader said...

Moom,

The bounce yesterday and then this morning were very unconvincing to me.

I got chopped up a lot today but managed to find a bunch of winners on the short side.

Who knows what happens to this market? Eventually, I'll be buying with you.

-DT

artha said...

DT,

No wonder you have a gift for writing.

I noticed you are holding GAIA in your longer term account. Did you become interested in the company because your wife is a yoga instructor? Just curious. I didn't know they are a public company. They send me catalogs but I've never purchased from them yet.

TraderCaddy said...

Good job. It looks like I trade in a similar fashion. I don't scan either since I believe much of the move has already been made. I also group my screen by sector. I have metals, oils, semis, indexes (including 2X inverse), ETFs ,etc. I look for the strongest stock (or the weakest) in the sector and I go with it depending on the general market direction.

Dinosaur Trader said...

artha,

Thanks for the compliment.

Yes, GAIA first got on my radar because of the yoga thing, but I've also purchased a lot of stuff from their catalogue and have been very happy with the quality.

They also offer lots of residential solar items and other "green" products for the home. I don't think the whole trend towards "greener" products and living is going away and I think GAIA will ultimately benefit.

It's one I've owned for awhile and I'll hold through a bear market (should one ever come again). It's a long term play for me.

-DT

Dinosaur Trader said...

TC,

Yes, similar indeed. You work for a prop firm?

As far as trading with sectors goes, it's only really started working for me again this past week. I was having less success with it for most of the year, but that could be because I was in a slump and all...

Hope the volatility continues until I go on vacation in a couple of weeks!

-DT

bloggerdotcom said...

But wait a minnit - the market went down today, doesn't that mean you lost money?!?! ;)

TraderCaddy said...

DT- I don't work for a prop firm. I trade my own account full time and have been doing it for about 10 years now. Prior to that I traded part time for about 10-12 years while I was working. I started out trading the Fidelity Select Sector funds when they first came out in the '80s. I find sectors easier to trade as they "stick out" on a relative strength basis to the whole market.
Times have changed though. It used to be very easy making $$ and was like growing a money tree. Not any more IMO. The hedges run the show.

Narrow Edge Trader said...

The biggest market moves are made in the first 1/2 hour of trading and the last hour of trading. That's b/c that's when the big money is squaring off their positions. That's why they tend to be the most exciting times of the day. I would avoid a ton of small shitty useless losses if i only traded during those two key times. That's when the pros are trading very actively, trends get stronger, breakouts/breakdowns are more meaningful, volume spikes etc etc. All other times during the trading session is just account churning, commissions to my brokers, boredom, frustration and usually small losses that add up over time.

Stewie.

Dinosaur Trader said...

blogger,

HAHAHA! This is the single most difficult thing to explain to non-traders. How the direction of the market is immaterial to a trader's profits.

However, it's far worse when the market rips and you lose money and everyone you know looks at you expectantly...

-DT

Dinosaur Trader said...

TC,

Times have definitely changed. I have found that all the mechanical changes to the market (to the NYSE anyway), decimalization, hybridization, have been the big culprits in hurting my profits.

I still wish we traded in sixteenths. But I guess that's why I'm a dinosaur.

-DT

Dinosaur Trader said...

Stewie,

I agree these are the most volatile times.

Back in the go-go days, I'd trade 9:30-10:30 and then 2:00-4:00 and just chill out in the middle of the day. Since January though I've found the open very difficult to trade. This I've blamed on the outsized, low-volume swings on the NYSE stocks that occurred once they all went Hybrid in late December.

Hopefully, the hybrid will continue to improve and this problem will in time, go away. I still haven't traded the open anything like I used to though... even this past week. I miss it.

-DT

JJ2000426 said...

You are a day trader and you do not know why 2:45pm is a pivital time? Why? because day traders generally unwind their positions during the last one hour trade before going home.

I loaded up some JRCC today. Should have done it last Thursday but I was pretty tense with SWC. Now I am more relax and confident in SWC, I can add positions of things I am interested. JRCC is a coal miner. It may go bankrupt, which is remote, or it could go up 10 folds from here. In the case of bankrupt, its underground coal mine is valued at least several times its market cap. Have a look.

SWC really looks like at the bottom now. In the next few weeks it should bring me a $20,000 gain per day.

Glenn said...

JJ2000426 is a pumper. If he trys to pump his shit on my blog I will turn off his internet.

Dinosaur Trader said...

JJ,

Well, I guess you can say SWC has "bottomed".... again! At least volume finally declined on the downside.

As for JRCC, I'll just say that buying weak stocks in a weak market isn't really my style.

Good luck, I hope they work for you.

-DT

Dinosaur Trader said...

Glenn,

JJ was a pumper, no doubt. However, we worked our differences out in a post a few days back and I've received no spam since.

However, I don't doubt that you would ruin his internet. I wouldn't even think about fucking with your blog...

-DT

JJ2000426 said...

Dinosaur:

How was my call on JRCC on August 1st at $4? I predicted a 10 fold increase. Today it reached that 10 fold and well ahead of schedule.

I predicted 20 fold or more increase for SWC and PAL. They are yet to get there so they are still very cheap to buy.

Read about my thoughts here.

Dinosaur Trader said...

JJ,

Okay, nice call. I think you need to work on your style... people may listen to you more if you were a little more "human" sounding... it's the whole robot thing that people tend to turn off... like there's no way I would have bought JRCC on your recommendation, because all you do is say the same shit over and over... SWC this, PAL that... blah, blah, blah...

And you have this tendency to pump the same stocks over and over even while they're going against you, and then, to boast about how much money you're making if they go up. That's just annoying.

Good luck.

-DT