End of Day 03/12/2007

Some end of the day volatility in the steel stocks brought me into the green for the day. Barely.

I traded 25 stocks today and made 289 trades.

I made money in 11 stocks and lost money in 14.

My best stock of the day was CRS. I made $349 in him.
My worst stock of the day was TNH. I lost $162 in him (see earlier post for trade anatomy).

Today was slow. That's right... yet another LOW VOLUME RALLY. And while I'm very bearish about this market short term, it's getting more and more difficult to watch these rallies slide by. I really need to rid myself of my bearish opinion on which way the market is going so I can free myself to trade intraday. Since I've been cut off from holding overnight positions for the time being, I should simply focus on intraday action.

I did a good job of cutting my losses today except in TNH. That trade was a nightmare.

I caught a spike in CRS at the end of the day and made over a point in the trade. I hate trades like that, but I'll take it right now.

It's all about getting my confidence back so that I can boost my position size again and get on the right side of trades.

Net $53.44

Anatomy of a (near) disaster

A slow day. Low volume... no volatility, "best not to take much risk", I thought.

Then how do I explain what happened to me in TNH? A momentary lapse of reason I suppose? Not sure how to label it, but I know it happens over and over again to myself and others trading the market. I also know that if it happens too much, you're definitely doing something wrong.

Perhaps I was still burning about getting stopped out of my TNH long at 51.62, I don't know. I do know that when I looked up and saw the stock spiking up to 55 that I thought it MUST be a short. The market itself seemed weak to flat and none of the other stocks in the fertilizer sector were showing such strength. So I began to short. I was immediately wrong. However, instead of covering and taking a 20-30 cents loss on my 400 share position, I got stubborn and decided to short more. I 'knew' that if I covered and took the loss that the stock would definitely turn lower.

I began to hope the stock would turn in my favor... a sure sign of impending disaster.

Anyone who has traded for any amount of time will tell you that hoping a stock will either go up or down means that you are in some serious doo-doo. By the time the stock got up near 56, I was short 800 shares and down over $700 in the stock.

The stock traded above 56 and then shot down 75 cents very quickly. I would have loved to cover some of my short here but it was nearly impossible... the spreads were showing offers in the 60 and 70 cent range. Even though the stock was trading in the 30s had I entered a market order, I would have been filled at the offer.

Thank you for nothing, hybrid market.

So I waited, hoping some more that this was the break I was waiting for...

However, the stock was not done going up.

As quickly as it shot down, it ripped back up, taking out the old high and posting a new high at 56.22. I had put a buy stop for 200 shares at 56 and was filled around 56.19 or so. Ugly... my loss in the stock was now close to $1000 and I was still short 600 shares. Sounds like fun, no?

56.22 happened to be the top. I ended up covering most of my shares around 55.20 and some around 54.70. I actually used limit orders because I have lost faith in market orders. Is it only dinosaurs that use market orders? I cut my loss in the stock from close to $1000 to only about $150 but it wasn't because I did anything right. I was slow to close out a losing position and I got burned because of it. The fact that I made back some losses by being short when the stock did eventually drop was really just dumb luck.

And, as is often the case, when you get into a bad situation with one stock all of the other trades you have on at the same time tend to suffer as well. For example, the strength (that I was shorting) in TNH made me take a look at the other stocks in the fertilizer sector. I thought, "Well, TNH is strong and POT is strengthening, maybe I should pick up some AGU 'down here' in case he rallies..." That was mistake #2. I bought AGU around 39.45-39.50 and all the stock has done since that time is slowly trend down. Last I looked, it was trading below 39.25. At least I nipped that loss in the bud.

Then, while all the excitement of the fertilizer sector had my attention, my FED short was actually WORKING. However, I was so concerned with my blossoming loss in TNH that I never added to my working FED position.

So my reasonable $150 loss from the morning grew into a nearly $1000 loss and has now settled in around -$250 for the day. It's been unpleasant.

I can't believe the market is up again!!!

The hybrid market... a small disaster

I'm down $150. I was up $150. There's just no trading this market right now.

Let me share a couple of frustrations...

OMG. I bought this stock around 10am near 39.50. About 10 minutes later I was stopped out at the low of the day. Nothing new there, that's been happening consistently for the last 8 years. What IS different is the way the stock traded immediately after I was stopped out. In the past, if you get stopped out but you still like it, you could get back in. Not today with OMG as it spiked almost a half point right after the stop-out... that's how stocks trade in the new hybrid market. Poorly.

Same exact thing happened with LTM at almost exactly the same time. Go figure.

One last frustration. My worst stock of the day is TNH. I bought it around a quarter after 10. Only 200 shares because I'm currently trading small and trying to get my confidence back. So I stop 100 at a new low and the other hundred just below the figure. The first 100 I got at a fair price losing 10 cents or so. The hundred I stopped below 52 however were triggered and I was filled at 51.62. The low of the day. And of course, (because this always happens when you are in a slump) the stock ran straight up after that. Argh.

So I'm down $150. My only good trade is LVS which I've made about 40 cents on. Volume is really light today. It's probably a good day to take things easy. Can't force trades.

If you like music while you trade, check the latest Forkcast on Pitchfork. Here's the link... it's like a mixtape of the best recent music they've reviewed.

http://www.pitchforkmedia.com/page/forkcast/41645

Trade well.

Monday not at all here

I had a wonderful weekend. So good, in fact, that I didn't think about trading at all and I didn't read any books on the topic either. My IBD was never delivered. I took that as a sign to just relax.

This morning I woke late, forgetting that the oil burner was scheduled to be cleaned. So, unshowered and unshaven I met a man who reeked of oil at the door and let him into the basement. He told me about his pets. He had a beautiful blue bird that he taught how to say, "Pretty Blue Bird!" that was eaten by a lizard that he normally kept caged. He also has ferrets... 6 ferrets.

I then had a brief conversation with my daughter. "I got socks! You got socks?" Then she showed me the wrapper of her fruit leather. "Mine is blue. Your pants are blue. They match!" Everything is amazing when you are 2.

The point of all this is that I haven't done too much morning research yet. The CFC news is worrying and, bearish as I am, I wouldn't be surprised if the market takes a hit.

We will see. Good trading!