Monday, July 30, 2007

The Flaming Lips, "She Don't Use Jelly"

A classic.

Bull Trap

I don't really know what a "Bull Trap" is, but my guess is that it's a rally just like the one we saw today. Plus, it rhymes with "Bull Crap" which is what I think of today's market move.

I mean, I knew we'd bounce but CNBC is acting like the sky has been cleared and we're ready to run to 15,000 on the Dow again. Gimme a break! The market got killed on Friday, practically melted in the last 30 minutes of trading and on all time record volume no less. Today we rally 90 points on lighter volume and we're good? I don't buy it.

Anyway, maybe I'm just pissed because I largely missed the rally. That's probably it, in fact... I made money right off the open in a number of stocks but then got chopped up between 10 and 12. If I got long I lost money and if I got short I lost money. Things just weren't moving for me. So, I walked away.

When I came back to my computer around 2pm, I saw that we "rallied" nicely during lunchtime, about 100 points on the Dow. The solars were really moving, FSLR in particular and so I picked up one, LDK (that I saw mentioned on Stewie's blog this morning) that hadn't moved with the others.

I bought it at just the right time, at around $44.50, just before it jumped up to $45. I quickly took profits (since I'm too bearish for my own good) and watched it trade up another 60 cents, but it was my best stock on the day nonetheless. I made $301 on the trade.

My worst stock of the day was AAPL. I made a few trades in it and while in each trade I was right initially, I didn't get out with a winner once. The stock was just too choppy today and it was a mistake for me to keep going at it. The only good thing was that I kept my position size small in these losing trades. Still, I lost $360 in AAPL today.

Anyway, the selloff from last week reminds me somewhat of the drop in February. The market ripped down on incredible volume and then began rallying on light volume. I got so bearish that I was crippled mentally to take part in the rallies. I will be watching myself closely to make sure that I don't let the effect my trading too much. Today, it definitely did. I missed out on a pretty good rally... lots of stocks moved.

Let's see what happens tomorrow. While I believe we're headed back to the lows, I'm going to try and keep an open mind day to day... hopefully Clarence, "The Rodent of Stock Market Volatility" will visit again soon.

Here's the stats:

P&L, $154
Best, $301
Worst, -$360

shares traded, 34,200
24 stocks traded, 11 winners, 13 losers
175 total trades

Virtual Office, -$559. Dow, +92.84, 13358.31.

Denarii, $494 on 20 contracts traded.
Me, $154 on 34,200 shares traded.
OBAT, $120 on 4800 shares traded.
Bubs, -$179 on 2000 shares traded.
Evolution, -$1148 on 44,200 shares traded.

Well, it was pretty much a chopfest out there today. The futures held on to some support around the 1460 area and the market rallied. However, most of the juice of the rally came during the low-volume hours of the day, from 12-2pm.

While Maria Bartiromo was squealing all day about a "major bounceback" and Bob "the village idiot" Pisani kept salivating about the "heavy volume" I think they have it all wrong.

Art Cashin, perhaps the only CNBC regular who has a real head for the stock market (as ironic as that sounds) in a segment with Pisani and Ratigan said, "I would have liked to see more volume today. Volume that would have equalled that of the sell-off on Friday." Pisani immediately chirped up, "Yeah, but that was record volume on Friday..." without noticing that on Friday he was talking about how the financials were holding up... I mean, you can't have it both ways.

The fact of the matter is that the market sold off hard on record volume on Friday and bounced weakly today. I highly doubt the market is out of the woods. But we'll see. Perhaps Bob Pisani is correct...

New Stock Market Blog

Stewie, a regular over at Wallstreak has started a new blog. In it he'll be posting setups and market observations.

Check it out. I'm looking forward to finding some good stuff on it.

Clarence, The Rodent Of Stock Market Volatility

Meet Clarence, the "rodent of stock market volatility."

While he's slightly less famous than Santa Claus, the Easter Bunny or his gay cousin "Punxsutawney Phil" I believe that in due time, Clarence, the "rodent of stock market volatility" will be a household name.

Meanwhile, this video is 5-seconds long. Watch it over and over again...

UPDATE: Apparently, Clarence is hungover or something because it's 11:53 and all the market is doing is chopping around.